BP Needs to Tell Whining Americans to Take a Hike: Matthew Lynn

Discussion in 'Wall St. News' started by Ghost of Cutten, Jun 9, 2010.

  1. http://www.bloomberg.com/apps/news?pid=20601039&sid=a3hdg31PUmp8


    "June 8 (Bloomberg) -- Ever since oil started gushing from its well in the Gulf of Mexico, the British energy company BP Plc has responded precisely the way you’d expect from a massive corporation caught up in a terrible mess.

    It has sent its public-relations staff out to grovel abjectly on television. It has run around trying to make it look like it’s doing something, even if it is only stuffing old socks into the leaking well. Chief Executive Officer Tony Hayward has been wringing his hands at every available opportunity.

    But this is a catastrophe on a whole new scale. Traditional responses won’t work. In fact, there are no words BP can use to apologize sufficiently for the damage the leak has caused. Whatever it says, it’s still going to be the most reviled company in America.

    Instead BP should try a different tack. It should tell the U.S., and everybody in it, to go take a hike. In reality, the U.S. is guilty of the most appalling hypocrisy. It’s too late to rescue BP’s reputation now; all it can realistically hope for is to salvage as much money for shareholders as possible.

    It isn’t hard to understand why BP is in trouble. The biggest oil spill in U.S. history has soiled at least 140 miles (225 kilometers) of coastline, halted new exploratory drilling in the Gulf and shut down a third of its fishing areas. Politicians are baying for BP’s blood. The media is kicking the company to pieces. The New York Daily News last week described Hayward as “the most hated -- and clueless -- man in America” for his handling of the crisis. Publicity doesn’t get much worse than that.

    Spin Doctor

    So far, BP has been playing this right out of the chapter in the spin doctor’s manual headed, “What to do when your company is about as popular as the Third Reich in 1946.” It has apologized, and apologized again. It has simpered, felt people’s pain, and promised to learn from its mistakes. Responsibility has been taken, errors owned up to.

    No doubt we can expect some pretty hefty donations to environmental charities over the next few years. And don’t be surprised if we see the Hayward family canceling its summer vacation and getting down to the Gulf beaches with a bucket and big mop.

    The trouble is, none of it is going to work. Iranian President Mahmoud Ahmadinejad has more chance of getting the Ford Motor Co. franchise for Lubbock, Texas, than BP does of staying in business in the U.S. So why not try a complete reversal of tactics instead? Tell everyone in the U.S. to go stuff it where the oil don’t leak.

    U.S. Double Standards

    Here are three reasons why it should:

    First, the U.S. is guilty of crazy double standards. Hayward should go on TV and say: “Excuse me, which country is the biggest oil consumer on the planet? Who refused to do anything about climate change, or even to put sensible taxes on gas? Heck, your president even flies around in a 747 when a modest Gulfstream jet would get him there just as fast. So of course the oil companies have to drill in more and more dangerous places. If you insist on being addicted to cheap oil, you have to recognize there are risks attached. So grow up, and stop acting like children.”

    Next, BP likely is finished in the U.S. There is no form of apology that will make any difference. The average American consumer now hates BP and isn’t about to change that opinion for a generation or more. So BP should just hire the nastiest, meanest lawyers that money can buy -- the one commodity the U.S. has in over-abundance. Fight every lawsuit. Refuse every claim above the bare minimum. You’re going to get hammered anyway, so you might as well go down fighting.

    Wasting Money

    Whatever you do, don’t waste a lot of money on an army of advertising agencies and public-relations consultants trying to restore your image. It’s not going to work, so there is no point even trying.

    Finally, BP needs to protect its shareholders. So sell your assets in the U.S. to one of the other energy majors while you still can. Just remember there’s a big world out there, with a lot of oil and cars in it. Your job is to look after the owners of the company, not make yourself acceptable to a country that doesn’t want you anymore.

    Of course, doing this really will make Hayward the most- hated man in the country. But then, who cares? George W. Bush was the most-hated man in France, but since he wasn’t looking for any votes in Bordeaux, it didn’t count for much.

    BP’s image in the U.S. matters only so long as it tries to do business in the U.S. If it cuts its losses and gets out now, it can carry on fine in Japan, France, Argentina and all the other countries where no one is really that bothered by what happens in the Gulf of Mexico.

    Just say: “Thanks for everything guys. It was good while it lasted. Sorry about the oil spill, but so it goes. Goodbye and goodnight.”

    It’s the only strategy that’s going to work now."
  2. You are vastly overestimating the attention span of the average US citizen. All we seem to care about is who's going to win American Idol and how much is the gov't going to pay me today.

    I said at the very beginning of this disaster that BP will leave/be kicked out of the US market, a few years will pass, gas prices will rise, BP will be back under a new name.
  3. So far, BP has been playing this right out of the chapter in the spin doctor’s manual

    Looks good in court.:cool:
  4. dhpar


    great article and totally agree.
  5. BP should play the American way.

    Set up a Settlement and Liquidating Trust. Fund it with exactly 75M... max liability. Let the lawyers string it out for 20+ years milking fees out of the kitty. Setup New BP Inc. transfer all US assets and issue new shares.

    Once the money is gone... The lawyers will let it go.
  6. Ever hear of fraudulent conveyance?

  7. zdreg


    you have to prove its fraudulent conveyance. It is not cut and dry. obviously their lawyers are looking at every possbility.
  8. Sanaz3


    As a person with mechanical engineering background, I know what tough challenges BP has been facing to shut off the flow of oil, while being under the adverse mass media attention. People on Wall St and those who write such article have no idea what those engineers are doing as the article claims : "...It has run around trying to make it look like it’s doing ". I am sure BP is more concerned to stop this shit as soon as possible than anybody else, it's not like they are enjoying this shit continuing or are really benefiting from it. If BP and other oil companies didn't venture to tap new resources, you fu$king whiners would have to buy gasoline for $20/gallon after waiting hours in 10-mile-long lines...so please SHUT the FU*K UP!

    BP and the oil industry in general hire alot of people, so nobody really acknowledges that aspect of this business. They only put the "disasters" under scrutiny, which is fine as long as they stay sane and rational. The only part about this spill that saddened many families was the loss of 11 lives!

    BP has committed to pay for the damages and actually is every day, so what the fu#k is this media hype all about, I want to know? In fact, if anyone is actually benefiting from such "disasters", it is the social media (CNN, Bloomberg...) itself, because they have something to feed off.

    "Taxes Add to the Price of Gasoline
    Federal, State, and local government taxes are the next largest part of the retail price of gasoline. Federal excise taxes are currently 18.4¢ per gallon, and State excise taxes averaged 22.01¢ per gallon at the beginning of 2010. Eleven States levy additional State sales and other taxes on gasoline. Additional county and city taxes can have a significant impact on the price of gasoline in some locations."
  9. There would be no fraud because they set aside exactly the maximum amount they would be liable for. They are out of the deal. If the funds are burnt up by the lawyers and trustees then claimants can sue them directly. Best for BP and the new BP to be removed from the process without any involvement or control.

    This is not rocket science litigation.