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Obama vs. BP
Fraser Nelson has an interesting post on The Spectator web site, where he looks at the impact that the BP oil disaster — and Obama’s reaction to it — will have on Anglo-American relations, and at the blame game currently being played.

Nelson points out that BP is a truly multinational company, with 40% British and 39% American shareholding, and a board of directors that includes six British and six American members. Yet Obama has consistently referred to the company as “British Petroleum”, a name it hasn’t used in over ten years.

Maybe it serves Obama’s political interests to talk down BP, to emphasise their non-American former name, to call for the sacking of their senior management, and to interfere with their plans to pay a dividend. After all, getting angry on TV will divert interest from his inability to make a difference.

BP has committed to fix the leak and to pay for the cleanup. It strikes me that we should be supporting the company for the sake or the cleanup, for their ongoing business, for their 92,000 employees worldwide, and for the pension funds on both sides of the Atlantic who are their major shareholders. We all have a stake in this.
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While I agree that the wider base of employees deserves support, there are several factors suggesting the management is just plain bad:

a) It was their board and management that pushed for the cost cutting that caused the blow-out and deaths of their employees
b) They are prioritising their profits over any wider responsibility
c) They're spending vast amounts of effort and money in blocking press coverage and trying to maintain their image rather than the spill

Given that their statutory civil liabilties alone could run to over $180m per DAY (not including any direct costs, criminal liability, lost business, cleanup or compensation), they just don't seem to be taking things very seriously. They're smiling to the press and shareholders while racking up potential liabilities that could kill the company. That's almost as irresponsible as the spill.

British Petroleum merged with Amoco Corporation (American Oil Company) in 1998, becoming BP Amoco plc, then in 2001 changing their name to BP plc. Looking at the history of BP’s oil-related incidents and disasters, the high profile ones all appear to be in the US: the Texas City Refinery explosion in 2005, and later accidental fatalities at that plant, the Prudhoe Bay oil spill in Alaska, and the recent Deepwater Horizon oil spill. Perhaps there is a culture of gung-ho management in their American operation — maybe a legacy of Amoco, who also had a poor history including incidents like the massive Amoco Cadiz oil spill off the Finistère coast in 1978, and the 1980 fatal explosion at a plant in Delaware.

According to news reports, BP’s liability for non-cleanup costs is $75 million under US law unless gross negligence is proven. BP has gone further than this and said it would pay for all the cleanup and remediation regardless of its legal obligation.

Will gross negligence be proven? Is BP solely to blame, or will the other companies involved (the rig owner Transocean, the contractor Halliburton, and others) share the blame? We don’t know yet.

Whatever the outcome, if we are expecting BP to pay out a significant amount of money we need the market to maintain confidence in its business, and we need to maintain the morale of its employees. Its other operations may be covering the costs of this oil spill for years to come.

What else could BP’s management could have done in the past couple of months?

Whatever else happens, lawyers will make a lot of money out of this.

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