There is talk about the loss for pensions if BP does not pay a dividend. Is this a secret code for too big to fail?
BP is GOING to cut their dividend...There is going to be a minimum of at least a 50% cut in their dividend. Here is the live feed of the oil spill, its still leaking out of control. http://www.huffingtonpost.com/2010/05/26/bp-oil-spill-live-feed-vi_n_590635.html
Some accommodation will be found, for now. Don't bet on it lasting, though. I figure there will be some agreement to put some very very large amount of money in escrow to fund clean up and compensation for loss, and on the announcement of that agreement, the stock will shoot up like a roman candle. It'll be the easiest short there ever was. I'm waiting for it. After that will come the real decline: slow, steady, grinding, relentless. Late 2010 puts would probably be a safe way to play it at first. Adjusting as this develops would then be called for. Remember, we're talking about a company that also had loss of life at a refinery in Texas, and has a rep for cutting corners wherever it can. Follow the roach theory: where there's one, there's more. And when your luck runs out, it doesn't come back for a long time. BP's luck has run out.
This is a British problem. If they want to bail out BP after it spends all its cash cleaning up the oil, let 'em. The cleanup is going to last years and cost tens of billions. Of course, to Obama that is just pocket change when you have the ability to spend all the money you want from the American people's bank accounts.
Don't forget you're talking about oil here. Oil determined the winner of world war 2, and it's even more important today. We need oil. If America kills BP over this, how will the other oil companies feel? It may become too expensive to do business in America and the oil companies will have to focus on sending all the Arabs oil to China. Since oil is the most important thing in the world, and since BP's profits of 16 billion dollars last year alone would cover any near term or long term clean up cost, I don't see much trouble for BP. The dividend debacle is for political purposes. Anyway, if they don't pay a dividend, that would be better for the stock price. Don't forget the maximum fine is 75 million dollars. The US is a country of laws, and Louisiana is the most lenient of them all.
This isn't their first disaster, and it won't be their last. It's not the cleanup costs of this one: it's what happens when the next one hits. Random events tend to clump together. This won't be the last disaster with the initials BP all over it, and I don't think the wait to the next one will be too long at all.