BP Holds Gulf, Congress Hostage


A couple of weeks ago, when BP managed to link its $20 billion commitment to “make things right” with continued Gulf of Mexico oil production, some of us worried that the linkage might create a subtle incentive for Congress and regulators to “go easy” on regulation – including any outright bans.

We were wrong: there’s nothing subtle about it. And let me be among the first to call FOUL!

The New York Times covers the ransom today, quoting Fadel Gheit, a managing director at Oppenheimer & Company, who guesses that the Gulf generated $5 billion to $7 billion in annual profits for BP, or about a quarter of the company’s total.

“If we are unable to keep those fields going, that is going to have a substantial impact on our cash flow,” said David Nagle, BP’s executive vice president for BP America. That, he added: “makes it harder for us to fund things, fund these programs.”

The NYT quotes Gheit as being fairly dismissive of BP’s warning that it might not be able to meet its financial obligations. “BP has substantial assets, whether they develop them or sell them,” he said. “If BP needs to sell assets to meet its financial obligations, that’s a decision they have to make.”

You know that thing people do, where they say: “I don’t want to tell you how to live your life, but…”? Well, that would seem refreshingly candid, transparent and helpful after what the BP folks are doing.

Says one contradiction-challenged BP exec: “I am not going to make a direct linkage to the $20 billion, but our ability to fund these assets and the cash coming from these assets that are securing these funds would be lost”… if the House bill were enacted by Congress.

The amazing New York Times story is here: http://www.nytimes.com/2010/09/03/business/03bp.html?_r=1&th=&emc=th&pagewanted=print

© Smith Stag, LLC 2010 – All Rights Reserved

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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