Spill baby spill, slippery politics

@hawkeye10,

Well, the good news is that 51 days later, they've reconsidered and will now accept the help.

@Irishk,

BP filing for chapter 11 within one month ?

http://abcnews.go.com/Business/bp-survive-company-result-oil-spill-gulf-mexico/story?id=10874702

Quote:

http://abcnews.go.com/Business/bp-survive-company-result-oil-spill-gulf-mexico/story?id=10874702

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@hamburgboy,

sorry - pls ignore previous post - i dawdled too long - my comments didn't make it - be back later .

1 Reply

@hamburgboy,

How would chap11 work for BP? Would it go something like this...

* BP gets debt protection from Chap11
* BP loses stock value and becomes ripe for buyout
* Some other oil company buys them and all their assets
* BP execs get a big bonus from the buyout and leave their jobs for a year and take time off in their mansions (far from the oil spill).
* Then next year they are hired by the other oil companies (maybe at a slightly lower multi-million $$$ salary) and start over again at a fresh company.
* Most of the employees of BP are simply shifted over to the new company and continue pretty much as before.

Is that about right?

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i think it is annoying that obama is blaming BP and everyone is going along with it.

Absolutely no one is pointing out the fact that all the parts that go into the extraction of the oil require government certification and checking. Which means every month the government is suppose to inspect the tools and equipment and give it a pass or fail notice. It is not BP's fault if the government is claiming the equipment is good and there is a failure.

The second problem is that the government forced BP into going into deeper water since the government outlawed shallow drilling.

This is a failure of government period yet no one is placing the blame where it should be because they have done a great job deflecting the blame onto the companies as always.

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@Krumple,

Krumple wrote:

i think it is annoying that obama is blaming BP and everyone is going along with it.

Absolutely no one is pointing out the fact that all the parts that go into the extraction of the oil require government certification and checking. Which means every month the government is suppose to inspect the tools and equipment and give it a pass or fail notice. It is not BP's fault if the government is claiming the equipment is good and there is a failure.

Seriously? Of COURSE it is!

The first responsibility remains with the operator of the device. Let's say that your brakes fail one day - they had been squeaking, but you were going to take them in next week, just hadn't got around to it - and you get into a wreck and hurt someone. Is it credible to blame the government, because they inspected your car earlier in the year (a requirement for your registration) and didn't report a problem?

Quote:

The second problem is that the government forced BP into going into deeper water since the government outlawed shallow drilling.

Nobody forced anyone to do anything. BP decided to go into deeper waters, because they wanted to make profits.

Quote:

This is a failure of government period yet no one is placing the blame where it should be because they have done a great job deflecting the blame onto the companies as always.

Government should have had stricter oversight, yes. But oversight is the second line of defense. The first is the original owner of the device, who has a clear duty to maintain their machine - and a financial interest in doing so.

Cycloptichorn

1 Reply

@hamburgboy,

back from lunch and picking up on previous post :

Quote:

The latest sell-off came after respected oil industry analyst Matt Simmons told Fortune Magazine that a bankruptcy filing was likely within a month. "They're going to run out of cash from lawsuits, cleanup and other expenses," he said.

"One really smart thing that Obama did was about three weeks ago he forced BP CEO Tony Hayward to put in writing that BP would pay for every dollar of the cleanup.

But there isn't enough money in the world to clean up the Gulf of Mexico.

Once BP realizes the extent of this, my guess is that they'll panic and go into Chapter 11."

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@hamburgboy,

A lot of these guys are talking like BP should do a GM, which is go through a prepackaged bankruptcy that sheds debt, and then come out a shiny BP. This does not work because

1) politically the US can not allow BP to shed liability for what they have done to us

2) the BP brand is ruined

I would look for BP going into bankruptcy around the end of the year after its cash runs out, and for the assets to be broken up and sold off since they are too big for another oil company to swallow. The multi company BP structure and the international nature of BP might complicate things though.

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@hawkeye10,

hawkeye10 wrote:

2) the BP brand is ruined

But they have such a nice green-leafy environmentally friendly logo, how can their brand be ruined? Confused

But seriously, their logo just makes me laugh. Their name is British Petroleum, their logo should be a big giant brown oil drop, but instead it's the eco-friendly looking green leafy sunny-day looking thing. That's great marketing. Why can't I think of stuff like that.

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looks like Shell Oil is going to get bigger.

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@hawkeye10,

hawkeye10 wrote:

2) the BP brand is ruined

i wonder, as hard as it might be to believe now, people have short memories, one day this will be just another question morning show dj's ask to show the passing of time

sort of like the oklahoma bombing, and event that for the most part has become a "holy **** has it been X-many years since that happened" kind of thing

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1. I don't think it's humanly possible to clean up the oil spill.

2. I think it's the incestuous relationship between government (ours and others) and mega-corporations (like BP and many other giants) that are the root cause of these statistically predictable (if they were being honest with themselves) accidents.

Let's face it, catastrophic accidents in large scale systems like this should not be a surprise to anyone. They are not anomalies, they have a certain probability within a possible range of failure. NASA once calculated that the shuttle system had a "1 in something" probability of a catastrophic failure, and all complex systems are this way. But we plow ahead anyway, partly because it seems worth the risk, and partly because the risk isn't being analyzed honestly or accurately. If someone said there's a 50/50 chance one of these oil rigs would explode per year nobody would have done it. But they said, "our complex calculations show that there's a 1 in 1000 chance of this happening in the next ... pick a number... 50 years", so everyone went along with it. But the complex calculations were probably wrong, and some of that was probably due to denial and some of it was probably due to greed because they didn't WANT the odds to be greater, and some of it was probably due to simple human error, and then of course there's plain old bad luck.

But in any case, I think the Gulf is ruined. RIP Gulf of Mexico.

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@rosborne979,

they were having some success repositioning themselves from being an oil company into being a green energy company. Big bucks were being spent on the marketing, people were starting to believe it, even though by the numbers BP is still almost completely an oil company.

This disaster is a every news cycle message that BP is still a nasty oil company, so all that green storyline has been lost. More importantly Governments and corporate partners have now been taught that BP can not be trusted. Seriously, if you owned a drilling rig would you want to lease it to BP? Do your employees want to work on a BP contracted rig? BP just killed 11 people, few or none of them actually worked for BP.

BP has been a dangerous company for almost a decade, current management was beginning to turn around the perception that BP management is not able/willing to operate safely. This is now a lost cause I think, it would take 20 years to trust BP again. That is just to long to wait, the investors will do better by selling off the assets, killing BP.

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@djjd62,

They will just change their name. Happens all the time.

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@Swimpy,

the culture at BP is bad, this does not get changed except by killing BP or having them eaten up by Shell or someone else. A simple name change will not cut the mustard.

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@Cycloptichorn,

Quote:

Is it credible to blame the government, because they inspected your car earlier in the year (a requirement for your registration) and didn't report a problem?

When the mandatory testing of cars began in the UK (the MOT test) licences were issued more or less on application to garages. It soon turned out that a few of these garages were simply selling the certificate. They were soon detected and closed down. It is credible here to blame the testing station if a fault which existed at the test time subsequently causes an accident. Which is why those garages which do the testing are very strict and let nothing go by.

In the case of larger vehicles the Government runs the testing stations and nothing gets past their inspection teams.

Quote:

Nobody forced anyone to do anything. BP decided to go into deeper waters, because they wanted to make profits.

That's a bit naive Cyclo. You're just taking advantage of Krumple using the word "forced" when strictly speaking a lower level pressure is the case.

Quote:

The first is the original owner of the device, who has a clear duty to maintain their machine - and a financial interest in doing so.

Staying with you automobile comparison you wouldn't hire a car and then have it tested before driving it. BP hired the Transocean Deepwater Horizon facility which was made in North Korea. £500,000 a day or something. I think Transocean is registered in some distant small island in the Pacific.

I think most operators on the rig were American. All the regulation was American. All the oil was for American use in lowering purchase prices.

Only companies as large as BP can take the risks involved in exploring these marginal fields. If BP gets crucified no other company will take the risk. So deepwater oil will be forgotten about and your oil importation bill will grow.

They will laugh at Mrs Palin saying "Drill baby drill" and nods and winks from Vice Presidents.

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@hamburgboy,

But, I think they have always been 100% liable for actual cleanup. It's the liability for resulting damage that is capped at, I believe $75 million.

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@roger,

clean up a very small part of the economic damage, you have lost economic activity all over the place, and if the ecosystem is damaged you have lost fishing and tourism damage for decades. Florida has already predicted at least $10 billion in economic damage from what has taken place to date. BP liability here could easily swallow the company if they are could criminally liable

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@hawkeye10,

Is there a downside, except to stockholders and management? The assets are rigs, other equipment, and leases - none of which cease to exist if Bp goes out of business. I doubt even bondholders and other lenders will even get too much of a haircut. In happened in the US auto industries, but I don't suppose the precedent would apply in the UK.

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@roger,

I am arguing that BP stakeholders come out ahead if BP goes away, because almost all of the value of BP is in assets that can be sold to a better operator. Yesterday BP market cap was actually below the book value of the company..it s up some today but this tells me that the market values BP the company in the negative zone.

I would like to hear someone explain to me why the stakeholders will not FORCE BP into bankruptcy so that they can get a better return. Perhaps there is something here that I dont understand.

1 Reply

Spill baby spill, slippery politics

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