The blowout preventer looks like a five-story fire hydrant. It weighs 325 tons and costs $18 million. At the Deepwater Horizon oil rig, it sits on the ocean floor, a mile deep, reachable only by robotic submarines in the murky and freezing currents. By a complex series of valves and gaskets, the massive device is supposed to keep oil and gas from rocketing toward the surface and blowing up the oil rig and its crew of 126, which float on the warm waters of the Gulf of Mexico, about 50 miles from the mouth of the Mississippi River. But the blowout preventer was breaking down.

On the afternoon of April 20, workers on the Deepwater Horizon rig noticed bits of rubber gurgling up through the pipe that connects the rig to the well. Not a good sign, thought Mike Williams, the chief electronics technician. But he says that his supervisor told him, in effect, no big deal.

Down in the bunk room, Stephen Stone, a roustabout, was jolted awake by the explosion. “People were running from everywhere to the stairway to get to the next level, where the lifeboats were. But the stairway collapsed in a pile of rubble,” Stone told NEWSWEEK and other reporters. He ran back to his room to get a life jacket and his wedding ring, then groped through the debris of a collapsed ceiling, looking for a way out.

Stone and Williams both survived. Eleven of their mates did not. When the survivors got to shore, the rig operator asked them to sign a paper saying they had not suffered personal injuries. Stone says he refused.

Last Thursday President Obama was hoping to cap his own political blowout. With his poll numbers for handling the crisis plummeting and the Deepwater Horizon disaster already the worst American oil spill in history, Obama was visibly distressed as he stood before reporters in the East Room of the White House. In a rare full-blown press conference (his first since July 2009), Obama assured reporters that the spill is the first thing he wakes up to and the last thing he goes to bed thinking about. “And it’s not just me,” he said. “You know, when I woke up this morning and I’m shaving, and Malia knocks on my bathroom door…she peeks in her head and she says, ‘Did you plug the hole yet, Daddy?’”

Out in the Gulf of Mexico, a small armada of ships was attempting something known in the oil business as a “top kill”—essentially, filling the drilling hole with mud and cement to block the oil and gas from escaping. A 30,000-horsepower diesel engine was pushing the muck down a mile-long pipe into the faulty blowout preventer, as millions watched the undersea video and prayed for the best. At first, the maneuver seemed to work; then it ran into problems. BP attempted a “junk shot” of solid materials like golf balls and shredded tires to clog the blowout preventer, and then pumped in more mud. Company officials said they would keep at it through the weekend. Already, the damage to the fragile Gulf Coast was severe—and the true reckoning is still unknown as scientists mull the impact of many millions of gallons of oil, as well as large amounts of gas and chemical dispersants, on the aquatic life that feeds millions of Americans.

The Deepwater Horizon story is about a single catastrophic event, but also about the limits of government regulation and the revenge of nature on careless man. It is, unfortunately, a story that could still have some horrific twists and turns.

In hindsight, it is not hard to see why the oil companies and the federal government grew a little complacent. The oil companies have long been drilling on the continental shelf of the gulf—a mile or more down to the sea bottom, then another few miles through rock to oil and gas deposits. When the Deepwater Horizon blew, it had been drilling for seven years in different locations without an injury. There are 33 deepwater drilling rigs working the gulf—but none have had major spills before this. Obama was so confident about offshore drilling that in March he’d proposed doing away with a moratorium on drilling off the East Coast and Alaska—a move designed to show that Democrats were not insensitive to the need for cheap energy and the “drill, baby, drill” sentiments of a large portion of the public.

There were, it’s true, some warnings. In May 2000 a draft of an environmental analysis by the Interior Department’s Minerals Management Service (MMS) stated that “the oil industry’s experience base in deep-water well control is limited” and that a massive spill “could easily turn out to be a potential show stopper for the [outer continental shelf] program if the industry and MMS do not come together as a whole to prevent such an incident.” But the statement was dropped in a later draft. In 2005 the MMS adopted a series of regulations that assumed oil and gas companies could best evaluate the environmental impacts of their operations.

Such government passivity may sound laughable, or tragic, in light of recent developments, but it underscores an uncomfortable truth about government regulation in the modern age. The government is dependent on industry for essential know-how. Government officials usually lack the technical expertise to understand the intricacies of complex systems and high-tech engineering. That’s true not just in oil and gas but in the airline industry as well. As we discovered groping out of the wreckage of arcane financial instruments like CDOs (collateralized debt obligations) in the crash of 2008, Wall Street doesn’t even understand itself.

Inevitably, when government regulators are dependent on the industries they regulate, coziness and sometimes corruption creep in. The MMS appears to have been no exception. Oil companies filled out inspection forms in pencil, then the MMS inspector traced over their writing in ink. The MMS inspector general’s office found that regulators were accepting meals and hunting trips from the oil industry, and sometimes more—such as an expenses-paid trip to the Peach Bowl (the regulator was a big LSU fan). In a couple of instances, regulators were using drugs. The door between industry and government revolved in the usual way: in one instance, an inspector was negotiating for a job with the company whose rigs he was inspecting. “Obviously, we’re all oil industry,” Larry Williamson, the district manager in the MMS’s Lake Charles, La., office, explained in an inspector general’s report. “We’re all from the same part of the country. Almost all of our inspectors have worked for oil companies out on these same platforms…They’ve hunted together. They fish together. They skeet-shoot together…They do this all the time.”

In Washington, BP, the giant oil company, was skillful at projecting a positive public image while staying close to government regulators. British Petroleum, the company’s old name, was changed to the more global-friendly BP, and a new green-and-yellow logo was designed to seem more environmentally conscious, along with the slogan “Beyond Petroleum.” BP officials revolved in and out of government, and when top officials like Leon Panetta (former White House chief of staff, now CIA director), Tom Daschle (former Senate majority leader), and Christine Todd Whitman (former EPA chief) left government, they wound up on a well-paid BP advisory board.

BP needed friends in high places because it had a suspect safety record. In March 2005 an explosion at a BP refinery in Texas City, Texas, killed 15 workers and injured more than 170. Callous e-mails from BP officials at the time warned that the death toll could mount, but said that the story would go away because of “the holiday weekend” and because the media were preoccupied with the Terri Schiavo case. The Deepwater Horizon well was expensive—costing BP about a half-million dollars a day. The drilling rig itself was leased from Transocean Ltd., a publicity-shy company based in Zug, Switzerland. Transocean is facing criminal and civil investigations for tax evasion in Norway and has tangled with the U.S. government over tax disputes; the company has also been the target of lawsuits in Mississippi and Louisiana related to alleged environmental problems. (A spokesperson for Transocean said the company does not comment on pending litigation.)

The Deepwater well had been beset by problems and delays. It was a “cursed well,” Stephen Stone, the roustabout, told his wife over the phone. Several rig operators later told reporters that they had been under pressure to finish up with the drilling and move on. Capping a well is a complex operation. The New York Times reported that BP chose a cheaper, riskier method to plug the well rather than an alternative. Some evidence has emerged that the cement did not set properly before the rig operators switched from pumping “drilling mud”—a concoction used to keep the pressure on the well so the oil and gas won’t surge upward—to seawater. When the rig operators began using water, the oil and gas began to “kick” upward—a dangerous sign. The blowout preventer, designed for such moments, failed. It appears that a battery in the command module had gone out. What else went wrong will be the subject of endless investigations and lawsuits.

It was obvious from the first stories of spreading oil slicks that political peril lurked for the Obama administration. Republicans wasted little time raising the idea of “Obama’s Katrina.” The initial reaction by the spinmeisters at the White House was to avoid “owning” the disaster. President Obama pointedly called it “BP’s oil spill.” Generally Obama’s approach tends to be prudent and cool—the “No-Drama Obama” style he showed during the 2008 campaign. But he may have been a little too cool. Historian Douglas Brinkley told NEWSWEEK that Obama needed a “bullhorn moment,” a time when he could have shown defiant leadership, à la George W. Bush climbing on the rubble of the World Trade Center to figuratively wave his fist at Al Qaeda. “Instead,” says Brinkley, “there was a lot of lawyering up.” A senior White House official, speaking anonymously in order to allow his scorn to show, asked with a straight face, “How did that bullhorn moment work last time? You know, it was good for a moment until we parked 150,000 kids in Iraq and are still figuring out the problem.”

But this official conceded that the administration allowed itself to appear legalistic when passion was more the order of the day. It wasn’t until April 29, more than a week after the incident, that Homeland Security Secretary Janet Napolitano declared “a spill of national significance,” legal terminology that has the effect of authorizing federal assistance to the region, but which could only make the average cable-TV news viewer go “duh.” Administration officials kept referring to BP as “the responsible party,” another legal term meaning that BP is responsible for the costs of closing the well and cleaning up the disaster. But the not-so-subtle implication was that Obama was passing the buck.

White House officials do not hide their feelings that they were suckered a bit by BP. The oil giant’s CEO, Tony Hayward, visited the White House a week after the accident and was all calm and confident. “He seemed very reassuring,” said a senior official who was present. (Obama himself missed the meeting; he was in Iowa talking about jobs.) The White House, historian Brinkley scoffs, “believed BP’s BS for too long.” Theodore Roosevelt, said Brinkley, who is author of a volume on TR the environmentalist, “would have gone after BP as a ‘despoiler of the gulf.’” He says that Obama should have appointed a high commissioner to coordinate disaster response right away—someone with stature, like Colin Powell.

Obama did go to the gulf on May 2, but it wasn’t much of a trip. White House officials were wary of making Obama look like George W. Bush, viewing Katrina’s devastation from 30,000 feet, but they were unable to get him close to the slick, which was still offshore. Instead he drove through a rainstorm to a Coast Guard station and gave an unmemorable speech.

In any crisis, there is always a question of how many urgent issues the presidency can juggle at once. In this case, Obama’s homeland-security advisers were distracted by the failed car bomber in Times Square on the night of May 1; some were overloaded for days with press calls about why the alleged bomber was able to get on a plane even though he was on a no-fly list. Early on, Interior Secretary Ken Salazar vowed to keep the government’s “boot on the neck” of BP. But administration officials told NEWSWEEK they were limited in their ability to declare a major disaster by an obscure law, the Robert T. Stafford Disaster Relief and Emergency Assistance Act, which says that the feds shouldn’t step in and take complete responsibility when it’s certain that private parties will pay to clean up the disaster. BP from the beginning acknowledged it would foot the cleanup costs and not hide behind another law that limits its liability for lost economic activity to a mere $75 million.

Still, BP seemed slow to recognize the scale of the disaster. It took several days for the company to acknowledge a serious spill, and BP officials repeatedly lowballed the amount of leaking oil (probably 12,000 to 19,000 barrels a day). For 10 days BP tried, and failed, to make the blowout preventer work. Then it lowered a steel-and-concrete dome over the main leak, but the solution failed when the dome got clogged with an icy slurry of methane and water—a hazard of trying to operate a mile beneath the surface. BP engineers managed to stick a tube into the leaking pipe to siphon off some of the oil—but not nearly enough.

The company did have a plan, titled “BP Regional Oil Spill Response Plan—Gulf of Mexico,” approved by the federal government. But on closer inspection, it was a pretty flimsy document. Rick Steiner, a marine biologist and former University of Alaska professor who has worked on numerous oil spills, including the 1989 Exxon Valdez disaster, points out the plan discusses the need to protect walruses, seals, and sea lions, animals that do not exist in the gulf, which strongly suggests a cut-and-paste job. A Web address given for a response contractor’s equipment list goes instead to a Japanese shopping site. The good ol’ boys at the MMS may not have been closely reading this plan when they signed off, suggests Steiner. “When I first read it, my jaw dropped,” he told NEWSWEEK.

By May 10, three weeks into the disaster, Obama was losing patience. He assembled his top aides in the Situation Room and demanded some answers. “He just sat there staring; you could see his jaw clench,” said one attendee, remaining anonymous while discussing a White House meeting. Obama turned to his energy secretary, Steven Chu, a Nobel laureate, and said, in a scene right out of Armageddon, “I want you to assemble the best minds in America and get them down there.” Chu rounded up such heavyweights as Tom Hunter, chief of the Sandia National Labs, and mineral scientists and engineers from Berkeley and MIT.

Obama turned up the rhetoric. In the Rose Garden on May 14, he inveighed against the “cozy relationship between oil companies and the federal agency that permits them to drill.” He vowed to close loopholes and break up the MMS, and he disdained “the ridiculous spectacle” of BP, Transocean, and Halliburton (which had been hired to cap the Deepwater Horizon well before it blew) pointing fingers at each other during congressional hearings. But he was embarrassed when it was disclosed that the MMS was still issuing drilling permits in the gulf despite a supposed moratorium. (Last week MMS chief Elizabeth Birnbaum resigned.)

The administration’s attempts to get tough sometimes made it look like the gang that couldn’t shoot straight. Interior Secretary Salazar repeated his vow to keep the government’s boot on BP’s neck for results, telling reporters: “If we find they’re not doing what they’re supposed to be doing, we’ll push them out of the way appropriately.” But Adm. Thad Allen, the Coast Guard commandant who has been overseeing the government’s response to the disaster, told a talk-show host the same day that only BP had the means to deal with the leaking well a mile below the sea. “They are necessarily the modality by which this is going to be solved,” he said.

Everyone was suddenly a self-appointed expert. A White House official fumed: “[New York Times columnist] Bob Herbert says we should get our best and brightest down there. Well, guess what? They were down there three weeks ago! [Sen.] Bill Nelson [of Florida] says we should put the military in charge. Unless I missed something, the Coast Guard is part of the military.”

The official’s frustration was forgivable, or at least understandable: the slick was finally reaching the gulf shoreline, and television crews were there. Viewers tuned in to see once beautiful birds, soaked in oil, lying dead, as the brown goop crept into the gulf’s fragile marshland. For Billy Nungesser, the president of Plaquemines Parish, La., where the Mississippi River dissolves into a maze of estuaries and marshes, Armageddon had arrived. Short and wide, Nungesser is normally cheerful and outspoken, but last week he was fuming. He lashed out at BP and the Coast Guard, calling Allen “an embarrassment” and “a cartoon character.” “This guy has done absolutely nothing to help us,” Nungesser told NEWSWEEK. “To this day, they don’t have a plan. BP don’t have a plan…None of them have stepped up to the plate.”

Along with Louisiana Gov. Bobby Jindal, Nungesser had been relentlessly pushing for a new proposal: to fortify the barrier islands with dredged sand so that the oil would have a harder time making it to the marsh. But the $350 million project ran into resistance from the U.S. Army Corps of Engineers and some scientists as well (a portion of the plan was approved last week). Last Wednesday Nungesser toured the affected wetlands with NEWSWEEK and other reporters. “I get tears in my eyes, because when you’d pull into that marsh previously, fish would jump and scurry,” he said afterward. Now, “ain’t a bird, ain’t a bug, nothing…Everything was dead.” For a month BP and the Coast Guard tried containment booms and chemical dispersants and even controlled burns to fight the spreading oil. But on it came.

If the top-kill procedure succeeds in plugging the well, there will be sighs of relief from Plaquemines Parish to BP headquarters in London. But there is much more oil still to come ashore, and a vast undersea plume that will wreak havoc on marine life, possibly for years to come. Industry and government officials are nervously wondering what will happen if a hurricane strikes the gulf region this summer. The wind and waves could serve to disperse the oil. Or they could churn the ocean into an oily smear that coats the shoreline for many, many miles. The area around New Orleans, still recovering from 2005’s Hurricane Katrina, may find out soon enough. Last week the National Oceanic and Atmospheric Administration predicted the worst storm season since then.

Read More about the Gulf Oil Spill

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