Energy News  
ENERGY TECH
BP 'shakedown' remark sets off US political furor

BP readies war chest as spill costs mount
Washington (AFP) June 16, 2010 - Embattled oil giant BP froze payments to shareholders Wednesday and announced plans to offload billions of dollars in assets, as it faced mounting costs from the Gulf of Mexico oil spill. On the same day that the firm was dragged to the White House, where it agreed to set aside 20 billion dollars for spill costs, executives announced a series of belt-tightening measures to save the company around 17 billion dollars this year. Emerging from a meeting with President Barack Obama, BP chairman Carl-Henric Svanberg vowed the firm would live up to all "legitimate responsibilities," as executives moved to reassure investors the 101-year-old firm will not go under. Regular payouts for shareholders will be frozen for the rest of the year, Svanberg said, saving the firm an estimated seven billion dollars, and quelling a major source of public anger.

Top US lawmakers had demanded the company cover all costs of the spill before rewarding shareholders with a dividend that usually amounts to around 2.5 billion dollars per quarter. "The BP board decided we will not pay any further dividends this year," said a contrite Svanberg, as he apologized for the spill. "Words are not enough. We understand we will and we should be judged by our actions." Meanwhile BP chief financial officer Byron Grote told investors the company would try to offload 10 billion dollars' worth of assets this year to save costs.

Outlining a "deeply conservative fiscal approach" in the face of still unknown costs of the spill, Grote said the firm would sell mainly "non-core" assets. BP must pay five billion dollars into the escrow fund by the end of the year and a billion dollars each quarter for the remaining three years. While the fund is being built, BP said it would set aside 20 billion dollars worth of US assets as collateral. Grote said the 20 billion figure came from "negotiation with US government officials," he said. "Setting up this fund is merely a vehicle... if the fund is not fully utilized then BP would be able to pull out any residual funds that are in there."

The White House meanwhile insisted that the fund's value of 20 billion dollars was "neither a floor nor a ceiling on liability," and announced BP would also chip in an additional 100 million dollars to help oil workers who have lost their jobs. The account will not be used to pay fines or penalties that BP incurs. Wall Street reacted positively to the news, with BP's shares trading up around 1.5 percent in New York at the close. Analysts said BP, which has already spent some 1.6 billion dollars battling the spill and made a profit of around 14 billion dollars in 2009, should be strong enough to weather the storm even if it has to borrow more. "Regardless how the payments mechanically happen, BP has the financial strength to fund it," said Jason Gammel of Macquarie Research. "They have enough cash flow and quality assets that will allow it to fund that type of liability."
by Staff Writers
Washington (AFP) June 17, 2010
A US lawmaker kicked off a political storm Thursday and embarrassed his own Republican party by apologizing to BP chief Tony Hayward for what he termed a White House "shakedown."

"I'm ashamed of what happened in the White House yesterday," Joe Barton told Hayward during a congressional hearing, referring to the fact that BP bosses summoned to a meeting with US President Barack Obama had then agreed to set up an oil spill disaster fund.

"I apologize," said the Texas representative. "It is a tragedy of the first proportion that a private corporation can be subjected to what I would characterize as a shakedown, in this case, a 20-billion-dollar shakedown."

His remarks about the fund, meant to pay for environmental and economic devastation from the worst ecological catastrophe in US history, drew immediate condemnation from the vice president and White House press secretary Robert Gibbs.

Vice President Joe Biden attacked the comments as "outrageous" and "incredibly insensitive, incredibly out of touch," while Gibbs blasted Barton for caring more about big business than devastated fishing communities.

"What is shameful is that Joe Barton seems to have more concern for big corporations that caused this disaster than the fishermen, small business owners and communities whose lives have been devastated," said Gibbs.

"Congressman Barton may think that a fund to compensate these Americans is a 'tragedy,' but most Americans know that the real tragedy is what the men and women of the Gulf Coast are going through right now. Members from both parties should repudiate his comments," Gibbs said in a statement.

Republican leaders quickly issued a statement distancing themselves from Barton, who has been the biggest single recipient of oil industry money in the House of Representatives since 1989, according to independent figures.

"Congressman Barton's statements this morning were wrong," said House Republican leader John Boehner and his colleagues Eric Cantor, and Mike Pence.

Barton's remarks provided Hayward with a brief moment of respite as he fended off a barrage of criticism from politicians on both sides of the aisle, venting spleen in part to please audiences back in their home constituencies.

The congressman later attempted to backtrack from his earlier position, but the retraction was unlikely to assuage anger in the Gulf region where the livelihoods of many are at risk from the spill.

"I apologize for using the term shakedown' with regard to yesterday's actions at the White House in my opening statement this morning, and I retract my apology to BP," his statement read.

"I regret the impact that my statement this morning implied that BP should not pay for the consequences of their decisions and actions in this incident."

Conn Carroll, an editor for the conservative think-tank The Heritage Foundation, was one of the few to defend Barton, agreeing that the White House meeting a "shakedown of Godfather-like proportions."

"All of this was 'negotiated' while Attorney General Eric Holder, who has already threatened BP with criminal prosecution, stood in the corner," Carroll said.

"And what did BP get in return? A single statement from the president saying he did not want to drive BP into bankruptcy. Of course he doesn't. The mob can't collect from a bankrupt business."

But Barton's remarks were widely seen as a huge gaffe that will have gifted Democrats the opportunity to deflect Republican criticism of Obama's leadership over the spill and instead allow the conservatives to be attacked over their traditional links to Big Oil.

Douglas Weber of the Center for Responsive Politics, a nonpartisan research group that tracks money in US politics, confirmed that Barton had received 1,676,930 dollars in total campaign contributions from the industry since 1989.

"He is the biggest recipient of oil and gas industry campaign contributions since 1989 among the current House members," Weber told AFP.

Some, even Republicans, called on Barton to step down from his position as ranking member of the Energy and Commerce Committee.



Share This Article With Planet Earth
del.icio.usdel.icio.us DiggDigg RedditReddit
YahooMyWebYahooMyWeb GoogleGoogle FacebookFacebook



Related Links
Powering The World in the 21st Century at Energy-Daily.com



Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News


ENERGY TECH
US faces balancing act over BP sanctions
Los Angeles (AFP) June 16, 2010
The United States government must perform a careful balancing act as it considers how to sanction BP over the Gulf oil disaster without tipping the energy giant into insolvency, analysts say. Under intense pressure from President Barack Obama, BP on Wednesday announced the setting up of a 20-billion-dollar fund for spill victims as the company outlined a series of belt-tightening measures to ... read more







The content herein, unless otherwise known to be public domain, are Copyright 1995-2010 - SpaceDaily. AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by SpaceDaily on any Web page published or hosted by SpaceDaily. Privacy Statement