Where's the Oil? BP's Y2K

Since the oil leak in the Gulf of Mexico opened a few months ago, speculation about the volume of escaping oil has been constant. Inasmuch as the diameter of the pipe from which the oil flowed was known, and the pressure forcing the oil out was reasonably estimable, an acceptable ball-park calculation has been at hand.

People huffed and puffed and spewed hysteria about the destruction of the Gulf and the death of regions in the Atlantic. Global media delivered the rantings and ravings and readers showed their worries and fears.

What now? Five million barrels of oil appear to have vanished. Gone. Dissolved in the water, destroyed by chemical dispersants, the warm water, the sun and collected by special boats skimming it from the surface of the Gulf. For the oil that slipped by and made it to shore, there were armies of citizens armed with shovels to scoop up the globs from the beaches.

This disaster is looking like the Y2K of Oil. A near non-event for which BP was expected to allocate $20 BILLION as a minimum outlay for clean-up and compensation to injured parties.

What will the worry-warts, hysterics and disaster queens do now? Like Bush leaving the White House, their reason for living has vanished.

Breaking News Alert The New York Times Mon, August 02, 2010 -- 7:49 PM ET---

U.S. Puts BP Spill Total at Nearly 5 Million Barrels

Nearly five million barrels of oil have gushed from the BP'swell since the Deepwater Horizon spill began on April 20, federal scientists said on Monday in announcing the most precise estimates yet of the well's flow rate. The estimates would make this spill far bigger than theMexican rig Ixtoc I spill of 1979, previously believed to bethe world's largest accidental release of oil.

BP -- Strong Buy

Surprise, surprise, the oil that had been gushing into the Gulf of Mexico seems to have disappeared. According to the experts, a combination of human and natural forces have led to its near disappearance.

When the leak sprung, BP piped in special dispersant chemicals into the flow. Apparently they have worked as advertised. Second, the oil that rose to the surface of the Gulf was further dissolved by the combination of warm water and hot sun. After clean-up efforts got underway, a lot of oil was skimmed off the surface of the water. Meanwhile, the water currents in the Gulf have carried much of the oil out to the Atlantic Ocean.

Some oil reached shore areas. But able-bodied citizens were there and waiting, scooping up every blob that hit land.

Thus the question of damages needs a major revision. It looks like the immediate damage to the water and shore is close to ZERO. The harsh dispersant chemicals and the oil itself may have harmed or killed some sea life. But the new question is how long will it take for the effects of the chemicals to dissipate?

When can fishermen, crabbers and oystermen resume their work?

Hard to say. But, it's now clear the total cost of the clean-up and compensating the fishermen and resort owners will fall far below the figure of $20 billion concocted by hysterics claiming the oil leak was Doomsday for the Gulf.

What's ahead for BP?

The company will make good on its obligations to pay for the clean up and maintaining the income of the people hurt by the interruption to their livelihoods. After the company and the injured parties settle on a figure, the company will restart its dividend. It's important to remember that BP stock is the Widows and Orphans stock of Great Britain. A lot of people and mutual funds expect to collect hefty dividends from this stalwart organization.

When the dividend is reinstated, the stock will rise. If oil stays around its current price, the company will continue to enjoy enormous cash flow, which suggests the stock price will return to its pre-leak levels -- $60.