Rep. Joe Barton’s apology to BP CEO Tony Hayward before a congressional committee this morning is sparking a lot of discussion. Barton said he was speaking for himself in calling a $20 billion fund, set up at the White House’s urging, a shakedown. It’s already become political fodder.
But is the fund, to pay claims to businesses that have suffered economic losses from the Gulf oil spill, really a shakedown, or is it a gift to BP? It seems to have buoyed BP’s stock for the moment, and it also appears to offer a cap of sorts on the company’s liability.
The money isn’t really the issue. BP knows it’s going to wind up paying that much, and perhaps more, one way or another.
The government can require BP to put more in the fund if $20 billion isn’t enough, but what happens in the meantime? Now it’s the government, not BP, that’s reviewing, paying and rejecting claims.
No matter who administered the fund, of course, it’s likely to become a bureaucratic mess. But now, when fishermen on the Gulf Coast have their claim rejected or feel they aren’t getting enough, they aren’t going to be mad at BP. They’re going to be mad at President Obama.
The administration must now decide how many fish weren’t caught, how many hotel rooms would have been sold if, and so on. It’s a thankless task that will backfire.
Of course, the administration’s worried about how to pay claims if BP goes bankrupt, but wouldn’t it make more sense to leave them holding the liability as long as possible?
Instead, BP has managed to offload some of the future public outrage over the spill, all while Barton coos sweet nothings to the CEO who’s presided over one of the country’s worst economic disasters.
BP has an army of spin doctors working on muting the outrage about the Gulf of Mexico oil spill, but you wouldn’t know it listening to Tony Hayward’s congressional testimony today.
Hayward keeps reiterating his carefully crafted PR talking points, but he’s not answering lawmakers’ questions.
Hayward insisted that he’s had a “laser focus” on safety since he became CEO three years ago.
We’ve engaged in a systematic change at BP. I’m not saying there isn’t more to do. We’ve made safe, reliable operations the core of the company. We have focused like a laser on safe and reliable operations. Every day.
Rep. Bart Stupak, D-MI, then asked what changes had been made since April 20.
“As we learn more about what happened here we will continue to make changes,” Hayward said.
Hayward continued to review what BP had done and vowed to continue to make changes, but he refused to provide his own assessment of what went wrong aboard the Deepwater Horizon. He said he wasn’t involved in specific drilling decisions, even though he has since reviewed the documents. Asked to draw his conclusions based on the information already available, Hayward responded: “I haven’t drawn a conclusion.”
An exasperated Henry Waxman, D-Calif., shot back: “You’re not taking responsibility. You’re kicking this can down the road.”
We are almost two months into this crisis and the guy in charge hasn’t drawn a conclusion? As CEO, he should have made that conclusion within days.
In his opening remarks, Hayward said “none of us yet knows why it happened.” But we do. We don’t know all the details, like why the blowout preventers were compromised, but Hayward’s testimony shows that the same problems that have perpetuated disaster after disaster at BP continue. Much may have changed, but it hasn’t been enough.
Hayward’s laser beam needs stronger batteries.
No really. At a hearing in Washington, Rep. Joe Barton, R-Ennis, said while he believes BP is liability for the oil disaster in the Gulf of Mexico, he thinks it’s wrong that the White House forced the company to set up a $20 billion fund to pay liability claims.
Barton called the fund a “$20 billion shakedown” and said the normal legal process should be allowed to work. Then, speaking only on behalf of himself, he apologized to BP CEO Tony Hayward.
Barton claimed the creation of the fund was unprecedented in American history. Perhaps, but then, so is this oil spill and the economic impact resulting from it. Given the plunge in BP’s market value since the disaster, it’s legitimate to question the company’s ability to pay claims over the long term or even, for that matter, to survive. In fact, if BP gets taken over, a pre-packaged bankruptcy would likely set up a similar fund.
Besides, President Obama probably didn’t have to do much arm-twisting to get BP to agree. After all, it sends a message to investors that the liabilities are, essentially, walled off to some degree. That may explain why it’s shares have been rising the past two days.
Either way, it’s an odd time to be apologizing to the company that’s unleashed one of the worst oil spills in our history.