Oil Spill Overreaction

Despite headlines screaming “the worst oil spill in history,” it turns out the BP blowout disaster wasn’t really as big a deal as you’d have thought.

Oh, well…sorry.

According to the feds, 74% of all the oil leaked into the Gulf has already been removed. “Much of the rest,” The New York Times summarizes a government report released today, “is so diluted that it does not seem to pose much additional risk of harm.”

Nearly half – 41% – of the oil simply “evaporated, dissolved or dispersed” – taken care of by Mother Nature herself. That’s a larger share of spill containment than all of BP’s burning, skimming, recovery, dispersing and plugging efforts…combined.

The report estimates about a million barrels of crude oil remains floating in the Gulf.

“Of course, it’s not good to blow out your oil wells,” Byron King explains. “But we can be thankful that nature has oil-eating bacteria out there. Add oil to the seawater, with heat from the sun, and sunlight, and stir it up with wind and wave and you see that the oil is going away faster than many people expected.

“In a normal environment, oil-eating bacteria are in equilibrium with their surroundings. If there’s not much oil in the water, the bacteria are few and far between. But if you add oil to the mix, the bacteria bloom.

“As the bloom progresses, more bacteria eat more and more of the oil. They eat the oil until it’s mostly gone. When the ‘oil food’ is gone, the bacteria die off. The result is much less oil, and much more microscopic biomass in the water.”

According to Marcio Mello, who regaled the masses at Vancouver last week, biomass is another way of describing “fish food.”

“In perhaps two years time,” Marcio predicts, “the Gulf fishing industry will recover in such a way as will be spectacular. Just wait. You can tell me if I’m wrong.”

Meanwhile, the media hype and protests over the spill, complete with political posturing, have created what we believe could be the investment opportunity of a lifetime.

Addison Wiggin
for The Daily Reckoning

The Daily Reckoning