A fortnight after the explosion on the Deepwater Horizon rig in the Gulf of Mexico, 5,000 barrels of oil a day are still spilling into the sea and the slick is as big as Luxembourg. BP executives were interviewed this week as part of a congressional investigation into the incident. The Obama administration vowed to keep its “boot on the throat” of BP to ensure it pays for the clean-up.
What the commentators said
This is an “environmental calamity in the making”, said Lex in the FT. It could be three months before BP can stop the leak. So it’s too early to gauge the impact on BP’s finances and reputation. It underestimated the scale of the incident last week when it reported its first-quarter earnings, and has since appeared to be “playing catch-up”. It now says the clean-up is costing $6m a day. Nomura reckons the bill could ultimately reach $10bn.
In which case, the $29bn of value wiped out by investors may appear overdone, said Fiona Maharg-Bravo on Breakingviews. But there is a great deal of uncertainty surrounding this case. One issue is whether the leak can really be stopped within three months. This incident could also make it harder to secure exploration licences in America. As such, the market’s reaction is not “totally irrational”.
BP: 564p; 12m change 15%