Tuesday night there was much grumbling and grousing about President Obama. His usual critics on the right were critical of everything he said or did. He didn’t show enough emotion, he didn’t talk tough enough, he inhaled wrong, he exhaled wrong. He was also criticized for discussing alternative energy at a time of crisis. He should have called this person and that person.
Those on the left weren’t too pleased either. They felt he didn’t go far enough. He didn’t show emotion, he didn’t hold BP accountable enough, blah blah blah. He didn’t wash enough pelicans.
Then Wednesday something short of a miracle happened. President Obama went into a meeting with the BP folks and members of his administration. He came out with $20 billion dollars allocated in escrow for damages to the environment, the economy and people’s livelihoods and an apology to the American people. Dividends won’t be paid out and BP remains intact.
Not too bad for a guy who couldn’t shoot straight on Tuesday.
[Sorry, wrong video posted]
“He came out with $20 billion dollars allocated in escrow for damages to the environment, the economy and people’s livelihoods and an apology to the American people.”
Can you explain this further, MH? Does that mean BP is paying for the destruction? How are they doing this (meaning, what are they actually going to DO)?
One more note–BP owes an apology to the world and to Mother Earth. Let’s hope it’s not too late for that.
I guess I approve of this. Hopefully the 20 billion is enough to change business practices. the whole thing started because it was costing them a million dollars a day to do the job safely.
I guess I approve of this. Hopefully the 20 billion is enough to change business practices. the whole thing started because it was costing them a million dollars a day to do the job safely.
I thought I’d share an assessment an MBA buddy of mine gave me.. I brought in Exxon and he one-up’d me with a better overall analysis.
You’re missing the real play here. Besides being largely craven ***holes with no personal honor, Congressmen can smell money from a mile away, and BP is in enough trouble that they’re going to start paying to survive.
1. BHOCongs beat them up, whine like little ***ches, etc….
2. BP agrees to set aside a whopping $20B for cleanup, which sounds incredible until you realize the lawsuit potential is worth more than BP is!
3. BHO, perhaps in return for the CEO firing, massive contributions, and a bump in the set-aside ($25B), and citing the threat to 20% of US domestic oil production, steps in to handle the clean up and resulting lawsuits, which under the table limits BP’s liability. BP, after all, has pushed a lot of alternative crap and was in favor of cap-and-trade. And now BHO has $25B to play with, claims victory and tries to undo tarnished image as an unexperienced wanker.
4. BP’s share price stabilizes as the uncertainty around future lawsuits goes away.
Winner in all this? Exxon.
Losers in all this — American and British pensioners. Costs and assets, income and ability to both borrow and poay over time nothwithstanding, Obama agreed to screw pensioners. Sadder still, a lot of those pensioners live in the Gulf. This was nothing more than Obama under the bus for me politics, but oh, boy are the Democrats in the Gulf going to feel this one.
Losers in all this: the US Environment, The US people, the US economy.
Anyone who hasn’t learned to diversify one’s money after 2008 deserves to lose it. It could have just as easily been Exxon or Chevron.
TP, are we saying that American and British pensioners are in funds that put all their eggs in one basket? After Enron, I didn’t think that was done any more. Please name a pension here or across the pond that does that.
TP, are you willing to say that for some pensioners you would have the life choked out of the gulf states and their people and economy? I guess money does talk and BS walks…
BP is worth trillions, I expect.
“BP is worth trillions” – From what I have heard BP is only currently worth about 7 billion according to their last quarterly report, but I don’t know how accurate that is.
Hello, Here is some information. The amount you are citing is their cash on hand. Watch the video at the bottom of the page also:
from http://www.gurufocus.com/news.php?id=97216
I think a word got left out…7 billion it should have said. Hard to find good cut and paste.
An apology to the American people?!! Wait just a cotton picking minute here!! Just who was it that gave permission to drill a well at this unusual depth? And who was it who failed to monitor it adequately for safety as required by law? Ooops, ummmm….That woud be us — or, more accurately, the government elected by us and the employees engaged by us to manage that government. Maybe it is not just BP which should apologize to the world and to Mother Earth?
It should be said that BP has a current market cap of 98B. I had read that BP self-insured? Is that false?
Fun article. http://dealbook.blogs.nytimes.com/2010/06/17/bps-shareholders-take-it-on-the-chin/
“Governments, too, have lost big on an investment that, for them, has been both financial and strategic. As of May 1, Norway’s government pension fund, a long-time BP investor, given that nation’s own oil wealth, held 336.5 million shares. The Kuwait Investment Authority owned nearly that much. China and Singapore owned about 200 million shares apiece.
Public pension funds in the United States are reviewing their BP investments. The State of Wisconsin Investment Board, which holds $30 million in BP stock as part of an indexed investment that tracks the broader market, is monitoring the developments closely, said Vicki Hearing, a spokeswoman for the board. Its BP investment represents a small fraction of the fund’s $74.8 billion in assets.”
Granted what’s happened in the Gulf is a terrible, terrible thing. But, for BP to be close to failure, for the government putting a rope around it’s neck, for the Brit’s screaming about how it’ll effect there pension system and for a company with an OK track record for helping the environment to be crushed…. Beautiful.
My money is on Exxon and CP to pick up even more market share.
DRILL BABY DRILL!
Their market cap is listed at 98.3 billion. 3.13 billion shares out.
52 week range is $29.00-$62.38. The dividend would have been $.84.
For those willing to take the risk, its a mighty cheap stock right this minute. I wouldn’t do it but plenty of people are buying up a bargain.
By the way, I like Tony Hayward. I am not angry at him. I am not even angry at BP. I am horribly frustrated by the fact they were doing something they didn’t know how to stop or fix and that our country has been allowing that to go on for a long long time.
All oil companies are out to make money. When they do things either purposefully, accidentally, negligently, or things just happen, they still have to try to make things right and they have to pay for damages.
First, I am saying that 40 percent of that dividend transfer comes from direct BP investors (stock holders) . But wait others will be hurt too. BP is the biggest British Corporation (to big to fail American style) – so watch out for how your pension fund is hit through diversified bonds and portfolios in the remaining 20 percent not owned by British investors. It has been estimated that every pension fund will be hit as they almost all have some 1 to 3 percent BP. Ok, so you and your public pension will be unharned, but down in the Gulf, company employee retirees and others are going to get wacked. If it had been an American company – and remember that the deep drilling was at our request and in our national interest, you can bet that Obama would have been out there advocating for a new stimulus. And the thing is, the pension freeze and transfer to the American Gov’t is not necessary – it was all for show— Obama’s I am a tough guy now show.
And Second, Yes , yes, yes, isn’t it awful — and BP has already accepted responsibility for the cleanup, and I guess they are liable – notwithstanding the lack of due process and the fact that as a condition of the risk of the deep water exploration their liabilities had heretofore and technically still are legally limited by law– in the interest of American national security interests. Now note that at they did not accept responsbility for the impact on the oil industry or other Gulf rig workers sidelined by the Administration – regardless of what Obama said – nor will they, IMHO, accept responsbility for the US Govt’s malfeasence in managing the response or the impact of its blocking help from the Dutch and others- as you know to protect union workers/wages both at sea and on the shore. At least in Katrina, the Bush Administration waived everything to get recovery action. This Administration, as best I can tell, has waived nothing and has in fact overtly prevented response action.
I don’t get your apparantly rude and sacrcastic shot about protecting pensioners over the environment. What is that about? The issue here is competent leadership versus incompetent leadership in a crisis, the inability to understand complex financial interests vice a get’em community activist reaction view of the world and making making matters worse vs a professional relationship with BP to get the job done. Thanks to Obama and his kensian advisors BP went down again today from “AA” to “BBB. What they hell do these people think they are doing!!! Moody’s is threatening to move on all Deep water rig companies. “We believe it could take up to two years before producers, rig operators, and service firms in the deepwater Gulf can resume activity to pre-spill levels,” said Steven Wood, a managing director at Moody’s.” That is going to make gas prices soar and hit the pension markets of even more Americans. Doin a great job Brownie!
Taking a breath — the gulf and the markets will recover – but pray for no hurricanes.
Marin, that is simply disgusting. You would keep doing something that obviously needs closer scrutiny without ever knowing what went wrong or how to cut it off if there is an accident?
I guess you would have sent up another Challenger the next day?
I think our congress is so horribly rude. I expect Parliament is equally so.
Please, tell me again, what authority does President Obama have, that enables him to either cut a deal or browbeat BP into doing any of this. If BP wants to do this voluntarily, fine. But the executive branch and the legislative branch have NO authority to just tell a private company to hand over a single dime.
I think that this is a sweetheart deal that Obama set up. His speech says that an INDEPENDENT third party is supposed to handle said escrow account and yet one of HIS employees will be paying out the money. Claims for unemployed oil workers are said to be included in this. Said unemployment is Obama’s fault. It was HIS administration that dropped the ball on the reaction, on the inspections, etc. It was Obama, personally, that got BP money. He needs to recuse himself from any negotiations with BP and leave it to the Judiciary, since there are ALREADY LAWS ON THE BOOKS, that cover this.
President Obama is the one gutting the oil industry in La. with the moratorium. A six month stoppage will cause a multi-year recession in related drilling industries. He’s using this as yet another crisis that he can take advantage of.
Obama is using this as an excuse to advance his Federal Unicorn-Based Alimentary Resource (FUBAR) energy programs and wants to sell Cap and Trade through this. He wants high energy prices – his quote.
Obama is harmful to the US.
Not sure how you get disgusting from what I wrote?
Let’s examine BP’s ability to pay debts. In order to do so they need to…drill more oil.
But, they’ll be under so much govt scrutiny, enviro-consumers will hate them (even though as far as oil companies go they were as left as you could be without being CITGO) and not buy and of course you have a large segment that feels they have to make BP ‘pay’ by not buying there product. Ok, so small locally owned gas stations get crushed. The space is begging for a replacement gas station… Who buys out the cheap lot? Exxon.
Who will supply the gas thirsty consumers that are raging against BP? Exxon.
Who stands to directly profict if BP has to declare bankruptcy? Exxon.
I’m surprised Grisham hasn’t jumped on this to write a book!!! It’s writing itself… 🙂
I’m all for doing a safety stand-down. A few days or even a week of talking to the rig workers, going over safety, looking at the mechanicams, the rigs, and gear. Looking for obvious safety issues. But at the end of the day we need to drill and holding it up for an artificial reason of being too scared that another accident will occur just takes away food off the table of those that use oil for a paycheck.
The glee that you see in #10 is centered around an enviro-friendly company getting stomped on by the enviro’s. That makes my heart sing.
Actually, what is more interesting is how deep your hatred is, tp.
Meanwhile, I am sitting here thinking how glad I am that Sound-byte on Steroids isn’t somehow in the mix, making matters worse. On the other hand, had it not been for incredibly bad judgement on behalf of John McCain, he might be the one sitting in the heart attack seat on this one.
Fess up, there is literally nothing that the Prez can do that you would like, tp.
As with many other Clintonistas – not so far.
So who should be president in a tp world?
Hatred – no – no hatred. Anger & frustration at the incompetence and the cancerous growth of government.
Extremism in the defenseof liberty is no vice” Some wack job from Arizona , I think 🙂
ooohhh, that is a tough one since the Ombamites and Hillery efficerated the DLC and went left. Let me get back to you on that. Whats on your list?
,
We will all have to pay for this debacle for years to come in either taxes or higher gas prices. There is plenty of blame to spread around.
I am just so confused. BP took the riskier drilling method, and cut corners. They were advised by their advisors to proceed in certain ways, that they rejected. They chose the riskier route to save time (time is money).
They are subject to regulations. BP decided to ignore some of these regulations. Should BP only adhere to regulations when an inspector is around looking?? NO, they should be following the safety protocols at all times, not just when the regulator is around.
There has been offers from other countries for help, and some was accepted (from Norway and Mexico – http://blogs.abcnews.com/politicalpunch/2010/05/gulf-oil-spill-bp-countries-offer-assistance.html ) But the question is, what did they offer, and did BP need what was being offered.
BP is paying for the cleanup, and has agreed to set aside $20 Billion.
One reason why they are drilling in deeper water, is for the tax incentives to drill in deeper water – they make more money (pay less royalties) for drilling in deep water.
I cannot understand how anyone can turn around and say that this was the Obama administrations fault, or that it is anything other than BP’s (BP as the majoarity lease holder) fault. As far as we know, it was not equipment failure, or mother nature, it was individuals who wanted to cut corners in order to have the well come in under a certain cap. They are showing a similar appetite for risk that wall street has shown. BP has stepped up, and has accepted the financial responsibility for there pollution of the Gulf. IT is now up to BP to go to court and determine how to share the cleanup costs with others like Halliburton, Transacean, etc.
Lets blame the Bush administration, Bush and Cheney focused more on additional oil drilling then on other alternative energy sources. Had they looked to other energy sources, maybe we would not be where we are (dependent on global oil).
$20 billion to be presided over by an Obama political appointee. Wonder where that money will end up. My guess is most of it will go to SEIU. I can hear it now. “Make that check out to B-A-R-R-A….”
So, its Bush and Cheney’s fault again. Typical. If Bush had been in office for 18 months, he would have gotten the blame. Just think of the out cry if Bush had been BP’s biggest recipient of campaign money. Or if his Minerals division had been the one that gave the rig a safety award last year. Apparently, they were making all the appropriate government people happy.
No one, or at least I’m not, is saying that BP does not have responsibility. I’m saying that this is Obama’s watch. This is HIS baby. And his reaction or lack of reaction has compounded the long term ill effects. His policies are based, not on science, but on political wishes.
And I still want to know how the President can make law. He enforces law. There is no law that states that a private company must give its funds to the government for an escrow account controlled by that government. The President appears to be breaking the law, himself. Where is the outcry?
Deep water drilling is also necessary because shallow water drilling and drilling on land is so fought by the environmentalists. They are the ones that like deep water drilling. Why is there a moratorium on all drilling? Any ill effects from that is President Obama’s fault, not BP’s. I notice that only the internet and Fox are showing what the result of that moratorium will be – Brazil’s Petrobras gaining all the drilling equipment. I wonder, does anyone in Congress, or allied to Obama have an interest in Petrobras? I mean, other than George Soros? Louisiana will have a multi-year slowdown and a recession.
As far as we know, we know, actually, nothing. Nothing has been released as to the actual cause of the explosion, so it might have been equipment failure, or mother nature, or sabotage, or aliens from outer space.
As to that risk that wall street has shown, well, why is there that willingness for risk? Oh, wait, the oil business has been very restricted in where it operates, so must entail more risk, just like the financial businesses had to figure out how to profit form government mandated high risk loans. Then the gov’t bought that risk. And both businesses are staying strictly within the letter of the law. I notice that no one is saying that BP broke any laws, just that they cut corners. Well, the government is the rule maker and the referee.
Obama is the captain of the ship. Its all his responsibility. Whether he votes present or not, its all his. Even on the golf course.
Cargo…[whispering] I have a small interest in Petrobras.
I think the administration wants to determine that companies know how to fix any ‘ooops’ before resuming drilling operation. That only seems responsible to me.
Cargo is right. When you take over the watch, that watch is all yours. It’s up to you to determine immediately that everything is in good shape and functioning correctly. If you do not do that, you will get no mercy at a court martial and no leeway to blame the mess on the previous watchstander. When the watch is in your hands, the watch is in your hands. Beginning from January 2009, someone in Interior should have run a serious double check on everything with regard to mining safety at every juncture and started to make any necessary course corrections if dissatisfied with the results of the inspection. In my opinion, this oil well disaster was the fault of both BP and the USG. If the USG had been on top of this from the very beginning of the administration, perhaps BP would not have had the leeway to take any of the dangerous shortcuts of which they now appear to be accused.
I am all about taking responsibility – who has the responsibility to follow the drilling procedure – BP – as far as I know, we do not have a MMS regulator on each rig at all times to make sure that proper procedure is being followed – just like a regulator does not watch each stock trade. BP chose to move forward even though there were indications that things were wrong. I do not think you can hold MMS accountable for that. When a regulator is present, they are there to inspect the operations, not run the operations.
Is Obama to blame for the Massey Big Branch Mine blast?
If I buy drive a car, and hit someone, who is to blame – Toyota or ME? If there is nothing mechanically wrong with the car, I have to take all the blame.
Pat’s right. Blaming Obama is like blaming Ronald McDonald for a bad hamburger. Neither one of them actually runs the place.
What I really wanted to see from the President this week was a unifying message, a la “We’re all in this together, let’s work together to clean this up. (for example) I have $20 billion now–we can use some of this to create jobs for people to come to the Gulf to help clean this up.”
No, no unifying message, no taking advantage of an opportunity to create (albeit temporary) jobs. He’s still out to kick someone’s @ss and take advantage of a good crisis to advance his energy agenda. And I fear that there will be rampant fraud and waste when it comes to dispensing of BP’s $20 billion.
Sorry, Pat, but the MMS is being handed a goodly slice of accountability for this oil rig mess. Mary Kendall, the Dept of the Interior Inspector General has already told Congress that the MSM has been notoriously lenient in enforcing regulations and lax in its inspections. The worst part is that MSM has been a flipping mess for many years. This new administration came into office with the slogan “Hope and Change.” Quite obviously the MSM did not get the full memo. In November 2009, some MSM employees were punished for untoward and downright scandalous actions going back into the Bush years; but it is quite obvious to me that Sec. Ken Salazar fell down on the job of doing a thorough inspection of his turf and fully attending to any deficiencies. Obama is the captain of this ship. Salazar was his handpicked man. The captain always bears ultimate responsibility for what happens to his ship, even if he wasn’t on deck at the time.
Emma, I have decided some of this is really what you want to hear. I had to talk myself into liking Obama. He certainly wasn’t my first choice. And because I spent a lot of time looking for positive, I tend to not get upset all that often. I thought it was a very positive message that he sent out. It was all focused on the folks along the coast.
The money was to compensate the people who have lost jobs and income. That is certainly the most important part right now. There are people who haven’t been able to work for 2 months. That would knock most of us out of the ring.
I do somewhat agree with Wolverine that we as American’s do need to take some responsibility. Now, I didn’t like paying almost $4 a gallon especially since at the time I commuted to Alexandria. However, I was disgusted by people who were just over the top about the price of gas and the ones that demand no new taxes be placed on gas.
People: $4 is cheap! Milk costs that much per/gallon! I remember when I visited my husband’s country in Central America with my son after he was born. I was SHOCKED at how cheap some things were (a meal for 14 people at Campero for about $20, loaves of bread equivalent to about .50), but the real shock came for me at the gas station. As usual, I was doing my little calculations in my head regarding how much I was REALLY paying, and was quite stunned when I realized the gas was about $5/gallon. And this was back when we were paying about $1.25-$1.50.
This does not mean I think BP is off the hook, but WE ALL created this mess. People are what creates pretty much ALL messes. It is our insatiable desire for illicit drugs and our lenient gun rights that fuel the cartels, our need to find more oil which drives the companies out further in search of it. One person where I do not believe the blame falls is Obama. With the 18 months of disaster after disaster he has been dealing with and the mess he inherited, I don’t know how he could have done anything to prevent this catastrophe.
Wolverine – I hold Obama and Ken Salazar accountable for the failures of MMS. I blame BP for the mess. No amount of regulation is going to get a company that wants to circumvent the proper procedure to get back in line. BP was going for profit – they drilled deep water because they can make more money, they cut corners to save time and money ( http://www.uruknet.info/?p=m67115&hd=&size=1&l=e ). Not installing the centralizers – to save time and money. I blame BP.
cargo – it is not the environmentalists that is driving for more deep water drilling – they want no more drilling. It is actually tax incentives (less royalty fees) that drives them to drill deep water.
Did MMS ok BP to remove the mud from the well, and fill it with sea water (this may have been the trigger) – I do not know the answer to that, if so, then MMS should take some of the blame for what happened, as this is not the recommended procedure.
And with some, the Prez can do nothing right. He gets 20 billion dollars to provide relief for Gulf Coast people and some scum bag who has been in Congress a million years accuses him of doing a shake down like he’s some back alley thug.
BP was probably darn glad to offer up $20 billion. That’s a drop in the bucket compared to a massive class action lawsuit.
Twinad,
Cheap is relative. $4 a gallon is not cheap. Nor is it expensive compared to Europe. It is expensive in relation to US prices. Milk in Richmond runs about $2.35, not $4. Milk and gas are about the same, in any case.
“our lenient gun rights that fuel the cartels” This is a falsehood. Our 2nd Amendment rights and the ability to purchase firearms DO NOT provide cartels with their guns. The majority of firearms in the hands of the Mexican cartels comes from their military, either from illegal sales, defections, or thefts, or captured. It is a myth that firearms are being purchased from gun stores and gun shows in any great amount. Are small amounts of civilian firearms making it south. Probably. But not in enough numbers to arm the cartels. Are thousands of US arms in Mexico. Yes. Apparently draconian gun laws don’t work. One can be jailed for being in possession of one round of ammo in Mexico. Perhaps they need to allow their citizenry to arm themselves in order to protect themselves from the drug cartel crime wave.
http://www.foxnews.com/politics/2009/04/02/myth-percent-small-fraction-guns-mexico-come/
The cartels have enough power and money to buy in bulk on the international black market and they want automatic weapons, not the semi-autos that one would purchase here.