BP, White House head for showdown over costs Shares plunge on fears Obama administration threatening new penalties Reuters updated 1:37 a.m. PT, Thurs., June 10, 2010 WASHINGTON - The Obama administration is threatening to impose new penalties on British energy giant BP over the worst oil spill in U.S. history, and the company believes it may be heading for a showdown with the White House, a BP source told Reuters. The company's shares plunged 11 percent in early trading on London Thursday, reaching lows last seen in 1997, after sinking to a 14-year low in New York, as the threat of new penalties on the company further sapped investor confidence. Shares regained some of the lost ground in London to trade down 6 percent. Turning up the heat on the beleaguered company, a senior U.S. Justice Department official said that the department was "planning to take action" to ensure BP had enough money on hand to cover damages from the Gulf of Mexico spill. U.S. Interior Secretary Ken Salazar told a Senate hearing Wednesday he would ask the British oil giant to repay the salaries of any workers laid off because of the six-month moratorium on deepwater exploratory drilling imposed by the U.S. government after the spill. BP's total bill so far, including cleanup costs, has reached $1.43 billion and the U.S. government has already said it will have to pay billions more in penalties. The White House echoed Salazar's comments. "The moratorium is as a result of the accident that BP caused. It is an economic loss for those workers, and ... those are claims that BP should pay," White House spokesman Robert Gibbs told a briefing. BP is worried about widening demands by the White House on spill-related costs, the BP source said Wednesday. While the company has said it will pay for the clean-up and direct damages to those affected by the spill, the moratorium was a government decision and costs related to it were a different matter, the source said. At a congressional hearing on Wednesday, one lawmaker asked U.S. Associate Attorney General Thomas Perrelli whether the Justice Department had the ability to issue an injunction against BP to stop it paying its dividend. "We are looking very closely at this and we are planning to take action," he said. Flagging investor confidence The threat of new penalties on the company has clearly shaken-up investors despite BP maintaining that it has the financial flexibility to deal with liabilities related to the spill. It said in a statement Thursday that it was unaware of any justification for the collapse in its shares. BP depositary shares trading in New York fell nearly 16 percent to close at $29.20 Wednesday, their lowest level since August 1996. "BP notes the fall in its share price in U.S. trading last night. The company is not aware of any reason which justifies this share price movement,'' BP said in a statement. A fresh round of congressional hearings into the oil spill were scheduled Thursday in Washington as BP sought to capture more of the oil gushing into the Gulf of Mexico from its ruptured undersea well. It said Wednesday the exact flow rate remained unknown. With Wednesday's battering in New York, BP has lost more than half its market value since the crisis began on April 20 when the deepsea well ruptured and the Deepwater Horizon rig exploded, killing 11 workers and unleashing a torrent of oil. It has caused environmental devastation along the U.S. Gulf Coast and threatens lucrative fishing and tourist industries. BP shares have been hurt by concerns the company might have to suspend its dividend payment. U.S. politicians have been calling for this, saying the company should put its cash into paying for legal claims and environmental damage in the Gulf. Voter discontent The Obama administration, facing growing voter discontent over its own handling of the crisis, has sought to distance itself from the company. President Barack Obama has also toughened his rhetoric in recent days and said in an interview this week he would fire BP CEO Tony Hayward if he worked for him. In a further sign of the administration's pressure on BP, Coast Guard Admiral Thad Allen, who is leading the government relief effort, demanded that the company provide more information and transparency on how it was meeting damages claims by individuals and businesses affected by the spill. "The federal government and the public expects BP's claims process to fully address the needs of impacted individuals and businesses," Allen said in a June 8 letter to BP. BP has paid out close to $50 million in damages claims so far along the Gulf Coast â mostly to fishermen, shrimpers, oystermen and boat operators who say their livelihoods have been impacted by the spill. Meanwhile, BP America President Lamar McKay, along with top executives from Exxon Mobil Corp, Chevron Corp, ConocoPhillips and Shell Oil Co, were called to testify at a June 15 congressional hearing that will look at the oil spill and America's energy future. Copyright 2010 Reuters. Click for restrictions.
Thankfully oil man Bush and Cheney aren't in the White House,BP wouldn't have anything to worry about Hopefully all those Dumb ass southern republican voters remember who is fighting for them,and that Republicans Reagan and Bush fought for a 75 million dollar limit on damages
Drilling Bits of Fiction The Obama Administration is under political pressure to reverse its ill-considered deep water drilling moratorium, and the latest blowback comes from seven angry experts from the National Academy of Engineering who say their views were distorted to justify the ban. In the wake of the oil spill, President Obama asked Interior Secretary Ken Salazar to produce a report on new drilling safety recommendations. Then on May 27 Mr. Obama announced a six-month deep water drilling ban, justifying it on the basis of Mr. Salazar's report, a top recommendation of which was the moratorium. To lend an air of technical authority, the report noted: "The recommendations contained in this report have been peer-reviewed by seven experts identified by the National Academy of Engineering." That would be false, sir. In a scathing statement this week, the seven experts explained that the report draft they had reviewed did not include a six-month drilling moratorium. That was added only after they signed off. "The Secretary should be free to recommend whatever he thinks is correct, but he should not be free to use our names to justify his political decisions," wrote the seven in a letter to Gulf Coast politicians. The seven noted that they broadly agreed with the report and had even signed off on a proposal to suspend new deep water permits for six months. The also agreed to a "temporary pause" in drilling to perform additional testing on the Gulf's 33 deep water wells that have already received permits to drill. But as for a "blanket moratorium," the seven said it "is not the answer. It will not measurably reduce risk further and it will have a lasting impact on the nation's economy which may be greater than that of the oil spill." If anything, the ban could prove "counterproductive to long term safety." One of the seven, University of California at Berkeley engineering professor Bob Bea, further explained in an email cited in the New Orleans Times-Picayune: "Moratorium was not a part" of the "report we consulted-advised-reviewed. Word from [the Department of Interior] was it was a [White House] request." In other words, the drilling ban is a West Wing political invention designed to make the boss look tough on oil companies. Our guess is that the credit goes to energy czar Carol Browner, who has been loudly touting the ban to show the Administration is doing something. Mr. Obama has said he's open to rescinding the ban earlier if new safety recommendations could be implemented sooner. But he has punted that question to the commission he appointed to investigate the spill, which isn't even fully staffed and has six months to report its findings. That will arrive too late for thousands of Gulf residents who are at risk of losing their jobs within weeks as deep water rigs prepare to leave the Gulf. As a tacit admission of the damage it is causing, the White House is now saying it expects BP to cover the wages of workers affected by its own politicized moratorium. Americans don't blame Mr. Obama for the oil spill, but they are beginning to doubt the competence of a President whose decisions suggest political panic more than careful policy. In their letter, the seven experts encouraged Mr. Salazar to "overcome emotion with logic" and rethink the ban. That's good political advice too. http://online.wsj.com/article/SB100...82675625258.html?mod=WSJ_Opinion_AboveLEFTTop