Thursday, June 10, 2010
Bankruptcy or bailout? Those may be the choices for BP
by Larry Geller
I did write that the Gulf of Mexico would be entering hurricane season and practically no one was talking about it. Now there is talk about it.
Probably I didn’t write about my expectation that BP would declare bankruptcy to preserve the fortunes of its executives and owners, but that has been on the (breakfast) table for discussion here at Disappeared News headquarters for a couple of weeks. Between sips of espresso we speculated on how the management team would move to extract their fortunes from the company before sticking everyone else with the cleanup bill.
Isn’t that the American way?
Recently, that’s come up for discussion in articles on the web as well.
This is a quote by “oil and gas industry insider, Matt Simmons” in an article from Fortune:
They have about a month before they declare Chapter 11. They're going to run out of cash from lawsuits, cleanup and other expenses. 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. [Fortune, The Gulf Coast oil spill's Dr. Doom, 6/9/2010]
An alternative scenario is that Obama and Congress bail out BP when it comes crying about the cleanup costs. BP is everywhere in energy in this country, from Alaska to Texas. If any company is too big to fail, it is BP. Besides, they are the only ones busy snipping off bits of pipe or making origami caps to fit on top of the well. They’re drilling the two relief wells. We can’t let them go out of business, can we?
Hurricane season could trigger the bankruptcy. More from Simmons:
Experts forecast an active hurricane season this year. We know it could disrupt efforts to stop the spill, but how else do you think storms could impact the Gulf Coast?
We've got to stop the gusher first. Then we have to deal with the other issues. There's a lake at the bottom of the Gulf of Mexico that's over 100 miles wide and at least 400 to 500 feet deep of black oil. It's just staying there. And only the lightest of that is what we're seeing hitting the shores so far. If a hurricane comes and blows this to shore, it could paint the Gulf Coast black. We should have been pumping this oil out onto other tankers weeks ago.
But then, no one asked Simmons. Obama has relied on BP to manage their own disaster, and that decision has been a disaster in its own right. Former General Electric CEO Jack Welch tweeted this morning:
Inviting 5 oil CEOs to testify next week..WH should have had them and their best scientists in Wash solving problem.for past 7 wks
BP has insisted recently that there is no oil under the sea, just what’s on top. BP has been keeping journalists away from covering the extent of damage. BP has paid fishermen to clean up some of the oil without necessary protection. Reports came out early on that BP was pushing signed settlements for very little money in exchange for silence about the drill rig explosion and leak. BP is accused of consistently underestimating the volume of oil discharged. BP did not have contingency plans to immediately deal with a blowout. BP did not have the mechanism in place that might have shut off the oil. BP continued using its toxic dispersant when told not to. According to this morning’s news, BP is spreading toxic chemicals from helicopters onto oil slicks in inland waters where they won’t disperse. BP will be bailed out so it can carry on its important work in providing this country with energy.