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News : International Last Updated: Jun 14, 2010 - 7:07:28 AM


Day 52: BP is US Public Enemy No. 1; Wall Street should be the world's
By Michael Hennigan, Founder and Editor of Finfacts
Jun 11, 2010 - 4:13:35 AM

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Booms laid for protection at Breton National Wildlife Refuge, near Venice, Louisiana.

It's Day 52 of the oil spill at a well in deepsea Gulf of Mexico and the oil giant BP has become US Public Enemy No. 1 as the 24-hour media feast on the drama caused by a foreign foe, egged on by President Obama. However, while the environmental havoc is significant in the gas-guzzling nation, it hardly compares with the devastating fallout and incalculable human toll wrought by Wall Street excess to millions across the world.

After the explosion and deaths of 11 workers on the Deepwater Horizon platform on April 20th, BP downplayed the impact of the oil spill and President Obama was criticised for being too calm as armchair pundits speculated if the incident would be his Hurricane Katrina event, evoking the storm that in 2005 temporarily wrecked New Orleans and permanently destroyed President George W. Bush's credibility ("Brownie, you're doing a heck of a job").

So in recent weeks Obama has been on the offensive as frustration has grown with the time it has taken to stanch the leak. Earlier this week he said he would have fired Tony Hayward, BP’s chief executive, if Hayward worked for him and that he was looking for “whose ass to kick” in connection with the disaster. The Justice Department on Wednesday said that it was planning to take action to force BP to withhold its next dividend payment while on Thursday, Speaker Nancy Pelosi joined the drumbeat of calls for BP to stop paying dividends to shareholders until small-business owners had been compensated or the spill cleaned up. “They made $17 billion last year; they should be paying these companies first,” Pelosi said.

In the UK, Obama has been criticised for using the name "British Petroleum," which has not been used by the company since 1998 and on Thursday,  George Osborne, the British chancellor, said he had called Tony Hayward at Prime Minister David Cameron’s request. “The prime minister is clear that we need constructive solutions and that we remember the economic value BP brings to people in Britain and America,” Osborne said.

Shares in BP have plunged to a 13-year low and the stock market value of £122bn before the April accident has fallen by more than £50bn.

Jason Kenney, an oil and gas analyst at ING, said in a comparison with the explosion and deaths of 167 men on the US-owned Piper Alpha platform in the North Sea in 1988, which is the world’s worst offshore oil disaster: "When you compare how Britain reacted towards the US company Occidental after its Piper Alpha disaster where 167 people died, they are worlds apart.

“The US reaction is getting towards hysterical. Half of them seem to think the US is knee deep in oil. It’s difficult to underestimate the effect 24-hour TV dinner media coverage of the spill is having over there.”

Discussing liability the British company should take, with Larry Dickerson, Diamond Offshore president/CEO:

Ken Salazar, the US interior secretary, said on Tuesday that the Obama administration would require BP to pay the salaries of any workers who were laid off as a result of the government’s moratorium on offshore drilling, imposed while safety reviews take place.

 BP oil drilling rig in Gulf of Mexico in calmer times. As the saying goes:Still waters run deep.
Relatives of the 11 workers killed on the Deepwater Horizon rig met privately with President Obama in the White House on Thursday. The families were reported to have pressed Obama to back changes to the federal Death on the High Seas Act, which limits compensation to survivors of those who die in international waters.

Think of the impact, if Wall Street was exposed to international claims.

The New York Times reports that the well was probably leaking up to 40,000 barrels of oil a day, much more than previously estimated, scientists appointed by the federal government said Thursday. That estimate was made before BP cut the riser pipe of the leaking well on June 3rd to cap some of the flow. The new figure suggests that an amount of oil equivalent to the 1989 Exxon Valdez disaster in Alaska, could still be flowing into the Gulf of Mexico every 6 to 12 days. The Coast Guard reported that BP had managed to capture 15,800 barrels of oil on Wednesday, just how much this represents from the outflow, is unclear.

Discussing whether BP should be responsible for paying all liabilities, with Richard Socarides, Democratic strategist and Tom Curran, Peckar & Abramson:

Hundreds of lawyers have descended on the Gulf coast to make hay from the disaster and cases have even been filed on behalf of the oil-coated fish and birds.

Meanwhile America consumes a quarter of world oil production even though it has only one-twentieth of the population - - so this addiction has to be mainly fuelled by overseas supplies from unstable regions; offshore drilling in the deep ocean or onshore environmentally challenging extraction from oil shales.  

But despite the anger, people still want to have their cake and eat it.

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