Obama Goes For British Petroleum

Discussion in 'Current Affairs, News and Analysis' started by Markintime, May 13, 2010.

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  1. President Obama is pushing for legislation which would push the total amount an oil company can be charged for the cost of clean up after oil spills from 75 million to 10 billion.


    Will this mark the end of BP and perhaps more pertinently, would he be so keen to push such crushing charges on a US owned oil company?
  2. in_the_cheapseats

    in_the_cheapseats LE Moderator

    Although their corporate' HQ is in London BP is hardly "British" these days. US shareholders own 39% of the BP shares, UK investors own 40% so this will hit as many of "them" as us. BP is the largest non-US coy in the Dow.

    However, I doubt if the "hurt" is deliberate at a foreign company, I think is is deserved. Any oil company, US or otherwise that makes this amount of mess should be held accountable for clearing up the mess. To full cost.

    I have no problem with businesses or individuals being held to account for their mistakes.

    This legislation will hit any company that makes the same impact to the environment
  3. Biped

    Biped LE Book Reviewer

    Isn't it the case that the company that owned and ran the exploration rig, which failed all the tests repeatedly, on more than one of its rigs is actually entirely American?
  4. I would agree in principle that a company should be responsible but only to the extent that it can healthily afford where there is no evidence of recklessness. Unless I've missed something this was the result of an accidental explosion which destroyed the drilling rig, killing 11 people in the event.
    Oil extraction keeps the US running and provides it with an independent domestic supply. The US will quite happily spend billions ensuring anti-US dictators are removed from power to ensure oil supply, why should they not assist when disasters occur to those acting on their behalf?
  5. Fronty

    Fronty Old-Salt Book Reviewer

    BP will probably sue the company running the rig for the money in any case. And it's not like they will end up paying it... Their consumers will.
  6. That's the bottom line. The company is Halliburton who will likely pick up most of the tab. 10 billion? they can afford that from their petty cash box.
  7. There has not been a lot of comment on this topic recently which is quite understandable as it currently has little impact on the UK. I thought I would throw in a few comments from a US perspective.

    BP is a big multinational company and and despite the fact that BP has been repeatedly failing in all their efforts the public here does not perceive this as a British problem but a problem with Big Oil.

    There are conflicting claims as to who is at fault: BP, Halliburton, ..... but there will IMHO be enough blame to go around for all parties involved. There are legal barriers to the US Gov't taking direct action plus the problem that if the gov't takes over control of the problem then the gov't owns the problem and could own the liability of the problem.

    It does appear that the problem arose from a bit of a cluster fcuk by BP and the contractors. Alarm systems failed and had dead batteries/no batteries, dangerously high pressures over an hour before the explosion but no activation of the blowout preventer....

    This thing is a mile down and the physics of gas and oil flow are markedly different at those pressures.

    For those unfamiliar with the area, the gulf was a major fishing area until the spill but fishing is now prohibited in the spill area. The currents are carrying the oil along the coast towards areas whose economy relies on tourism but most tourists prefer to swim in salt water, not crude oil soup. If the spill continues the oil will hit the gulf stream and skirt the US east coast, destroying fisheries on the way, and head across the pond for Ireland.

    The lead US agency in this is the US Coast Guard. The senior USCG Flag officer in the area is RADM Mary Landry. Several years ago she was assigned to my area I met her numerous times. She is a very bright capable lady and a nice person. I feel sorry for her with this mess ending up on her plate. Note for those watching the press on this. Admiral Allen retired last week as head of the USCG and has been replaced by Admiral Papp so you will see a new name in press reports.

    Tip for Arrsers: When the oil shows up on British beaches, carry a small bottle of kerosene and paper towels for when the kids step on tar balls of crude, works quite well.

    editied to add: Every cloud has a silver lining for some. I fully expect that entire regiments of corporate lawyers will be racking up millions of billable hours on this for years. At least someone profits I guess.
  8. £10 billion probably isn't that much to BP. Moreover, any company per accountancy rules in addition to having to provide for cleanup costs over the life of their capital expenditure, can also make a charge against profit (depending on likelyhood) for contingencies such as this based on previous experience/likelyhood - similar to providing for warranty costs, and you can self insure etc. I'd be surprised if they hadn't covered all angles.
  9. seaweed

    seaweed LE Book Reviewer

    This is just noise from the terminally inadequate Obama who is talking tough in case anyone fingers him (as figurehead of the Federal Govt) with any responsibility.
  10. Markintime:
    Will this mark the end of BP and perhaps more pertinently, would he be so keen to push such crushing charges on a US owned oil company?

    Certainly hope not, like them or loath them, we really need them and their subsidiaries as employers and for the money and taxes they generate as well as the company taxes they pay.
  11. Seaweed
    I agree.
    Commei light Obhamamahama was all for offshore drilling then BP have megga problem and now wants to wash hands.

  12. He's a politician, with plenty of advice.
  13. On the TV news in the US the people of Louisiana certainly seem to blame him. You see signs outside stores "Out of Business thank BP & Obama" "Obama and BP are killing this town" etc.

    One of the problems is that if this was a hurricane or other natural disaster there would be FEMA funding available. For this sort of thing BP is liable and there will be a long wait for the fishermen, etc to get any reimbursement for lost income. Also, Obama flew in and talked with the leading officials etc and did not spend time meeting with fishermen etc who are the ones losing their shirts over this.
  14. I fully agree with the increase costs being raised to £10Bn, however I may get shot down here BUT BP's, and the third party contractor's contingencies were poor IMO & have dragged on far too long & were far too slow to react to such an incident, yet again poor judgement and ignorance may (subject to investigation) be a significant factor!

    Lessons from past incidents are still not being learn't even at this depth better equipment contingencies have failed which is unacceptable for such a large global company & hearing this flow will continue until Aug is frankly a disgrace.
  15. 'Fraid not.

    The way it works is that the operator (BP in this case) has responsibility for engineering design, and for specifying what contractors have to do. It seems that Transocean fulfilled their part of the deal in this respect.

    I believe that BP also implied that Cameron might have been at fault for the BOP they supplied, and that the company that did the cementing might have been at fault - there appears to be no evidence whatsoever to support BP's claims. BP were responsible for the well design, the operating procedures, and the crisis management and they, not the service companies, appear to be the ones at fault.