BP Demise Would Threaten U.S. Energy Security, Industry

[cory777]

Source: Bloomberg

Oil spill aside, U.S. energy security will suffer if BP Plc goes under or is significantly reduced in size.

With public anger off the charts over BP’s role in the Gulf of Mexico oil disaster, there’s not much sympathy about the financial burden the London-based company faces from future legal claims and cleanup costs. BP says it’s considering asset sales to help cover the cost of a $20 billion escrow fund President Barack Obama demanded the oil producer set up to handle U.S. claims.

The company’s survival may also be in doubt if the financial hit from the Deepwater Horizon rig explosion approaches $100 billion, as some analysts suggest is possible.

Such a scenario would have implications for U.S. energy policy at home and abroad -- and mostly bad ones, Bloomberg Businessweek reports in its June 28 issue. Obama recognized as much when he said on June 16 that “BP is a strong and viable company, and it is in all of our interests that it remain so.”



Read more: http://www.bloomberg.com/news/2010-06-24/bp-s-demise-over-spill-would-threaten-u-s-energy-security-industry-jobs.html

[bluestateguy]

1. Industry propaganda

BP's demise should be the objective.

[dipsydoodle]

2. In which case

that would be Obama's propaganda from the article. I don't however believe that to be the case. One way or another you do infact need BP.

[saigon68]

10. TOO BIG TO FAIL

DISGUSTING

[dipsydoodle]

16. I never did understand

how it was that an insurance company or bank were considered to be too big too fail.

I believe this to be a different situation for you. I'd say BPs most valuable assets outside of their oil interests in Iraq wherever are their pipleline interests which they could probably sell to the highest bidder overnight by just making a few 'phone calls. Assuming it to be true that the Pentagon get 60% of their oil from BP they might not be too happy if either Russia or China gained control of the pipelines particularly the Baku–Tbilisi–Ceyhan pipeline from the Caspian to the Mediterranean.

Take away the Pentagons supply and in the short term at least that could restrict your domestic supply.
How would feel about paying European prices for fuel ?.........c. $6.50 / US gallon.

:hi:

[wordpix]

32. I would not mind $6.50/gal as long as we have subsidized public transportation that works

like Europeans do. They also have subsidized health care and are not paying for the endless wars we're paying for, which we should STOP

[ixion]

20. Indeed... that seems to be the new mantra

whenever one of these international conglomerates gets in trouble, that's what they start whining, just before the gov gives them a big'ol handout. :banghead:

[SkyDaddy7]

18. We don't need BP

Besides BP's demise would be Exxon's gift. Our security is not at risk. This is industry propaganda.

[mbperrin]

49. Why do we need BP? Is there a shortage of executives who want to

attend yacht races, make hundreds of millions of dollars while not taking out insurance on a disaster of their own making?

The world turned a number of times in the 6 billion years before BP. It will continue after, perhaps a little more happily.

[AmericaIsGreat]

3. Uh, the implication would be that we need to get off of oil even faster

And that sure as fuck ain't bad.

Also, lol at costs approaching 100 billion.

At this point we'll be lucky if BP gets hit hard enough to actually hurt them. The 20 billion for claims is just 5 billion over the next 4 years. Unless they have to spend something like 30, 40, 50 billion in a short period of time they will be JUST fine.

[IrishBuckeye]

48. Using fear to bailout the oil industry...hey fear worked for W so why not?

W was voted back in after the shit had hit the fan so I can see why the oil industry wants to use the fear tactic. Of course in reality this means we should get the hell off oil even faster but a fear stuck public will be told what's best for them and you know as sure as shit that they (Big Oil) aren't going to push for that route with any gusto, just some bullshit lip service like they gave in the 70's.

[Frank Cannon]

4. Another "too big to allow to fail" thing, eh?

Well, too fuckin' bad.

[LawnKorn]

5. Right now BP is threating the ecological security of the whole Gulf of Mexico

Evidence of capitalist greed is washing ashore from Texas to Florida. BPs first objective is to stop more oil from entering the water. BP's second objective is to clean up the oil that is already in the water. Survival of BP as a corporation holds a spot far down on the list of things that need attention.

[No Elephants]

12. BP's first objective is to make certain people richer.

[Sherman A1]

23. Precisely

[niceypoo]

6. Global warming will make it a moot point

Within the next ten years

[No Elephants]

7. BP will pay for everything and the 20 billion (at 5 billion per

year) will not be a cap. People will still be free to sue BP.


Put that in your diary (ok, journal, blog, whatever) so you remember that that is what we were told. I never believed it. BP had to have gotten something for its agreement to set up that fund.

Early yesterday morning, I posted that you could take to the bank that, whether or not it ever went bankrupt, BP would NEVER pay for all the damage it caused. NEVER. So, I am not surprised by an effort to convince the American people that their own best interests DEMAND that BP be let off the hook. I am just surprised that it started so soon. I guess it has to, though, bc folks and states will soon start suing BP, if they have not already begun.

[wordpix]

33. daily civil fine around $280M/day so far WITHOUT criminal fine; last wk at $63B with criminal fine

http://www.nytimes.com/2010/06/17/us/17liability.html

As BP watches its bill rise quickly for the oil spill, including $20 billion it is setting aside for claims, it could find the tally growing much faster in coming months if the United States Department of Justice files criminal charges against the company.

Based on the latest estimates, for example, the daily civil fine for the escaping oil alone could be $280 million. But criminal penalties, if imposed, could cause the costs to balloon still further, said David M. Uhlmann, a law professor at the University of Michigan, who headed the environmental crimes section of the Justice Department from 2000 to 2007.

Others note that such penalties could lead to loss of government contracts.

Even misdemeanor convictions under environmental laws could produce stunningly large fines under general federal criminal statutes, Mr. Uhlmann added. That is because the Alternative Fines Act allows the federal government to request twice the gain or loss associated with an offense if the Justice Department shows that a crime was committed.

Predictions by analysts of the overall cost of the spill to BP, when criminal penalties are included, have been rising. On Wednesday, Pavel Molchanov, an analyst at Raymond James, estimated the total legal cost, including criminal fines, at $62.9 billion, which would dwarf the $20 billion escrow account to be used to pay claims of economic loss. snip

:puke: This company is not long for this world.

[No Elephants]

34. Do we know much of those accruing fines has BP actually paid so far?

[wordpix]

42. zero so far, the DOJ has to prove they're criminals to fine them at highest criminal rate/barrel

otherwise, it's a lower rate.

Obama's in a bind---he needs BP to stay solvent to help with their so-called "expertise" and pay out what they can, before they're fined so much they go under.

They deserve to be gone, though.

[Pab Sungenis]

8. More "too big to fail" batsqueeze.

Too big to fail is too big to EXIST.

[No Elephants]

9. Sorry, but the administration begs to differ; and the administration has more clout with Congress

than you or I have.

http://www.huffingtonpost.com/2010/06/03/senate-financial-reform-b_n_599769.html

Then again, almost anyone has more clout with Congress than you or I have.

[notadmblnd]

11. This is a corporation that has 10 billion per quarter in profits

Where the hell has all their money gone?

[dipsydoodle]

13. You will obviously find all of the answers you seek

in their annual report : http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 which has the full accounts. Comparing the dec '09 balance sheet with the dec '08 balance sheet would be a good start.

[wordpix]

43. how about a summary for those of us who work other jobs?

[tomm2thumbs]

14. I have a good idea - let's find out

Afterall, the idiots screwed up an entire gulf - one out of three of America's exposure to the earth's oceans... (and in time working on the second one along the Atlantic). I think that deserves a chance of going out of business entirely.

In fact, I'd say it would be well-earned.

[madrchsod]

15. so stan thinks the rest of the oil industry .....

would`t buy BP`s assets?

[dipsydoodle]

17. There isn't anyone big enough

outside of maybe Petrochina. http://www.chinadaily.com.cn/bizchina/2010-06/11/content_9965569.htm

[No Elephants]

35. Any reason why one company has to buy all the assets?

In liquidations, stuff usually goes piecemeal.

Another possibility: Several companies could form a joint venture for the purpose of acquiring and operating the viable assets.

[dipsydoodle]

38. That's why in the event of receivership

the USA would lose all control over who bought what at the highest price. In most cases that could turn be the Chinese which in turn is one of the issues which may have some bearing on the US government's current relationship with BP. When they talk about "security" you can read as meaning your "economy"

[Scuba]

19. No, it's relying on BP and others like them that puts our energy security at risk.

[No Elephants]

36. And bailouts put EVERYthing at risk.

[truthisfreedom]

21. fix'd: "BP Demise Would Threaten Present U.S. Energy Security, Industry, Must Move On!"

[newfie11]

22. BULLSHIT! N/T

[ejpoeta]

24. from what i can tell, there are several other oil companies with much better safety record.

i am going to bet they could take over whatever oil bp would have and would gladly do so.

[SemperEadem]

25. I highly doubt that

they need to break up all those companies so that one cannot be so big that it cannot fail--oh my!!1 Where have I heard that rhetoric before?

[Burma Jones]

26. Not to mention pensions in the UK.......

Yep, too big to fail......

[dipsydoodle]

28. And equally so in the USA

Odd how that bit is frequently missed out here.

[UpInArms]

27. utter bullshit.

the US is not now nor in the foreseeable future - energy secure

[LaurenG]

29. Then the green industry needs to get a move on

No doubt as we get off oil or oil availability is drastically short we will pay high prices and it will be painful. As far as I can tell though pain is better than the alternative.

[wordpix]

44. how about getting rid of the oil/gas/nuke subsidies & get a Green Manhattan Proj. going?

:shrug:

[JerseygirlCT]

30. Why is it in pronouncements of this sort, that the blame for such

an eventuality is never really placed where it ought to be - on BP?

It's always "don't push too hard, or too far or be too mean to them, because we need them".

If they go under, there's one reason: they gambled, and lost, and took down countless people and entire eco-system in the mix. They're certainly not victims in this, though they created many.

[Odin2005]

31. BS! What a bunch of bald-faced LIARS.

[inna]

37. Blackmail for bailout by taxpayers?

I won't be surprised at all if we'll have to cover the majority of costs.

[lonestarnot]

39. What bullshit. We destroy them because it looks like they've destroyed the entire east coast.

[The Backlash Cometh]

40. Bloomberg. That's like a Wall Street PR rag, isn't it?

[ronnie624]

41. Not if we were really serious about conserving

and used BP's assets to develop technologies for producing clean sources of energy.

[JackRiddler]

45. The entire Gulf may die, or worse, but oh dear please let BP live.

[w4rma]

46. Oh no. We aren't playing this con again. (nt)

[Spazito]

47. Hmmm, why does this strike me as very familiar....

oh, I know, it is the typical fearmongering by industry, whether it is the oil and gas industry or the defense industry, the booga-booga Bin Laden type of fearmongering, imo.

BP can fold and there will still be many oil and gas corporations to 'pick up the slack' I have no doubt and they aren't all the other boogyman, China, imo.

[GeorgeGist]

50. Some would call this sheer genius ...

Obama recognized as much when he said on June 16 that

“BP is a strong and viable company, and it is in all of our interests that it remain so.”

And, some would call it sheer stupidity.