As submersible robots made another risky attempt to control the underwater Gulf oil gusher, the crude on the surface closed in on Florida.
BP's stock plummeted and took much of the market down with it, and the federal government announced criminal and civil investigations into the spill.
The stakes couldn't be higher. After six weeks of failures to block the well or divert the oil, the latest mission involved using a set of tools akin to an oversized deli slicer and garden shears to break away the broken riser pipe so engineers can then position a cap over the well's opening.
But it's a big gamble: Even if it succeeds, it will temporarily increase the flow of an already massive leak by 20 per cent - at least 100,000 gallons more a day.
That's on top of the estimated 500,000 to 1 million gallons gushing out already. In Florida, officials confirmed an oil sheen about 14km from the famous white sands of Pensacola beach. Crews shored up kilometres of boom and prepared for the mess to make landfall as early as Wednesday.
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"It's inevitable that we will see it on the beaches," said Keith Wilkins, deputy chief of neighbourhood and community services for Escambia County.
Florida would be the fourth state hit. Crude has already been reported along barrier islands in Alabama and Mississippi, and it has impacted some 200km of Louisiana coastline.
Attorney General Eric Holder, who visited the Gulf on Tuesday to survey the fragile coastline and meet with state and federal prosecutors, would not say who might be targeted in the probes into the largest oil spill in US history.
"We will closely examine the actions of those involved in the spill. If we find evidence of illegal behaviour, we will be extremely forceful in our response," Holder said in New Orleans.
The federal government also ramped up its response to the spill with President Barack Obama ordering the co-chairmen of an independent commission investigating the spill to thoroughly examine the disaster, "to follow the facts wherever they lead, without fear or favour".
The president said that if laws are insufficient, they'll be changed. He said that if government oversight wasn't tough enough, that will change, too.
BP's stock nose-dived on Tuesday, losing nearly 15 per cent of its value on the first trading day since the previous best option - the so-called top kill - failed and was aborted at the government's direction.
It dipped steeply with Holder's late-afternoon announcement, which also sent other energy stocks tumbling, ultimately causing the Dow Jones industrial average to tumble 112.
If BP's new effort to contain the leak fails, the procedure will have made the biggest oil spill in US history even worse.
BP PLC's Doug Suttles said that although there's no guarantee the company's latest cut-and-cap effort to close off the leak will work, he remained hopeful, but wouldn't guarantee success.
Meanwhile, Federal officials are hoping film director James Cameron can help them come up with ideas on how to stop the disastrous oil spill.
The Avatar and Titanic director was among a group of scientists and other experts who met on Tuesday with officials from the Environmental Protection Agency and other federal agencies for a brainstorming session on stopping the massive oil leak.
