This is a rush transcript from "Hannity," July 15, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: BP says that the cap installed on its damaged oil pipe in the Gulf of Mexico has stopped the flow of oil into the water.

Now BP engineers are now monitoring the well to ensure that the cap can withstand pressure and keeping their eyes open for new leaks that may spring up in other parts of the well.

Although the leak is capped BP now runs the risk that pressure from the oil flooding out of the ground could fracture the well and make the leak even worse. But for now it appears that the leak has been plugged. Now on screen left you can see the leaking version of the well and on screen right the current capped version.

So while cautious optimism is in the air some are wondering, well, why did it take 87 days to stop this disaster?

Joining me now with reaction to this breaking news are from the FOX Business Network, the host of "Varney and Company," Stuart Varney, and the author of "Why We Hate the Oil Companies, Straight Talk from an Energy Insider," the former CEO of Shell Oil, John Hofmeister.

Guys, welcome back, good to see you.

John, let me start with you. Last time you were here, you were not confident that this would work. What do you think of where we are right now?

JOHN HOFMEISTER, FORMER SHELL OIL PRESIDENT: Well, I would emphasize the word cautious, Sean, before the word optimism. This is not a done deal yet.

Pressures are very, very tough things to deal with. And if the casing is in fact weakened or damaged, then they have to be very, very careful about how they deal with this whole containment device.

I think it's progress. It's good progress. It took many, many weeks to engineer this special modified containment device. I think they're going to nurture it as carefully, as slowly as they have to. I think they've set the relief wells aside temporarily in order to orchestrate the top and the bottom of the well at the same time, so that they can do - make the most of what could be a weak casing.

HANNITY: All right. Why don't you explain exactly what they did here so people can understand it?

HOFMEISTER: Well, what they basically did is they set this containment device specially designed on top of the blow-out protector. And it is a big device itself. It has the ability, Sean, to actually ram charge closings, to actually shut off the flow of oil and gas from the top of the blow-out protector through the containment device to try to push that oil back into the earth.

However, when they test closing it, they are taking a risk of blowing the casing below the blow-out protector because of the intense pressures.

HANNITY: All right. Worst-case scenario, if that happens, what does that mean?

HOFMEISTER: Well, it means we have an uncontrolled flow with no stable casing in order to contain the well. And it just flows continuously.

HANNITY: All right. Let's look at, Stuart, the economic impact of this 87 days. The government's incompetence in all of this which I think has been pretty staggering; their tone-deafness.

Look, I hope this works. Everybody hopes this works. It's only - even if it does, though, we still have huge economic impact from this.

STUART VARNEY, FOX BUSINESS NETWORK: I think the greater economic damage done in the immediate future comes from the moratorium on deepwater drilling. That's immediately destroyed 20,000 high-paying jobs in Louisiana. And it has cost the president a great deal politically in the south.


VARNEY: When this oil comes ashore, as it has already of course, yes, it will slow the economy in the Gulf region. That may have a national impact. But in the immediate future, it is the moratorium which does the greater damage to the economy.

But as you said, the president - I think tomorrow - will start to move towards this good news from the Gulf. He'll try I think to try and take some credit for it. He might say we directed the efforts here.

HANNITY: Yes, yes.

VARNEY: He may try to take that credit. But he's got - he's to get over a lot here.

HANNITY: Yes. He took - he also took credit today for 3.6 million jobs that he didn't create. So we'll get into that with Lou Dobbs in our next segment.

All right, let me go again. Bobby Jindal, John, said the following. He said the next 48 hours are crucial and critical as they test the pressure of this to make sure this thing is working well.

That's one aspect. That's one big problem here. The next big problem we have is how long would the cleanup actually take based on the amount of oil that had already leaked?

HOFMEISTER: Well, I think Bobby Jindal is exactly right. I mean it will, they have to nurture this thing carefully. The bigger issue is ultimately the clean - well, the bigger issue is getting that well finally contained. But then the cleanup.

The cleanup has been botched, as we've talked about before. I think the failure to deal with the scale of the problem is unforgivable. Little shrimp boats, rags and little boom barriers don't do the job. We can see that. It's too late.

HANNITY: Look at this.

HOFMEISTER: We've already polluted much of the wetlands.

HANNITY: Yes. It's a great point. Stuart?

VARNEY: I don't know who's in charge. I want some central authority figure to stand up and say, today we collected X barrels of oil out of the ocean, this is how the cleanup is going, we are in charge, we're on top of it. We have seen nothing like that at all.

HANNITY: It's hit the coast of Houston. It's hit Louisiana. It's hit Alabama, Orange Beach. It's hit Destin, and Fort Walton Beach and Pensacola and from Florida.

VARNEY: This was President Obama's original Katrina, in fact.


VARNEY: The failure to move quickly, marshal the resources.


VARNEY: To stop the oil reaching the shore in the first place.

HANNITY: John, do we - do we run the risk if this doesn't take - and we all hope it does so that we can begin the cleanup effort. If it doesn't take - the last time you were here we discussed the possibility of blowing this thing up - is that the only option that remains?

HOFMEISTER: Well, there's still the option of producing the well over a long period of time. You could build a pipeline to connect that well to the regional pipelines in the area and actually produce it. You could use the proceeds from producing it to pay down some of the damages that have affected the coast.

The implosion is still there. I've always said that's a very high-risk option. It's not one I've ever recommended at this point and still don't.


HOFMEISTER: Producing the well is another option. But if I could come back to the moratorium -

HANNITY: But how long does that take?

HOFMEISTER: Well, it would take probably not just weeks but it would take some months to build that pipeline system. It wouldn't surprise me if that's not already actually being worked on.

HANNITY: Last question back on the economy. Destroyed the tourism industry at least for this year.


HANNITY: Destroyed a lot of the environment.


HANNITY: Fishing industry.


HANNITY: When does that recover?

VARNEY: I've no idea when it will recover. I do believe it will have an impact on the overall national economy. The overall economy is already slowing. We didn't want to see that but it is. It is slowing. This cannot improve that at all. It will add to the slow down of the economy.

HANNITY: We're going to talk a lot more about the economy in the next segment. You said something this week that really struck me that we could have 10 years of a lost decade depending on whether or not we change course in 110 days.

VARNEY: We're headed in that direction, we better change course.

HANNITY: All right, Stuart, thanks. John, thank you for being with us. We appreciate it.

HOFMEISTER: Thank you.

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