Five weeks after the Deepwater Horizon drilling rig blew up, creating an oil slick in the Gulf of Mexico bigger than Luxembourg, BP is still struggling to contain the leak. Now oil has reached the coast. Political pressure on the company is growing as the US government itself comes under fire for its handling of the spill. “We will keep our boot on their neck until the job gets done,” said US Interior Secretary Ken Salazar. A criminal investigation looks increasingly likely after a preliminary internal investigation pointed to safety failings. BP’s shares have lost 26% in four weeks, wiping more than $50bn off its value.
What the commentators said
UBS reckons that the episode will cost BP around $5bn, noted Lex in the FT. But this assumes that the leak will soon be stopped and that “juries in affected states will not return unexpectedly large damages claims”. It’s also hard to gauge the response of regulators in the US, BP’s biggest market, accounting for 40% of its business. With Congressional elections approaching “extracting what might
seem an unreasonably large pound of flesh from BP could prove tempting”. The Environmental Protection Agency could bar BP from receiving further federal government contracts. Such a move could cost “billions in revenue”, according to Propublica.org.
The worry now is whether BP will maintain its $10bn dividend, said Richard Fletcher in The Daily Telegraph. BP’s spin doctors say it’s safe. But “these are of course the same people” who at first insisted that no oil was leaking from the rig. They then had to concede that BP was siphoning off only around 2,000 barrels a day from the well, rather than the 5,000 initially claimed. Chief executive Tony Hayward’s odds of surviving this episode “shorten by the day”.
BP: 481p; 12m change -3%