BP denies it hid inspection data

Sam Eaton Aug 21, 2006

KAI RYSSDAL: Not many people would call $72.45 a barrel cheap. But oil prices have been holding suprisingly steady lately. Falling, even. Down four and a half bucks last week. Even as BP closed down half of its biggest oil field in this country. But a growing number of analysts say it’s only a matter of time before that trend starts going the other way. From the Marketplace Sustainability Desk, Sam Eaton has more.

SAM EATON: Some analysts are viewing BP’s denial as the latest in a “he said, she said” drama with little impact on the long term price of oil. But there’s also a growing number of experts who see BP’s Prudhoe Bay shutdown as the first shoe to drop in an industry-wide predicament.

People like Fadel Gheit with Oppenheimer and Company say most oil companies are saddled with an aging infrastructure.

FADEL GHEIT: I mean, most of these pipelines have been in service for sometimes double or triple the original forecast and instead of lasting 20 years they’ve been in service for 30 or 40 or even 50 years.

Gheit says with record oil prices companies want to keep their profits flowing. That creates a disincentive to idle equipment for maintenance. Gheit fears more leaks and shutdowns in the future. Some analysts are predicting a $20 hike in the price of oil over the next decade due to infrastructure problems.

Stephen Leeb, author of “The Oil Factor,” says it’s a crisis that will be tough to avoid. He says there’s a disturbing level of complacency among oil execs.

STEPHEN LEEB: They are really blind to what’s happening in the oil patch. So, yeah, a lot of this has gotten ignored and, you know, under the assumption, “Well, if something happens, we’ll have plenty of time to fix it because the world won’t notice it.”

Leeb says given that belief it’s not surprising BP may have overlooked basic maintenance issues. The question, he says, is how many more shutdowns it will take before oil companies start to change their tune.

I’m Sam Eaton for Marketplace.

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