Note the fund is to be established over two years, through a combination of dividend cuts and reduction in spending. Moreover, a planned dividend payment for June 21 is being halted, which would appear to be a meaningful concession. From Bloomberg:
Svanberg and Chief Executive Officer Tony Hayward agreed to set aside $20 billion over several years to compensate victims of the spill after Obama in an Oval Office address yesterday called for creation of a fund. BP said it will reduce capital expenditure and sell more assets than planned to free up cash.
“The dividend is off the table,” said Alastair Syme, an oil and gas analyst at Nomura Holdings Inc. in London, before the announcement. “Until they have some clarity on the costs of the spill, they can’t do anything.”
BP’s payments accounted for about 14 percent of all dividends in the U.K.’s benchmark FTSE 100 stock index last year. Fitch Ratings yesterday lowered BP’s credit score by six grades to BBB, two levels above junk, on concern costs will escalate.
President Obama deemed the meeting to be “constructive” and stressed that the $20 billion set-asde was not a maximum payout and that BP would be responsible for all costs, including environmental damage. (Hhm, what might the loss of the brown pelican, if it comes to that, be worth?)
The fund will be “independently” administered by Kenneth Feinberg, who was in charge of overseeing executive compensation for the TARP (aside: he has gotten himself in the midst of particularly politicized and thankless tasks. He also administered the process of compensating 9/11 victims). The administration of the fund had been a bone of contention.
The Wall Street Journal reports that BP “voluntarily” agreed to set aside an additional $100 million to compensate Gulf workers idled by the moratorium on deep sea drilling.
As we noted via links in Links today, credit concerns about the oil company have escalated. Credit default swaps prices on BP have an implied default risk of 35%, and at least one counterparty. Bank of America, is not willing to take on BP oil contract risk further out than one year.
Update: This comment came via e-mail from former oil industry employee Glenn Stehle:
The outcome of Obama’s meeting with BP was an incredible disappointment. After all the tough talk, the end result is that Obama came away with what the little boy shot at.
According to the NY Times, “the oil giant will create a $20 billion fund to pay claims.”
But here’s the kicker: the preliminary terms of Obama’s agreement with BP “would give BP several years to deposit the full amount into the fund so it could better manage cash flow, maintain its financial viability and not scare off investors.”
So BP is allowed to live while the Gulf dies.
The tragedy is that the people on the front lines of this battle don’t need money and resources in a month, or six months, or in “several” years. They need the resources now.
Could St. Bernard Parish President Craig Taffaro have made it any clearer? “Just like he [Obama] referred to WWII and putting a man on the moon, those operations were successful because there were equipment and resources provided to make those missions successful,” Taffaro spelled it out for the President. “That’s what we need here in the Gulf Coast Region, enough resources and assets so that we can make this a successful fight against this oil spill.”
But BP, a company who generated $27.7 billion in cash last year and paid out $10.5 billion in dividends, is allowed to diddle, given years to come up with $20 billion.
“Let’s get serious about this,” Tony Kennon, Mayor of Orange Beach, Alabama pleaded. “I feel like sometimes we’re in the Land of Oz. This is a catastrophe of Biblical proportions, and we’re acting like it’s an everyday, run-of-the-mill oil spill. It is time to attack the problem and fix it offshore.”
But apparently Obama learned nothing during his well-publicized tour of the Gulf Coast region yesterday. At least he didn’t listen to anything the guys in the trenches had to say. BP should “not be in a position where they can have power to veto anything,” Taffaro counseled. The government “should be able to force the issue here, and that’s where the breakdown has come in.”
“As we noted via links in Links today, credit concerns about the oil company have escalated. Credit default swaps prices on BP have an implied default risk of 35%”
Contrast this with…
“BP will initially make payments of $3bn in Q3 of 2010 and $2bn in Q4 of 2010. These will be followed by a payment of $1.25bn per quarter”
And:
“BP’s Cash flows from operations expected to exceed $30bn in 2010 at current prices and margins…. $10bn of committed banking facilities”
I don’t think the CDS blow-out is going to impact BP too much.
I am telling ya, the option of simply buying out BP is becoming more and more attractive. It’s a bargain basement at market cap of $100-ish. Even after the huge clean up and liability cost.
They should just buy that sucker, fired and jailed all the pin heads and enjoy the oil and cash loot. Definitely worth more than GM and Fannie Mae.
I am telling ya, the option of simply buying out BP is becoming more and more attractive. It’s a bargain basement at market cap of $100-ish. Even after the huge clean up and liability cost.
They should just buy that sucker, fired and jailed all the pin heads and enjoy the oil and cash loot. Definitely worth more than GM and Fannie Mae.
Have Norway manage it.
Norwegians don’t seem to inspire fear in the West, even with a 500 billion SWF.
Peter,
Do you really believe that people are so uninformed that they don’t know that what you are peddling is untrue?
Do you really believe they never pick up a newspaper, never watch the evening news, never listen to the radio?
Just look at the video above of the Mayor of Orange Beach, Alabama or the President of St. Bernard Parish. This is just one of at least a hundred videos I’ve seen or news stories I’ve read over the last couple of months. And the lament is always the same. They’re pleading for the resources to fight this with. They’re pleading for Obama to get BP out of the loop.
And then there are all the senate and congressional hearings, the barrage of constituent complaints that have been voiced regarding inaction by BP. Are we supposed to take your word over theirs?
You have already demonstrated to my satisfaction that, at least when it comes to drilling operations, that you just make stuff up, and don’t have the slightest clue as to what you’re talking about.
So with me, you’re credibility is already zero.
And then you tell us all this stuff, exactly the opposite of what we’re hearing from the people on the ground on the Gulf Coast, and think somebody’s going to believe you?
Personally, I have to wonder if you’re playing with a full deck.
Peter’s comments have been very consistent. He has been trying, ever so hard, to come up with a reasonable justification for his pre-existing views. These views obviously existed not just before the facts emerged but before the spill even started. He has jumped around, again and again, trying to justify with new theories this pre-existing view, shaping ever so slightly with each new slapdown of his tortured logic, to no avail. I doubt it will stop with any avalanche of facts and logic you set before him. He has his mind made up. He *had* his mind made up. There is no room for cognitive dissonance. There is only one right answer. There is only the waiting until he finds the reason for that answer.
No worries… the oil is just resting below the surface.
> Where’s The Oil? Your Government Doesn’t Really Know
Defining the plume will only tell a small piece of what’s going on here, though. As for the larger questions of what will happen to the plume, how far it will drift, and what effect it might have on life in the deep, assuming it is in fact oil? “I don’t know,” says [Vernon Asper, an oceanographer with the NIUST team], “I just don’t know. But that’s why we’re here.”
In a manner of speaking, the team had struck oil, or at least that was the best guess. Both the transmissometer, which measures particle levels, and the fluorometer, which detects dissolved oil (see previous posts), were showing very large concentrations of something at about 1,000 metres down, something we had not seen anywhere else.
The Great Beyond: Oil spill science: The smoking gun
“That, my friend, is the smoking gun,” says Vernon Asper, an oceanographer on the team, “We’ve got to home in on this. You never see signals like that in the open ocean.”
Eventually the team found that farther away from ground zero the layer was lower — in the 1,100 to 1,400 metre range. This might show the oil, likely aggregated with plankton and other organic material, is settling out over time.
In most places, the oil has taken on a stringy form beneath the surface, but there are floating bands of dark brown in places. Diercks simply dragged a bucket through one of these to get samples of what looked and smelled like pure crude oil.
==> Over the weekend, a research crew from the University of Southern Mississippi found evidence that there are 3 to 5 plumes… About 5 miles wide, 10 miles long and 3 hundred feet in depth.
Vernon Asper | Antemedius
But after giving that information to the press, the lead researcher now says he has been asked by the federal government… Which funds his research… To quit giving interviews until further testing is done.
==> That may explain the massive amount of data drift on the surface!!
Tracking the Gulf oil disaster – CNN.com
There’s oil in them waves!.. :)
Seriously, the government estimates between 64 and 118 million gallons of oil to have spilled so far. You can easily double that by the time the relief wells are completed. At fines of up to $1,100 under the Clean Water Act for each barrel of oil spilled, BP is on hook for a lot of dough. A lot more than 20 billion.
Vinny
I am down in Florida and none of it is hitting here. Sounds like the spill is being contained. In the end, yawn. Damaging, but repairable. More media hype than anything else.
Well, I would say that three to five plumes of oil, each 9-10 million acre feet, which are submerged several thousand feet and therefore invisible from shore, could present some type of as yet unknown hazard to some forms of life.
My friend, the relief wells aren’t going to be completed until August, at the earliest. Until then, oil will continue to be gushing out.
I don’t think Florida is out of the woods yet.
Vinny
Surely, you jest!
Re: More media hype than anything else.
While I agree with you about the media hype (as I live in CaLi I know the oil slick will never get here).
I’m also sure that the people at the rear of the Titanic said exactly the same thing. One of the great things I’ve learn to love about American is how much we really don’t care about each other.
Well, according to the wildlife experts and biologists from Duke who are monitoring this, sea creatures, birds and other mammals are fleeing the oil spill and gathering near the coast of Florida, trying to escape BP’s mess.
http://news.yahoo.com/s/ap/20100616/ap_on_re_us/us_gulf_oil_spill_marine_life_2
It is outrageous that these scoundrels are getting away with this, ruining people’s lives and surroundings, poisoning the waters and maybe even rendering some species extinct. This is criminal and is just thrown on top of the other criminal activities that continue to go unpunished.
Rage got a condo to rent?
Daytona Beach and much of the East Coast of Florida are probably safe for now.
Obama: “…BP would be responsible for all costs, including environmental damage.”
Yves: “…what might the loss of the brown pelican, if it comes to that, be worth?”
You said it Yves. What presumptuous asses these corporatists are, waving their price guns at priceless treasures without understanding the real value of anything. For not even two fiscal quarters’ profits, Obama ensures the survival of BP and Tony Haywire, but for how many people, creatures, habitats, and beautiful places will this be an extinction event, now and over decades? The damage is incalculable; costs cannot ever be paid by BP.
“…what might the loss of the brown pelican, if it comes to that, be worth?”
That’s easy. If it tastes like chicken, I’d say at least 50 bucks. But if it has that nasty fishy taste, no more than 20 bucks. For the entire species, of course :)
Vinny
“For not even two fiscal quarters’ profits, Obama ensures the survival of BP….”
Almost unbelievable is how explicit Obama is in stating where his priorities lie:
“BP is a strong and viable company, and it is in all of our interests that it remain so,” President Obama said in his news conference after the meeting.
http://www.google.com.mx/#hl=es&rlz=1R2ACAW_es&q=Obama+BP+Oil+Spill+Speech+Video%3A+Address+after+Meeting+with+BP+…+&aq=f&aqi=&aql=&oq=&gs_rfai=&fp=19e23926c4442d42
Better a slave than a corpse, for obvious reasons.
To clarify: a ‘dead’ BP is a liability: a living BP will continue to make money, so as to pay the damages.
That they may be somewhat…restricted…in their finacial operations is not a matter of great concern, right now, to most Americans.
Let me play devil’s advocate. That sort of reasoning is the favorite refuge of corporate miscreants.
BP relies heavily on contracted workers and subcontractors. Its assets are primarily oil and gas fields that are either currently producing or to be developed.
If BP were to be liquidated, its assets and workers would move to companies that were more competent and more attentive to risk management. Its operations are unlikely to be halted; they would likely be put into receivership and sold, or the liabilities would be restructured, with high odds that new management would be installed.
This “alive is better than dead” argument is questionable when you look at what it means in practical terms.
There’s some truth in this logic. But I don’t think it’s quite as simple as that.
Before BP merged with Amoco/Arco it did not have the list of safety breaches it does today. BP – in spite of ownership – have attempted to improve safety but reeling in managers is not always that easy.
Additionally the very existence of the use of contracted workers – who have limited liability vs BP – surely encourages risk to take place amongst the workers… since at the end of the day it’s not them or even their company that would pay for the liabilities.
FInally there is the thorny issue if the US were just to appropriate BP’s assets how geopolitically this would play out. BP p.l.c is after it is still incorporated in the UK.
Peter,
With all due respect, you have the point re contracted workers completely backwards. Their incentives ALL point towards greater concern with safety, first and foremost to preserve their own life and limb. And their economic incentives (which I would think in pretty much all cases is secondary to their survival) also argues for more care, since that would lengthen the amount of hours worked.
I don’t think all ‘workers’ are directly in the line of fire so to speak when it comes to safety.
It’s again a fair point about there being an incentive for the contracted companies that employ to push for more safety measures because it takes them more billable hours. But not the employees themselves who are not all paid by the hour.
Also to consider:
1) People aren’t always motivated by money just to work; particularly intellectual jobs (http://www.youtube.com/watch?v=u6XAPnuFjJc&playnext_from=TL&videos=WTgrWDPPvg8).
2) With the contracting disconnect your entire company doesn’t go down the pan if there’s a safety breach. You won’t loose your job; you know there’ll be another client…
3) You’re more likely to just blindly follow orders if you as an individual and your company have no equity-stake (which is much about feeling part of an organisation as it is about money) in the outcome.
Peter,
Do you always take the truth and turn it on its head?
It was Halliburton, a contractor, who wanted to run more centalizers.
It was Schlumberger, a contractor, who wanted to run the cement bond log.
It was TransOcean, a contractor, who protested displacing the hole with seawater after the negative test failed.
And those eleven men who were killed? They were all contractors.
Firstly it’s important to state that it’s only according to the people from those companies – who want to save their own skin – that they requested these things. Such statements have not been corroborated.
My point is that communication and particularly communication about safety vs profit may very well be treated differently in a vertically integrated operation.
To make this point… lets imagine that those points you state were made. At the end of the day a contractor is just a contractor. There is an attitude in that the ‘client is always right’; you do what you’re told and yes there are always other clients so if a client is suggesting something you disagree with well they can lie in that mistake, you’re more likely to just go along with it, you don’t have any stake in the success of the company, the entire enterprise as a whole.
In a vertically integrated organisation there are many more lines of communication if a manager is doing something you don’t agree with. You could seek to speak to their manager and so forth.
These lines of communication simply don’t exist in the same direct way when organisations are split up into separate companies each contracted to do different jobs. The contractor reports to their boss at their own company. If they felt a directive was massively wrong they would first have to go to their manager who then MIGHT (only might) have access to more senior people with the client; but more than likely they don’t even know who their client’s manager is.
The point is when you have lots of contractors it’s just a totally different dynamic within the organisation. And I see this as a contributing factor as much as anything to the accident.
If responsibility lies in one place you can’t have people blaming the ‘other’ place since it doesn’t exist.
All in all this is some departure from my original point… and that is that to think you can just transfer BP’s assets to a new owner and therefore consider safety to automatically improve is misguided.
“And those eleven men who were killed? They were all contractors.”
Yes they were. But not ALL contractors are in the line of fire. More to the point the individuals making decisions about issues like those you raise most generally are not so hands on and in physical danger. Engineers running computer simulations of devices and making design decisions could in theory be thousands of miles away from the actual rig.
Peter,
The persistence, the perverse distortions of logic and fact, and the one-sidedness of your remarks increasingly indicate that you are in the employ, most likely indirectly (as in through a PR firm) of BP.
The fact that BP did not bother cleaning up a culture of safety risks at Armco is irrelevant. Once the deal closed, Armco IS BP. Such fine parsings and dubious argument are not consistent with any objective reading of the facts.
Your argument about contractors is also bogus. The use of paid contractors and subcontractors is the norm in the private oil and gas industry. And has been noted here and elsewhere, BP had 97% of the US safety violations of the ENTIRE INDUSTRY. Others majors use subcontractors and have sound safety cultures. BP doesn’t, despite your persistent efforts to introduce spurious issues and arguments.
“Firstly it’s important to state that it’s only according to the people from those companies – who want to save their own skin – that they requested these things. Such statements have not been corroborated.”
Those statements were made either before senate and congressional hearings or before the Coast Guard investigative panel. They were made under oath with penalty of perjury. In the United States lying under oath is a criminal offense.
Peter, why do you keep making things up?
Glenn I said they had not been ‘corroborated’. Many witnesses have lied under oath before.
Yves I was asked (far more politely I hasten to add) on FTalphaville whether or not I was an employee (either directly or indirectly) of BP. I can only deny that as emphatically here as I did there. No I am absolutely not. (But tbh I’m quite flattered actually that both you and Neil Hume thought I might be!).
But well I’ve been called a liar here now so what can I say! Any effort to refute it with words is worthless… clearly.
“The fact that BP did not bother cleaning up a culture of safety risks at Armco is irrelevant. Once the deal closed, Armco IS BP.”
I believe it is relevant:
1) In countering your point that BP’s ownership could simply be transferred and this would somehow make things right. Ownership is one thing. Changing the management and the structure of an organisation to ensure safety is quite another.
2) As something to bare in mind whenever BP is incorrectly referred to as British Petroleum.
“Your argument about contractors is also bogus. The use of paid contractors and subcontractors is the norm in the private oil and gas industry. And has been noted here and elsewhere, BP had 97% of the US safety violations of the ENTIRE INDUSTRY. Others majors use subcontractors and have sound safety cultures. BP doesn’t, despite your persistent efforts to introduce spurious issues and arguments.”
BP has acknowledged it has had past safety issues and events that it regrets. Up until this accident it was one of Hayward’s major drives to improve safety at BP and it still is.
Furthermore in the hearing today it was apparent that other organisations absolutely did not have sound safety cultures. They were invited to submit plans outlining their response to a similar disaster. The submitted plans were ridiculed.
Also what is in interesting there is you have said 97% of US safety violations of the ENTIRE INDUSTRY when you meant US safety violations of the ENTIRE INDUSTRY in the United States. So again I reiterate yes safety was a problem inherited from the merger.
Peter,
And while we’re talking about communications in vertically integrated companies like BP, let me just state that there is no way on God’s green earth that BP’s lowly company man out on the rig made those fateful decisions on the day of the blowout.
To begin with, if the company man had been around a drilling rig for any time at all, he could not have been that stupid. Furthermore, you can damned well bet that the toolpushers, drillers and roughnecks knew they were on a fool’s mission and let him have it with both barrles.
No, those decisions were made by someone several command levels above the company man, by someone who had obtained an executive-level position but without the benefit of any hands-on experience, and someone who refused to listen to those under his command. We’ve all experienced the type.
As far as those eleven men who died, I think Tennyson put it best:
Not tho’ the soldier knew
Some one had blunder’d:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do & die.
Peter,
Your comment above is yet another example of disingenuos, dubious argumentation.
Have your provided any evidence of your claim that BP’s record is better outside the US? It’s so awful here that it’s unlikely to be as horrid, but you have supplied nothing to support your assertion that they are a better operator in other markets.
And your argument re Amoco and Arco are stunningly dishonest. Amoco was acquired in 1998, Arco in 1999. You are SERIOUSLY trying to persuade us that BP’s woes are due to a decade old deal? M&A 101 is that the acquirer puts its management in key positions and reshapes the organization in its old mold. There is no excuse for the persistence of a sloppy safety culture after a full decade of ownership. In fact, if that IS the reason for BP’s tsuris, as you suggest, that is prima facie evidence that the assets would be better off in other hands.
I disagree. The damage BP has already done and is continuing to do to the environment and to all life, including human, is beyond what they can ever pay. Yet, they get a pass because somehow their viability as a company is somehow more important than everything else.
It’s not even a surprising view of things. It’s completly withing capitalist logic. Profits are more important than lives.
What an enlightening thread, Yves. Alas, for Peter, there proved sufficient slack for a rather strong noose :-)
One or two more reply tiers to better target responses would make it even better.
In Ayn-Rand denial, Peter writes: “Ownership is one thing. Changing the management and the structure of an organisation to ensure safety is quite another.”
Say what? Taking note of your British spelling, those are the words of an aristocrat, reminiscent of dialog in “Dangerous Liaisons”. After inflicting grevious sorrow on the heart and life of another, John Malkovich delivered his lines with masterful ice (paraphrased), “I am truly sorry … but it is entirely beyond my control.”
As with serial violations of law in coal mining, BP has eight times (800%) greater serious violations than the second worst oil co., and yours is a glaring example of buck-passing, limited-liability corporate licentiousness that elite criminals use to immunize themselves from their reckless, deadly avarice and rise above the rule of law. It is weasel logic that doesn’t work anymore. Even some of the emperors’s tailors are admitting that their fabrications are diaphanous.
Of course you have made an airtight case here for Yves’ virtual guillotine. If current management cannot change the culture of recklessness within the org, it’s time for leadership that can. Take receivership, humanely decapitate current heads and establish competent management. Human society and the larger web of life can no tolerate the life-and-limb sacrifice. Please, let’s not continue pushing this crap until the only remedy is a steel guillotine.
Just like the TBTF banks are a slave to us?
I’m with you exactly, Glenn: This was Obama’s rescue OF BP, it’s that simple. He told them they had to get money out front under the public’s nose, and show an ‘action plan’ capbale of walling their share price off from impending legislation. I’ve read that that [phoney] $20B is in fact being phased in over _four years_, at $5B a year, which is ridiculous. BP is going to see $5B in claims in before this year is out. BP also managed to jawbone the Invertebrate in Chief into taking a ‘capped payment’ for the losses which other oil firms are taking for the government suspend-work order.
—But none of those are the worst part. Obama sat down _personally_ to negotiate this deal. Stop and think about that: Barack Obama designated the CEO of BP as a ‘peer of state’ by giving him face time and allowing him to plead his case directly. That’s abominible. Our President is now reduced to a Mr. Fixer shyster cutting a deal. It should have been the President announcing the parameters of a solution with someone several paygrades lower then doing the actual dealing. Obama’s equating himself with a slick deal cutter or equivalently the Chairman of BP as a sovereign state is a complete disgrace, and illustrates again that he is, personally, a naif who has no comprehension of the role of his office or his responsibilities as the executive of a sovereign nation. He’s a hired lawyer, that’s it. That says a great deal about why his performance is so shamefully weak: Obama has no idea of what a public executive does.
Even the BP brass’ “perp walk” through the gauntlet of press to the WH “wood-shed” (normally underground) reeks of stagecraft for the unwashed.
“It riles them to believe that you perceive the web they weave.”
Richard Kline,
Thanks. I had not thought of that angle.
I believe, however, that the oil spill may be Obama’s Waterloo.
In a nation where barely half the population has sufficient mathematical skills to balance a checkbook, it was easy for Obama to hoodwink enough of the public on the bank bailout. The only palpable metric the people had to latch onto was unemployment.
But with the oil spill people are being bombarded with these images of ruined beaches and marshes, oil coated birds and massive fish kills. These are concrete, tangible images, not abstract figures like $700 billion for TARP that Team Obama can befuddle the public with.
Think of the photos, most notably the one by Huyung Cong “Nick” Ut, that exposed all the lies and propaganda issuing from the Jonson administration, and eventually turned the public against the Vietnam war.
http://www.quesabesde.com/noticias/nick-ut-con-texto-fotografico,1_6452
I’d also add that I believe the Bush and Obama administrations learned the lessons from Vietnam and have done a much better job of limiting access by photographers of integrity to combat areas.
So Glenn, it’s my hope that the Blob so engulfs Obama’s political credit they he doesn’t run again. Probably a vain hope, but it’s hard to gauge just how bad this thing is going to get. The reports on a 40% methene value in the gusher are extremely disturbing, for example. We don’t need more of Barack Obama; I can hardly believe we have another two and a half years of him as it is. But you hear a radical talking here who never drank his cool-aide.
Great update by Glenn Stehle. Obama never misses an opportunity to miss an opportunity. Incredibly, each and every single time he’s faced a crisis and gets the ball, he throws it away or scores for the opposition. Be it the financial crisis, financial regulation, foreclosures, wealthcare reform, war, Iran, Israeli piracy, or ecological disaster, he immediately caves to TPTB. He no longer deserves the benefit of any doubt from progressives.
Doug,
Maybe you’ve misunderstood which team Obama is on?
So Doug, Obama _works_ for the opposition. Now, look at the picutre again. Game plan, on target.
Still hard to grasp. Are you going to believe Obama or your own lying eyes. Say it ain’t so!
Old news, but good FYI:
> “Scientists fear the ecological damage could be worse from the oil hidden underwater than the slicks of oil visible at the surface.
Researchers first discovered the plumes in early May, but federal officials only Tuesday confirmed their existence. Officials with BP, the company responsible for the spill, said last week the plumes don’t exist.
The plumes are not just oil, but a mixture of oil, methane and other organic chemicals suspended in sea water.
Joye’s team measured methane levels in some places at 10,000 times what normal ocean water would contain.
“I’ve never seen methane concentration this high anywhere in the water,” she said.
The oil is likely to slosh around in the Gulf of Mexico for a long time, swirled around by ocean currents, she said.
“It’s not a closed body of water, but it’s an isolated body of water,” she said.
Chemical dispersants added by BP have helped keep oil underwater.
“The whole goal of adding dispersants (in deep water) was to keep the oil under water, which seems to be working,” she said.
But much would have remained underwater anyway – and some of it could stay there a long time, too, Joye said. The mixing rate – the time it takes for bottom water to reach the surface and vice versa -in the Gulf is about 175 years, she said.”
http://onlineathens.com/stories/060910/new_650789974.shtml
IMHO, I think this 20 billion fund is a good start. It won’t be nearly enough to undo the damage to the Gulf area, but nonetheless, 20 billion is a nice chunk of change for any greedy corporation to take notice.
However, we unfortunately, haven’t been told the details of the so-called “negotiations” that took place at the White House. Call me cynical, call me suspicious, but I’m just past the point in life to get excited at 5-word-or-less sound bites. So, we need to know exactly how much did Mr. Obama give away to BP in order to be allowed to claim this saving-face “victory”. Did Obama promise to renew BP’s $2.5 billion a year Department of Defense contract with BP? What else could have he promised them in order to keep them in business long enough to pay these “reparations”? Is this yet another scam and ploy to defraud the American people of their treasury and send it overseas to… gosh, I love to say this.. a greedy, FOREIGN, criminal corporation? Is this the newest incarnation of the TARP scam? I think these are valid questions.
Until I am convinced that Mr. Obama did not do any of the above, I don’t even promise him half of my vote next time he gets in line, leave alone a whole vote. So we still need answers. Clear, logical, unemotional, no BS/BP type of answers.
Bottom line. We, The Chumps, need continued and sustained REAL reporting here on this issue. We need to see the details of this “agreement”. We need superb bloggers like Yves Smith to continue to dig for the truth.
So far, thank you Yves for a job well done. We continue to rely on you.
Vinny
AS far as the $20 Billion fund, will this be used to gather up the oil plumes, or will BP walk away from this too?
Re: “3 to 5 plumes… About 5 miles wide, 10 miles long and 3 hundred feet in depth.”
> Will BP be forced to collect this mess ASAP, before this stuff gets tossed on Florida beaches durning hurricane season — or is this just one of those issues to not discuss?
shorter BP: what plumes?
Glenn appears to have missed the fact…
“Until $20 billion has been added to the fund, BP’s commitments will be assured by the setting aside of U.S. assets with a value of $20 billion, the company said.”
I see you have fallen for the BP con. And worse, your past comments on this very topic suggest you should know better.
BP before made statements to the effect that the entire company stood behind its US obligations and would make good on the Gulf damages.
If that were the case, it could fund the full amount NOW by drawing down on its credit lines.
Oh, but those are likely not at the US level, and the banks could look to non-US operations for repayment.
And securing it with ONLY US assets may be an intent to vitiate Obama’s big threat, that of stripping BP of its US leases and government contracts.
Citi has said that the US legal entities include foreign assets and enjoy parent guarantees, and hence are not easily segregated. But this bit of footwork suggests BP is trying to limit liability to the rig and US domiciled assets.
If you look only at all legitimate claims why would the escrow account need to be $20B immediately? The money is not going to be spent that quickly.
Why then would you pointlessly pressure and squeeze BP to unnecessarily stump up the money immediately at what would be punitive interest rates given the turbulence in the markets?
I mean what do you actually accomplish – apart from ‘punishing’ someone you don’t like – by doing that? It seems like a rather vindictive act against an organisation who has promised to make good, and promised to pay all legitimate claims.
Good-point about it being only US assets. Another reason why all ‘bankruptcy’ stories are scurrilous rumor-mongering.
Peter,
If the US production company is indeed incorporated in the US, it is not beyond the reach of US bankruptcy law, regardless of how far flung its assets are. Enforcing any guarantees by the parent (which presumably is subject to UK law) would require pursuing the matter in UK courts.
BTW, under UK law, there is tremendous pressure on directors to put companies into bankruptcy. If they are found to be “trading insolvent” the directors are PERSONALLY liable. I suggest you get up to speed on the basics before offering opinions.
As for the reason to have BP stump up the money now, it is common for companies facing large liabilities to move assets out of the entities at risk and drain cash. As law professor and criminologist Bill Black argued in the New York Times:
The fundamental truth of litigation is that it does little good to eventually win a legal claim for damages or restitution if you cannot collect on the claim. If the corporation puts assets out of the reach of the U.S., the citizens will lose.
Dividends not only put money out of the reach of the U.S., but also reward the people most responsible for causing the damage. BP’s officers and employees, in their capacity as shareholders, are the most obvious example of this, but shareholders are also responsible as owners of the corporation. The deal shareholders make when they invest is that if the corporation cannot pay its debts to creditors the shareholders get nothing.
BP could be insolvent if it is held responsible for the tremendous damages it has caused. The U.S. should not have to tell BP not to pay dividends (or senior executive bonuses). Of course, if BP acted prudently it would not have a horrific record of regulatory violations, several of which led to multiple deaths. It is no surprise that BP intends to pay dividends and bonuses. But any smart huge, unsecured creditor of BP should act to protect its ability to recover damages by suing to block the dividend payment. This is not “socialism” or government putting its boot on BP’s neck — this is a question of competence as creditor.
http://roomfordebate.blogs.nytimes.com/2010/06/10/can-the-u-s-punish-bps-shareholders/?scp=1&sq=%22william%20k.%20black%22%20bp&st=cse#william
I think the UK courts are more likely to see it is as a liquidity problem inflicted upon them by the US than a case of Directors ‘trading insolvent’ – which in itself would be quite a feat considering BP’s assets.
The UK PM has already stated his concerns about the US chasing BP for damages three and four times removed from the event; so again I don’t think they would be that sympathetic to the US were they pushing BP to pay for some real estate deal that was postponed in Louisiana because of the hyperbole the media are pumping about miles of beaches apparently coated with oil.
(http://ht.ly/1Y9St — blue lines indicate no oil observed).
BP have promised time and time again to do the right thing and make good. Their actions so far 100% support this:
* BP has not denied a single claim to date.
* $91m worth of claims have been paid.
* Avg 4 days from receiving call to delivering check to individuals. 6 days for businesses making claim under $5k
* Large claims process ($5k) was accelerated recently; (90% paid as of 15 June)
* $50M already granted to the three states for tourism.
* All of their share of the revenue from Maconda to be put in a wildlife fund for the states.
* Very quickly agreed on their own initiative not to be limited by the Oil Pollution Act limited liability.
* $360M put in escrow for Louisiana barrier.
* $500 Million pledged for Independent Research into Impact of Spill on Marine Environment
So why not at least give them the chance to continue making good before treating them as untrustworthy enemies? We’re civilised people are we not?
Peter,
Do you really believe that people are so uninformed that they don’t know that what you are peddling is untrue?
Do you really believe they never pick up a newspaper, never watch the evening news, never listen to the radio?
Just look at the video above of the Mayor of Orange Beach, Alabama or the President of St. Bernard Parish. This is just one of at least a hundred videos I’ve seen or news stories I’ve read over the last couple of months. And the lament is always the same. They’re pleading for the resources to fight this with. They’re pleading for Obama to get BP out of the loop.
And then there are all the senate and congressional hearings, the barrage of constituent complaints that have been voiced regarding inaction by BP. Are we supposed to take your word over theirs?
You have already demonstrated to my satisfaction that, at least when it comes to drilling operations, that you just make stuff up, and don’t have the slightest clue as to what you’re talking about.
So with me, you’re credibility is already zero.
And then you tell us all this stuff, exactly the opposite of what we’re hearing from the people on the ground on the Gulf Coast, and think somebody’s going to believe you?
Timmy,
You’re another one like Peter above that lives in your own little make-believe fantasy world.
BP produces maybe 1% of the world’s oil.
The US consumes 25% of the world’s oil.
BP’s overnight disappearance wouldn’t even cause the United States to blink.
Glenn,
I’ve had quite a few personal attacks on this thread and it’s a little sad because I think it’s best just to stick to the discussion. Readers can make their own decisions about what kind of person they think is writing rather than have it made for them, no?
But finally really this has trumped all previous personal attacks. Rather than defend my arguments intellectually you’ve resorted to simply calling me a liar.
Frankly to me that sounds an awful lot like someone confronted with the truth.
The map I gave you a link to is actually on a government domain (http://www.geoplatform.gov/gulfresponse/); so the government no doubt are lying too… pushing out false statistics?
But then if the government are liars and BP are liars and the people want them to ‘get out of the way’ well heck all in all it sounds like you’d quite like mob rule to clean up the accident.
If this were to happen you could rapidly find that without a considerate, managed and coordinated response people could do more harm to the environment building great dams and the like preventing oil reaching it than the oil will do itself.
Anyway if readers really do believe my list of bullet points there stating factually just some of what BP has done thus far to clean up the accident are just flat out lies then please call:
* Louisiana State University who has received $5 million
* Florida Institute of Oceanography (FIO) who have received $10 million already
* Northern Gulf Institute (NGI), a consortium led by Mississippi State University (NGI) who have received $10 million already.
* Contact representatives of the gulf states and ask them to confirm or deny that BP are just flat out lying when they say they’ve already made two payments of $25M to the guld states (one on 10 June and one of the 17 May).
(But indeed even though BP never provided this money those states are nonetheless offering money-back guarantees to tourists to come to their beaches — because the tourists are rightfully under the false impression that the majority of them (even in Florida) are covered in oil given the cropped and edited accounts that some news outlets that survive on sensationalism provide!)
Further Glen please provide:
* Web links to reputable sources of what must be at least a few accountants (given I stated not one has been denied) from people who had their claims denied by BP.
Anyway. Good night.
On a personal note; since we’ve become personal. I enjoyed this sites coverage of the financial crisis and shared the best articles with colleagues; but regarding BP it has for me lost a lot of credibility.
Yves energy is nothing short of amazing. But again it really disappoints me the way she has responded to commenters like myself who take a different view from her with personal attacks. Her arguments are often razor-sharp and compelling on their own. But they often start with unnecessarily attacking and personal put-downs.
More and more you get the feeling you don’t want to encourage measured debate, looking at both sides of a story on this site.
For me this it is very much through debate and looking at all angels and perspectives of an argument how you ultimately get to the truth.
Peter,
The more you write, the more it resembles unadulterated flackdom. No disinterested party would make such a patently untrue statement as “BP have promised time and time again to do the right thing and make good. Their actions so far 100% support this.”
They DIDN”T promise to do the right thing until the wrath of the Administration was brought to bear on them.
They did not even begin to boom properly, the first line of defense, and had to be pressured to accelerate their recovery efforts
What is the source for your list? It appears to come from BP, and thus needs independent verification. For instance, your point re insurance claims is subject to further scrutiny. What does “deny” mean? BP is no doubt rejecting claims for insufficient documentation. How often in that happening? How reasonable are their standards? Without knowing the full facts, all we have is a BP assertion.
“Very quickly agreed on their own initiative not to be limited by the Oil Pollution Act limited liability,” is superceded by any successful criminal prosecution, so this was merely a PR move.
“All of their share of the revenue from Maconda to be put in a wildlife fund for the states” is not consistent with other press reports, which say that the revenue from the recovery is going to the fund, as opposed to any future revenues from production from the field.
This report is from one of my contacts on the Alabama coast. This is decidedly a mixed reading:
would argue that so far, so good on the attempts at keeping the local economy going. I have a small boat company that I created in 09′. I rep a very nice Rhode Island built yacht. I own one. We weren’t profitable in 09′ but it was our first year, and we did greatly offset the cost of owning such a boat. It is, however, a commercial venture, and I, yesterday, submitted a claim with BP, because I wll certainly NOT be able to generate ANY revenue this year, as the boat is high and dry and unable to move from the marina. So, BP did call within 6 hours of my claim going in, but the woman was a “personal property” rep, and said she would forward my claim to the business section. I haven’t heard from them since, and it has been about 26 hours since the first call. The claims rep didn’t speak very good english, and didn’t have any of the data that I had inputted. She didn’t know my name, or that I was a commercial claim. Kind of like calling Microsoft – in India.
Are they doing all they can? Hardly. They have just recently, like within a week, requested foreign oil skimmers to come here. They should have been called day two. You could walk here in 60 days. Why have they waited until now to request same. Keep in mind, most commercial vessels (read oil skimmers) travel at about 7-10 knots (less than 15 mph). So it is going to take a while to get here. They knew how much oil was coming out day one. They have lied their ass off about same (sounds like AIG). They have pissed away a lot of opportunity hoping that their cheaper alternatives “top kill” and “top hat” would work. They didn’t, so now they are bringing in real rescue equipment. Obama is finally “standing up on his hind legs” (deep south saying) and BP is getting a little more serious about cleanup, but it is ugly here. The environment is getting fragged on a daily basis, and the ability to save the most remote and inland estuaries is looking grim.
And you happen to be incorrect on UK bankruptcy law, at least based on advice received by colleagues of mine from the UK firm Freshfields.
If the US operations were to need to invoke the parent guarantees to cover US liabilities, and the parent refused, that ALONE is seen as evidence of insolvency.
Now they would no doubt instead seek to have the matter adjudicated, but for the courts to refuse to honor a guarantee would cast a pall over the standing of other guarantees issued by UK companies to subsidiary operations, and would thus be potentially a very dangerous precedent. This isn’t the slam dunk you suggest it is.
Peter,
Both Glenn and I have repeatedly rebutted your arguments. You continue to offer incomplete, inaccurate, unsupported, and often counterfactual assertions. So Glenn points out that your style of argumentation is intellectually dishonest. We repeatedly point to SPECIFIC information and sources, and we further point out that many of your arguments are spurious. So what if a site shows that a lot of beaches have not been hit? We are talking about the damage that has already occurred, and BTW, the beaches are only a small component of the total damage. And until the leak is halted, any discussion of the extent of the damage is premature.
So he calls you out on your style of argumentation and you now try playing victim. I’m not sympathetic, and I sincerely doubt that the vast majority of readers will be here either.
NC is known for attracting critical thinkers, but you choose to characterize the refusal to buy your one-sided story as bias. Good luck with that one. Looks like projection to me.
Peter,
As to your map, what is your point?
Here’s a similar map from the NY Times:
http://www.nytimes.com/interactive/2010/05/27/us/20100527-oil-landfall.html?ref=politics
And you’re blathering on about the “hyperbole the media are pumping about miles of beaches apparently coated with oil?”
Like I said, making the arguments you do in defiance of such overwhelming contradictory evidence leads me to believe you’re not playing with a full deck.
“style of argumentation”
I think it was more than style in which he called me out. He called me a liar.
“I sincerely doubt that the vast majority of readers will be here either.”
On this I agree. Clearly you don’t really tolerate opposing views on this site…
“it has been about 26 hours since the first call”
Right. Average claims dealt with in 4 days. So that is not surprising.
“They knew how much oil was coming out day one. ”
No they didn’t. And again I assume that when the government then took over issuing statistics but the numbers had to be revised… then it’s called a mistake rather than deliberate obstruction of the truth.
“We are talking about the damage that has already occurred, and BTW, the beaches are only a small component of the total damage. And until the leak is halted, any discussion of the extent of the damage is premature.”
I was making the point that if you were to just view say pictures only of the crisis on Reuters (who is not to say a first rate newsource) you might get the impression many more beaches were affected. Figures are presented in miles not as a percentage of miles used as beaches or indeed a map like this one which provides a terrific sense of scale and perspective.
“What is the source for your list? It appears to come from BP, and thus needs independent verification. ”
Yes it is from BP. And I agree it probably does need independent verification. I offered sources to your readers where they could obtain said verification.
“And you happen to be incorrect on UK bankruptcy law, at least based on advice received by colleagues of mine from the UK firm Freshfields.”
Jolly decent of them to give you advice at 3am in the morning UK time I must say.
“guarantees issued by UK companies to subsidiary operations, and would thus be potentially a very dangerous precedent”
If we’re talking about precedents it would also be a very bad precedent also not to allow the law to determine what is and what isn’t a legitimate legal claim. Similarly for a corporation to be working in US but have it’s ‘assets seized’ as some are calling for… again that would rather an awkward precedent.
As for no “disinterested party”.
Ultimately my only interest is a distant relative of mine was defeated defending New York from the militiamen. Once upon a time the colonies were also corporations of sorts…
Of course we only need to look at Cuba to see what happens if anyone has the gumption to seize a US corporation.
—
Thank you for your time. I’ve really enjoyed the challenging debate.
I hope my comments at least win you some attention from your viewers who might linger a while longer on this page and who knows perhaps click on a banner for “American Express” or “E*Trade” and earn a little something here and there…
So yes ultimately there is not doubt you win if not the argument at least in shear dollars earned for your efforts.
Although I would love to read your response if you have one I must say good-night.
Thank you again. It has been a pleasure. Although I really was shocked when I was called a liar.
Peter,
No, I am dedicated to the truth, but you decide instead decide to mischaracterize my arguments and now add to them snide personal attacks.
And you also distort what is said to you. Glenn did not call you a “liar”; that is your construction. Nor did I write anything that could remotely be construed to say I was in direct contact with Freshfields (I indicated my report came from a colleague who, to add some detail, has repeatedly had to resort to litigation under UK law, he sometimes does business with less than honorable people), but you choose to imply that I am fabricating things.
You ignore the more important part of the comment from the Gulf Coast, yet more confirmation of BP’s failures as far as mobilizing resources for damage prevention and remediation, and instead to parse the earlier part, which is inconclusive.
Yves Smith says:
June 17, 2010 at 12:43 am
Peter,
No, I am dedicated to the truth, but you decide instead decide to mischaracterize my arguments and now add to them snide personal attacks.
And you also distort what is said to you. Glenn did not call you a “liar”; that is your construction.
Just reading through the battle between Peter and you and Glenn, and this to say the least is a bit rich. You first suggest that Peter must be in the employ of a PR company shilling for BP, and now you have the chutzpah to plead against personal attacks?
And Glenn did not use the exact word liar, but I’m not sure how that’s different from stating that Peter is making untrue statements and simply makes stuff up. He may or may not be right, but it’s dishonest to say he’s not calling Peter a liar.
Glenn Stehle says:
June 16, 2010 at 10:44 pm
Peter,
Do you really believe that people are so uninformed that they don’t know that what you are peddling is untrue?
They don’t even need to use their credit line. If Obama is smart he will say. So you need money. I’ll give you a .5% discount from your current CDS rate in the market. (hey, you can’t afford that.)
Provide your collateral, sign here, and I’ll have bernanke print the funny money.
TAADAAA…. instant 10% interest income to tax payers, with backing of hard oil asset if BP fails their obligation.
I agree completely, Yves. Securing that four year fund with BP’s _American_ assets is a huge concession, and one that appears specifically designed, with Obama’s connivance, to wall of foreign assets from direct claims. This may be a concession to the UK government, but tell me again, WHY is the American President busy conceding _at the outset_ our leverage to the criminal plutocrat polluters who caused the problem. . . . Because Obama works for them, that’s why: he is the corporacrats ‘man on the inside.’
Watch what happens when a bunch of former British colonies take the UK to the ITLOS chamber for Marine Environment disputes. They’ll get a dozen executive BP heads on a platter right off the bat.
These fellas are gonna find out one of these days how to respect all of the SMALL PEOPLE that they, Tony and the rest of them see through their little squinty eyes.
Here’s the opportunity to put these guys on the long term track they should have been on all along by requiring they invest X% in new cleanup machinery and technology BEFORE they get one more contract.
But instead no doubt, Obama and the PTB criminals are more likely to have assured BP of deals to easily cover the clean up costs of this disaster for REAL PEOPLE unlike the twit masters of the universe who know nothing about running anything like a REAL BUSINESS, only deals and swindling Wall Street style.
some baby talk from the masters of the oil drilling universe: “”I’m so far unscathed,” he [Tony Hayward] told analysts in a recent conference call, referring to the general criticism … so sticks and stones can hurt your bones but words never break them, or whatever the expression is.””
The mining and related drilling industry has to be very concerned with this turn of events. The idea that the industry would be responsible for cleaning up environmental messes that exceed the liability cap has allowed a variety of small drillers to operate and larger companies haven’t had to think beyond 75 million, so now this event changes the status quo. Would not be surprised if we see the biggest players getting our of the drilling business and creating some kind of arms length relationship with small cap drillers or gets out of drilling all together since the risks far out way the reward.
What? Is there no such thing as insurance anymore?
But the mining industry is under some pressure oflate, as witness the brou-ha-ha over the proposed Australian mining “super-tax”:
http://www.smh.com.au/opinion/pm-does-his-bit-to-help-resources-industry-20100616-yggf.html
Interesting times.
Ooops wrong link:
http://www.smh.com.au/business/divide-and-rule-will-not-win-this-battle-20100616-ygf1.html
…is the better.
I trust that there is little debate that mining is a productive activity?
Obama is a kind of a political nursemaid. He can only serve to help minimize the psychological damage during the Great Reckoning. Any acceptable policy move will necessarily fail because the system itself has already failed. Obama has succeeded only in appointing women to the Supreme Court.
Americans need to boycott both Corporate parties, but unfortunately cowardice reigns even among those who see the corruption. This crisis is on every level — environmental, economic, political, psychological. We are on the edge of the abyss. Until the populace can conceive of bringing a third party forward, it will get worse. Eventually the drugs stop working, and the Asians start calling in their loans.
A timeline of the history of BP. BP is a ‘Capo di tutti capi’ in the corporate world. So many skeletons buried in so many countries.
http://www.billlucey.com/2010/06/key-dates-in-bps-101year-history.html#tp
Lets put emotions aside. How about derivatives? Is there a beneficiary of this tragic story?
Even with good will, compensation isn’t necessarily easy. There are, apparently, a few record-keeping problems down there on the Gulf coast, as the LA Times reports:
“The first step for a commercial fisherman or coastal business seeking compensation for losses suffered in the oil spill seems simple enough: Submit copies of a commercial fishing license, proof of residence and tax statements.
“But the request for tax records poses a serious challenge to some residents of close-knit fishing communities on the swampy edges of southeastern Louisiana, which for generations have harbored self-reliant nonconformists who don’t pay much heed to everyday rules and regulations.
“In other words, they often get paid in cash — and don’t always report it”.
Oh, dear.
http://www.latimes.com/news/nationworld/nation/la-na-oil-spill-claims-20100530,0,4758933.story
Since when does the United States negotiate on equal footing with foreign criminals? 20BB is not enough. I resent how British Petroleum framed this as a problem between equals, saying the US is a great country, BP is a great company, etc. Since when do we allow a foreign corporation to control media access to a disaster site on US soil, as per this NY times article. http://www.nytimes.com/2010/06/10/us/10access.html?src=tptw
Also, what if the well is not capped by August. Read the comment by dougr here,which Yves previously noted, which explains why the flow rate is getting worse.
http://www.theoildrum.com/node/6593#comment-648967
A well failure is similar to a dam failure, little trickles leading to spectacular gushers and structural collapse.
Simply stunning how telling it is we are owned by these corporate anarchists.
In other news…Italy’s economists have decided ‘austerity’ is not a good idea and believe the EU is close to oblivion.
‘The euro mutiny begins’
“The rebellion against the 1930s fiscal and monetary policies of the Euro-complex is gathering pace.
Il Sole has published a letter by 100 Italian economists warning that the austerity strategy imposed by Brussels/Frankfurt risks tipping Europe into a self-feeding downward spiral. Far from holding the eurozone together, it will cause weaker countries to be catapulted out of EMU. Others will leave in order to restore sovereign control over their central banks and unemployment policies.
At worst it will blow the EU apart, leading to the very acrimony that the European Project was supposed to prevent.”
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100006271/the-euro-mutiny-begins/
Everybody should check out BP’s 2009 20-F filing, which is available on their website. It makes for fascinating reading.
It’s a 200 page document, so I have only skimmed it, but two things stood out: (1) BP as currently constituted has a tremendous amount of U.S. exposre; and (2) the U.S. does not charge oil companies enough to extract our oil.
I looked at the filing to get an understanding of BP’s U.S. assets, and they are shockingly substantial. Based on my quick read, about 40-50% of BPs developed oil reserves are right here in the U.S. Then I saw on p. 20 how the unit cost of oil extracted from the U.S. ($7.26) is substantially less than that of Britain ($12.38), the “rest of Europe” ($10.72), and the “rest of North America” ($14.45).
Obama had a lot of leverage. I’m wondering how much of it he gave up to get the paltry $20B funded over several years.
No way man, if I am playing on BP side. This is my move.
– Threatened to sell all their chemical asset. Those are labor intensive and not making any money, Specially at oil such high price. (strike one, unemployment in key industrial category) And they have legitimate excuse too (we need the cash)
– Sell some of their oil wells to the chinese. You can imagine the fear that will give to the congress/dems. They can start with the one in canada (too expensive/cost too high and not making any money) than slowly move to inland and coastal. BP holds substantial leases in gulf of mexico.
– Cancel all military contracts/eg. jack up the price.
– start manipulating “gas price” at the station. That will destroy inflation number.
– selling/close down refinaries.
Bottom line. If BP is doing strategic attack. They won. (this not to mention they own republican party, deep south senators, and the entire oil states court system. They can do whatever they want down south.)
Timmy,
The US has barred the sale of strategic assets to the Chinese. Did you somehow miss that it blocked the sale of Unocal to CNOOC?
BP is only the #14 oil producer in the world, plus you often can’t shut down wells without affecting their long term production (ie you might damage the resource).
They wouldn’t know what strategic or what not. Unless it’s very obvious like “entire company”, the public wouldn’t understand key industrial intermediate product from a steak sandwich. I am sure the lawyer can carve out their US properties and pint point several assets that can used for bargain point. (you fuck with us, 5% of your industrial output is offline.)
petroleum and chemical supply chain for specialized chemicals and military supply are very fine tuned. One missing key or off line, price explodes. Each product usually is controlled by one or two companies. Oil and Chemical industry is the original “too big to fail” industry. Even minor thing like shutting down trucking from refineries to gas station can shut down a big city within 20 hours.
Enron made money jacking up gas price simply by playing the transmission valves.
I am pretty sure BP/Amoco control key product streams here and there that can shut down important activities.
BP is also a big international conglomerate, they can play their global asset to enhance their bargaining. (South korea shipping yard order, Russia-China gas price, bribing african officials to shut down the other guy line, paying rebels to blow up stuff deep in south american jungles, shutting down refined product in important military outpost. etc.)
BP playing stupid and shutting down all their US refineries alone will crash US economy good.
Oh, and there is BP air. (DING. check mate.)
http://en.wikipedia.org/wiki/Air_BP
It’s oil company. There is a reason why everybody hates them. They really are nasty and will win against mere smart and well intentioned.
Timmy,
Honestly, do you have the foggiest idea what you are talking about?
First, Congress has deemed oil assets to be strategic and has barred their sale in the past to the Chinese. That refuted your argument earlier, and now you make an irrelevant, pointless comment in response.
Second, energy transmission regs have been tightened considerably post Enron.
Third, your refinery comment is way off base. BP “crash the economy” by shutting its refineries? Look at this list, then maybe we can have an intelligent conversation.
http://www.eia.doe.gov/neic/rankings/refineries.htm
And on top of that, US refineries are only operating at 83.1% of capacity.
http://tonto.eia.doe.gov/dnav/pet/pet_pnp_unc_dcu_nus_m.htm
Oil well is at the bottom of production pyramids. There are plenty of choke point I am sure BP owns. Congress wouldn’t know strategic if it bites their ass or unless it’s obvious military end product. But intermediates, catalysts, specialized feed, etc are usually controlled by one or two companies. That’s what modern oil company is about, massively integrated to corner or monopolized few products. BP has to own several of those, otherwise they wouldn’t be this big. Any descent size company can order steel pipe and rent a ship to dril oil, but the big oil control the “where to” and “what for”.
Admittedly I am too lazy to dig deep and see what IP/patent, process portofolio, production line and facilities they have. But trust me. The point of big oil/chemical company is to corner one or two important product and maintain edge.
PS. take out that 600K barrel refinery capacity during change up season (from summer gas to winter oil) and see what it will do to heating oil price in the north east. DING. second checkmate. Time for more stimulus. BP only needs to take out 2 of their biggest to crash entire US pricing structure. current run is 83% capacity.
http://www.eia.doe.gov/dnav/pet/pet_pnp_unc_dcu_nus_m.htm
And this is the easy and obvious, not deep inside matrix of industrial supply chain. I am telling ya, it’s pretty tight, they hold the ace cards.
Timmy,
You are just making stuff up. 83% capacity utilization is recession level. All the other refiners would fall all over each other to refine anything BP gave up.
Even operating at 110% the rest of refineries wouldn’t cover the two refineries BP is taking out. (And we don’t know what type of refined output and for what type of input they have. Not all refineries are broad purpose.
And the output pipe aren’t connected to entire country. Surplus refinery output in midwest or west coast won’t do jack to the north east during winter if BP shut down their texas properties.
And we are talking about all “oil well” in gulf of mexico” will supply the remaining refineries evenly. If BP gets nasty, they can always screw around with the well they have. …ohh…I don’t know, shutting them all down for urgent maintenance and safety inspection …
bottom line. They got plenty to play with if they want to be a jerk.
Timmy,
You mathematical skills seems as badly compromised as your argumentation skills generally. Go through and compile a spreadsheet based on the refinery list, which has production totals, that I provided. Your 110% assertion is complete crap.
And you seem to forget that the US holds the cards. If BP is found guilty in a criminal prosecution (which looks likely), the US can cancel all its leases and its contracts with the Federal government. It can ALSO impose fines of up to $4300 a barrel for the leak.
Do some math. All you do is keep offering the same unsupported assertions. They don’t even begin to pencil out.
Timmy,
What is this? Fantasy Island night on Naked Capitalism?
You’re another one like Peter above that lives in your own little make-believe world.
BP produces maybe 1% of the world’s oil.
The US consumes 25% of the world’s oil.
BP’s overnight disappearance wouldn’t even cause the United States to blink.
Wrong. BP has the asset and skill to fuck the united states. (make no mistakes, they also did bunch of regime changes during the 50’s and 60’s.) BP original name is “Anglo-Iranian Oil Company”. They were around during operation Ajax.
Playing money politics and party bickering are not beyond them either. Just watch how the senators and sleazy politicians start lining up and chiming in…
So if BP is so powerful and can buy so many friends in Congress, why are both Republicans and Democrats lining up to flay it alive? Why did it agree to a $20 billion escrow and to suspend dividends for at least a year?
Your argument is remarkably divorced from fact.
Yes, the dog and pony show. Good show that.
“Why did it agree to a $20 billion escrow and to suspend dividends for at least a year?”
I don’t know. maybe they found jesus. Or more likely they need to win the opening PR battle first, then after public attention sizzle 5-6 months from now, then the real long endurance court battle begin. The mind numbingly boring, brain melting legal skirmish. new administration, new hacks, different courts, different national mood, etc.
How long did case like bhopal or exon valdez last? decades my friend. decades. We are only 2 months into this mess.
This is not even the beginning of what is going to happen to BP. They are going to be on the hook for 10-20x this “escrow account” (which is no such thing if they get to pay into it over time) by next year.
People who bought the stock this afternoon thinking some “clarity” had been reached are not paying close attention. Or they are really good short-term traders.
Nice try, all you flacks talking about BP as if it were a going concern. The only people working longer hours than BP’s relief well contractors are the lawyers prepackaging BP’s bankruptcy. Otherwise Tony Hayward will have to get in line with all the other unsecured creditors. Just ask the expert-testimony mavens, that’s where the lump in the python shows up first.
Meanwhile, the BP oil plumes are rolling in underwater to a shore near you:
http://www.youtube.com/watch?v=HxjiL6kmntU
This retarded bitch should have been fired weeeks ago:
http://www.huffingtonpost.com/2010/06/02/noaa-director-toes-bp-lin_n_598461.html
NOAA Director Jane Lubchenco on Wednesday refused to contradict BP CEO Tony Hayward’s statement over the weekend that “the oil is on the surface” and “there aren’t any plumes.”
> She needs to be held accountable for misinformation!
Those are great links Doc Holiday.
The net effect of your two links is it creates the appearance that the Obama administration is on BP’s payroll.
One hears what is coming from the Obama administration, and then one hears just the opposite coming from those who are on the front lines in the Gulf. Who is one to believe?
My natural predisposition, having been involved in hands-on operations all my life, is to believe the guys in the trenches.
Doc Holiday,
Also notice the NOAA map that Peter links above showing shoreline oiling:
http://ht.ly/1Y9St
Compare that to the NY Times’ map that constructs the same phenomenon but using a combination of various sources: “U.S. Fish and Wildlife Service; NOAA; National Park Service; state and local officials.”
http://www.nytimes.com/interactive/2010/05/27/us/20100527-oil-landfall.html?ref=politics
This is yet one more set of contradictory evidence that makes it appear that NOAA is on BP’s payroll.
Do you remember back when the Bush administration was peddling the Iraq war, that someone in the administration or Pentagon would plant false data in the media, and then the “experts”—-retired generals, chickenhawks, etc.—-would then hit the airwaves the next few days and repeat that false data as if it were sure truth?
I see the same pattern emerging here.
Researchers aboard the F.G. Walton Smith vessel briefed reporters on a two-week cruise in which they traced an underwater oil plum 15 miles wide, 3 miles long and about 600 feet thick. The plume’s core is 1,100 to 1,300 meters below the surface, they said.
“It’s an infusion of oil and gas unlike anything else that has ever been seen anywhere, certainly in human history,” said Samantha Joye of the University of Georgia, the expedition leader.
> Probably not related to this (if your being bribed by BP):
http://news.yahoo.com/s/ap/20100617/ap_on_re_us/us_gulf_oil_spill_marine_life
Peter and Timmy sound like H&R Mgrs for BP Nigeria Ops.
Skippy…H&R in 3rd world countrys is more like the proletariat wing of security.
What’s all the fuss about?
BP has in fact agreed to nothing but to establish a fund – in principle – at some point in the future that it can chose to pay into as much as it likes when it likes.
All this does is to get the critics of BPs and Obamas back. It’ a carefully orchestrated PR coup to make them all look good and make it appear as if they cared.
As long as the deal is not inked, you have nothing. That companies would backtrack on promises they made in the past because it would be inconvienient to honour them at present is nothing new.
$20 billion is a joke, considering the likely damage that will be done – the well is still gushing, by the way – in short, mid and longterm both to the environment and to the health of people living in the Gulf region.
Folks, let’s cut through the crap. Most of us know that in the end (no pun intended) the U.S. taxpayer one way or the friggin other is going to pay for every stinking oil smell cent of this disaster when all’s said and done. And with interest.
BP is not going to get hurt over this. This is Oil Tarp baby. When you see Goldman Sachs getting involved on BP’s behalf it’s the same as if the U.S. Government in that meeting with BP today was sitting on BP’s side of the table doing the ‘negotiating’ with the Prez.
The ‘small people’ and the environment will be made whole indeed. Very whole. Unfortunately the whole will be a whole lot less than the original configuration.
Where’s ‘Slick’ Willie when ya need him to fight for the little guy? Or (cough) gal.
Yves Smith says:
June 17, 2010 at 12:27 am
So if BP is so powerful and can buy so many friends in Congress, why are both Republicans and Democrats lining up to flay it alive? Why did it agree to a $20 billion escrow and to suspend dividends for at least a year?
FREE AIR TIME ON CSPAN
First I’d like to point out how much the media controls the message, as evidenced by the fact that even on this blog of such articulate, well-informed people, an out-of-control gusher spewing oil into the GOM at a rate of at least 60,000bpd is referred to over and over again as a “leak”.
Secondly, we are at War. On several fronts. A nation at War does not consider risk in the way a nation at peace does. All civilian input to government and Corporate production decisions are taken for a grain of salt, especially where energy production and finance are concerned.
Read the Patriot Act. To raise concerns as trivial and completely implausible as environmental destruction of the Gulf, when the War Machine’s need for fuel grows every year, is tantamount to treason and (again, I suggest you read the Patriot Act) subjects those raising objections to “disappearing”. You not only lose your job, you lose your right to even question why you’ve been detained, or if They prefer, deported to a country that can more effectively question you as to why you think, for example, the BOP is unsafe.
All the finger-pointing and hysterics about BP’s monumental blunder have ignored this most germane fact. As a nation we act more as if we were at War than that we are at War. We are, as The Commander-in-Chief told us, as he accepted the Nobel Peace Prize, going to continue to be constantly at War to maintain the peace. So we are, as citizens, constantly, and for the rest of our lives, under threat of dismissal and arrest if we dare to question any decision made that’s deemed of importance to national security. Oil production most decidedly comes under that rubric.
The government had (has), just as in the case of the attack on the WTC and the financial collapse, all it needed before the catastrophe, to regulate the industry that was (ir)responsible. It chose instead, for the sake of expediency, to not use those tools. On the contrary, just as mortgage brokers were whipped into a frenzy of fiscal debauchery, by the very governmental entity responsible for their regulation, so too was the oil industry. And if those in power of, oh, let’s say the MMS, HAD used the tools at their disposal to slow down the escalation of risk to the point of mania, they would simply have been replaced by someone more, well, cooperative.
This mess is merely the predictable result of waltzing off to War with no more consideration/debate than that it’s a simple “cakewalk”, so that 5% of the world’s population could continue to suck down 25% of the world’s rapidly diminishing resources, even as it militarily forces entire economies to adopt its same practices. This is madness. Something had to give. And at the bottom of the GOM, something did.
The fault, dear Brutus, is not in our stars, but in our cars.
Interesting visual for BP drilling nightmare:
http://www.ouramazingplanet.com/infographic-tallest-mountain-to-deepest-ocean-trench-0249/
Glenn Stehle,
Thanks for your reply! It’s easy for all of us to feel isolated on this fast-paced information highway. I appreciate that Yves allows us all the opportunity to communicate and respond to this (and other) situations — this blogging process is what can bring together people — and we do need to come together on this BP spill — and keep on top of what is going on!
I almost wonder if this is like a slow-motion nuclear blast and the residents of the gulf will all be like the victims of Hiroshima and Nagasaki … this is an awful nightmare that is going to unfold every day, and I think many people will burn out, and most will try to ignore the reality of how are lives have been changed.
Best BP stories:
GOP Outraged By ‘Shakedown’ BP Escrow Account, Apologizes To CEO
http://www.huffingtonpost.com/2010/06/17/gop-outraged-by-shakedown_n_615686.html
I think it is a tragedy in the first proportion that a private corporation can be subjected to what I would characterize as a shakedown — in this case a $20 billion shakedown — with the attorney general of the United States, who is legitimately conducting a criminal investigation and has every right to do so to protect the American people, participating in what amounts to a $20 billion slush fund that’s unprecedented in our nation’s history, which has no legal standing, which I think sets a terrible precedent for our nation’s future.”
None of the critiques, however, matched the more philosophical pushback offered by Mississippi Governor Hailey Barbour, who objected to the idea of forcing BP to invest money for the purpose of paying out claims when the company could simply use that money to expand offshore drilling so that they could make money to pay out claims.
“If they take a huge amount of money and put it in an escrow account so they can’t use it to drill oil wells and produce revenue, are they going to be able to pay us?” Barbour told The Associated Press on Wednesday.
==> I guess it isn’t really amazing that corrupt people connected to big business, often seem to be retarded crooks…
Pipe boom plan at Perdido Pass: Engineers to build $4.6 million steel barrier to keep oil out of wetlands, waterways to north
http://blog.al.com/live/2010/06/pipe_boom_plan_at_perdido_pass.html
Baker said late last week that the project is scheduled to be in place within 20 days.
==> $4.6 is an indication that oil from BP’s well will continue flowing and that the plumes floating around will be an on-going issue for a long time — just in this one very small area.
I need to check this, but here is an idea of the space involved:
Gulf of Mexico coastline, 2,625 kilometers (1,631 miles)
==> ” $4.6 million project will extend a barrier of steel pipes for more than half a mile ”
Let’s say $8 million per mile @ 500 miles is about $4 billion for booms like this and that aint gonna happen!
Flood Of Tasks, Trickle Of Resources For Coast Guard
The Coast Guard has more than 1,000 personnel in the Gulf, along with dozens of boats and ships (the exact number is classified). They do everything from conducting hearings on the spill to flying journalists over it.
>Billy Nungesser: Still Not Satisfied
http://blogs.abcnews.com/george/2010/06/billy-nungesser-still-not-satisfied.html
Yesterday Nungesser called for Admiral Thad Allen replacement, telling The Associated Press that he wants someone else to head up the government’s response because Allen has failed and “is not the right man for the job.”
> Slippery Start: U.S. Response to Spill Falters
http://online.wsj.com/article/SB10001424052748703627704575298851812383216.html?mod=rss_Today's_Most_Popular
Twenty thousand people had been mobilized to protect the shore and wildlife. More than 1.38 million feet of containment boom had been set to trap oil. And 655,000 gallons of petroleum-dispersing chemicals had been injected into the Gulf of Mexico.
==> 1.38 million feet of containment boom = 261 miles and the amount of coastline involved is a total of about 1,631 miles — and who can say what percent of that area will be impacted; nonetheless, NOAA seems to be doing a great job of denying there are massive underwater plumes, and hence, the deployment of the available booms will be a matter of supply and demand! I guess this is an opportunity to go long in boom production … I’m sure BP is the prime investor in this, along with Exxon….
1 380 000 / 5,280 = 261.363636
MY TAKE Slipping in the Spill
By Dwight Baker
June 17, 2010
Dbaker007@stx.rr.com
Slipping in the Spill
By David S. Broder
Thursday, June 17, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/16/AR2010061603013.html?wpisrc=nl_opinions
David words
If there is any value in President Obama’s knocking himself out to dramatize on prime-time television his impotence in the face of the Gulf of Mexico oil leak calamity, I wish someone would explain it.
His multiple inspection trips to the afflicted and threatened states, his Oval Office TV address to the nation, and now his sit-down with the executives of BP have certainly established his personal connection with one of the worst environmental disasters in history. But the only thing people want to hear from him is word that the problem is on its way to being solved — and this message he cannot deliver.
MY TAKE
The news hounds pushed President Obama face in it. Now WHY? I could care less. The pollsters hucksters, the makers and breakers of Kings I have lost interest in all of them, for they are paid handsomely to tell lies. President Obama brought on board AGAIN IN THIS CRISIS the man that took him to his throne where he now sits. But that man did not take the cry out to be from people who he nothing about. Or the skills of some of them including me that had the fix for the blown out well. In essence that was the second thing that should have been on the sit down agenda and was not. Stop the oil from flowing plug the well.
David, name me just one President that didn’t continue to run for another term the day he was sworn in? The intoxication that comes with becoming President of the USA is never ending. And to make sure that comes around not as a lame duck all cautions are taken. The sadness of this time for President Obama is that his close in confidants does not have a clue what to do and to try to spin themselves out of their horrible oblivious not knowing non oil and gas engineering bottoms up knowledge is no ones problem but their own.
Forget about Nobel Prize winners, Harvard professors, scientists who have renown in their own fields or God Forbid news anchors and the rest of the seemed experts We the People in the USA have a war not just against BP but we are co-joined with BP in a war against Mother Nature. And Mother Nature right now is kicking our communed butt.
David my heart jumped with excitement after hearing of the events of yesterday but I suppose I might have been the only one besides many of the common others living on the Gulf Coast that had less than most and with this problem needing some hope and faith in our President that he heard their pleas and was working for a temporary and then a long term solution.
Just in from Reuters is a video worth watching:
http://uk.reuters.com/article/video/idUKTRE64U0OW20100617?videoId=103607028
Concluding when going over some of the chitchat on the Internet today, many want to be elites are tearing our President to pieces. Oh well, so be it their words they will eat as most do. So, after reading your words and remembering what I had read before I stand by my Letter and comment sent to President Obama in the early morning about 3:00-AM. Following:
Oil and Gas ill logic continues to buffoon some in the media.
By Dwight Baker
June 17, 2010
Dbaker007@stx.rr.com
Who wants to be one to continue to levy more hard aches on the evolving drama of the BP Blown Out well? Dad said, Never kick a man when he is down.
Yet is that what the Press wants to do now? Keep the fires raging keep the big bucks coming in from the advertisers and make more commotion than is needed and allowed in a civil society. I sure hope not.
The acts of repentance and those who asked to be forgiven was contingent on them making restitution and change of heart.
Therefore my opinion the BP bosses have put those things to be done to rest.
Thus, Let us all go forward with a new SONG, sung in victory and head down the next road of plugging the blown out well NOW.
The only way to find oil and gas put the bit in the ground and even then the only way to know for sure what the bit found is to complete and test.
From the facts and accounts of the BP well it was not thought the well showed much promise. BP thought the pay back would be minimal.
Yet were they surprised like many more? And in the days and weeks and years to come will that blown out well prove to be one of the best places to drill in the Gulf? That is a possibility; the research that I have done indicated that the drill bit might have encountered an anticline dome in the Wilcox formation. If that is so then the wild blown out well might prove out that the anticline dome was hit dead on.
Therefore if that hypothesis proves out to be true, that could mean. The once blown out well after it is plugged made safe and the massive clean up begins and never ends. That might prove out to be one of the best finds of all recorded in our annals of oil and gas Gulf of Mexico history that will benefit BP and us through the royalties paid in to our Mineral Management Services.
Thus, let us all move out with a new spring in our walk and forget about kicking BP the company for the faults made by just a few.
Concluding, I believe the best avenue for us to take from this time on, turn this entire matter over to the Justice Department to do their investigations and stop dragging this very bad thing gone all wrong for way too long in front of the American people to try and be rationalized out by our free press who do not have at this time all the bottom line facts.
Tame Nature with overshot, plug the blown out BP well Now!
Exxon Distances Itself From BP’s ‘Dramatic Departure’ in Gulf
http://www.bloomberg.com/apps/news?pid=20601087&sid=arKsRY2SVda8&pos=9
Something went wrong at the BP project about 5,000 feet (1,524 meters) below the sea surface that hasn’t happened at the 14,000 other deep-water wells drilled without incident worldwide, Tillerson said.
Exxon, based in Irving, Texas, has drilled 262 deep-water wells in the past decade, 35 of which were in the Gulf of Mexico, he said
More than 30 deep-water rigs have been ordered to stop drilling in the Gulf of Mexico for at least six months while federal officials conduct a review of offshore safety practices. The moratorium has forced Exxon, Shell and other major oil companies to suspend their deepwater exploration plans in the Gulf.
Edward Burtynsky photographs the landscape of oil
http://www.ted.com/talks/edward_burtynsky_photographs_the_landscape_of_oil.html
Doc Holiday says:
June 17, 2010 at 2:45 pm
REPLY,
I think it is grossly wrong to shut down those deep drilling rigs. All that needs to be done is do a through investigation to see if they were required to have the fail- safe BOP. If so then not installed have the rig cement in where they are— pull up the bottom BOP and install the fail-safe BOP, then go back to drilling. NOW how hard is that to do?
I told Jindal about doing that and tell the feds his people could do the inspection OH HUM.
Next —- BP will bill their drilling partners for their part of the cost. Hope they all can afford it at this time BP is the Operator with 62.50 percent Exxon/Mobil is in for 12.50 percent and Anadarko production is the one I suspect to have the most exposure with 25 percent. However I could be wrong how Anadarko got their 25 percent.
Dwight
One must remember that BP has Killed in the multiples: Modus operandi imponit Nervi belli pecunia infinita…for its place amongst the multinationals.
And as Obama has stated_it is_a partner in our future, capisce…do you understand who *we* are now?[!].
Skippy…Ab ovo (usque ad mala), abeunt studia in mores, abiistis, dulces caricae.