Did anybody know that June 12th was 'Worldwide BP Protest Day?' We missed that one entirely. In mid-June CNBC had BP's stock on deathwatch and the pundits were lashing out at the company, guns blazing. One of our friends even had the conviction to write "BP stands for bankruptcy pending" on his Facebook status (June 25th). That's when we knew the haters' nonsense had reached deafening levels. We actually bought some BP stock that very day. Then there was the lame spoof video that clocked nine million YouTube hits. As of this writing, 'Boycott BP 'has 809,043 fans on Facebook, and that count is up by 5,500 since we started drafting our thoughts on BP last night. "Boycott BP stations. BP brands include Castrol, Arco, Aral, AM/PM, Amoco," the protesters say. We think that all this hating on BP is overdone!Here is a fact: BP screwed this one up, big time. They weren't alone out there on the deep sea and there were several cooks in the kitchen. Nobody can argue against that. Sadly, a lot of these BP haters don't know the first thing about crude oil, deep-sea drilling, off-shore rigs, or blowout-preventers. Nor do they have a pragmatic solution for the issues America faces with energy dependency. BP is at fault here, but people need to take a chill-pill and gain a little perspective.
Oil has become harder to find onshore and as such, many of the new wells are being discovered hundreds of miles deep offshore. Extracting oil at these depths makes open heart surgery look like a routine checkup. A lot of new drilling activity these days is being conducted off the shores of West Africa, South America, and Russia. These are corrupt places where the rule of law means fuck all. It's almost a miracle we haven't seen MORE oil spills like this in the last decade. Finding oil onshore or in sovereign waters is also a matter of national security; hence our decision to invade Iraq twice in as many decades. Permit us some sarcasm, but the U.S. military created a mess in Iraq that cost taxpayers nearly $750 billion. That's a burden 16 times larger than the estimated $50 billion needed to rectify the Deepwater Horizon mess.
In the case of the Deepwater Horizon spill, BP and their service providers won't be let off the hook lightly. But some of the criticism should be directed at the EPA and government for refusing foreign aid and domestic sources of expertise in the days following the spill. Even tiny Netherlands volunteered to send over ships to help with the clean-up effort; we refused their aid over some ridiculous EPA redtape. The whole thing is ridiculous. BP has coughed up $3 billion in the last two months for cleanup efforts and have been diligently compensating Gulf-area residents. They've suspended more than $10 billion in dividends scheduled to shareholders. Can they do more in the months ahead? Yes, and they'll pay for it dearly. The company is already setting aside $20 billion to pay spill damage claims and will be divesting assets to free up more cash.
Our politicians don't have the right to take hostage and bankrupt a company that is so relevant to both the UK and the US. Activists should stop demanding the same. While BP could put their North American subsidiary through bankruptcy, suspend new exploration in the Gulf, pay claims and divest assets, we don't think BP America deserves to be shut down on account of this gaffe. BP CEO Tony Hayward's Congressional hearings last month were embarrassing to watch. I wish Congress would have displayed the same amount of disgust and concern for their constituents before allowing the White House to waste a trillion dollars invading Iraq and Afghanistan. BP didn't set out to create this environmental disaster, they just goofed-up in a really bad way. We think that BP has already been humiliated enough and our politicians should quit their posturing.
Welcome Alternative: What we find most disgusting in this BP saga are the tort/liability lawyers lining up to make handsome paychecks off of the oil-spill. They've been scheming up clever ways to sue the hell out of BP and the drillers since day one. Filing claims and facilitating compensation for people whose lives has been disrupted in the Gulf is one thing. Tort laywers (ambulance chasers) however, shouldn't be allowed to enrichen themselves and their firms from this mishap. For people sitting at home hiding behind Facebook, we recommend you calm down and think this one through a bit. The reality is that too many livelihoods in the Gulf depend on the oil industry and off-shore drilling. We depend on risk-takers like BP for the Nation's economy to keep ticking. And please don't rush to boycott BP gas stands; BP only owns 5% of those pumps in the first place. Most of the 11,500 BP-affiliated pumps are owned by hard-working Americans just trying to make a living. Before jumping on some trendy bandwagon next time, think about your intentions and pause before hitting that 'join' button.
Footnote: Here is an interesting glossary on the BP oil spill, if you're so inclined to check it out.
120 (proj. # days spill) *4300 (cost per barrel of oil) *100,000 (# barrels of oil / day) = $51+Bn; BP mkt cap = $106 Bn. There are a few variables in there. If BP were to pay what they should based on regulatory penalties, there's a chance a significant %age of their market cap would go to cover fines. But they won't have to b/c they've never had to, so why would that change. I'm not hatin', I'm just doing some math. And do I think we need to reduce our reliance on oil? yes. Foreign and otherwise. This isn't a BP issue, it's a global security issue. As you said, enough money has already been spent (Desert Storm I and II) trying to secure our claim on foreign oil when we don't have that money to spend. Why not innovate new technologies that keep our already huge defense budget down, so we create new jobs and can focus on being efficient rather than fiscally profligate. WEB Du Bois said the problem of the 20th century will be the problem of the colorline. The problem of the 21st will be energy. It already is and we're only in year 10. I agree, focusing on BP as the culprit - jumping on the all-things-BP-are-bad bandwagon - misses the point and lacks the level of critical analysis you put into your article. This isn't a BP issue, it's a larger macro issue that needs to be addressed, but if attention to BP (and a few others' blunder) is what galvanizes a call for change, so be it. This is the nature of the internet and the nature of humans. Leveraged voyeurism and voice. Plus, all the negative talk drove the stock px down allowing you to pick up some cheeky uberundervalued ITM calls. So look on the brightside, sunny.
ReplyDeleteImagine Joe the Plumber had his way and BP went broke. Who is then going to have to pay to clean up the spill? Oh yeh Joe the Plumber. Let me guess he'll then be whingeing again.
ReplyDeleteI read last week that 2/3 of the american trade defecit is paid to Opec each year for the approx 10 million barrels of oil per day. Why then would you want to say goodbye to a company who not only reduces this number but also pays American employers and Taxes?
Great article, but in my opinion it lacks a paragraph on a very important concept: accountability. It is true that boycotting BP is silly. But it is also very true that the deepwater horizon with its 4 million barrels of oil spilled (and counting) is not just a "gaffe" but a complete social/economical/enviromental disaster. I hope it will serve as a lesson for "risk takers" like BP. Accountability should be ethical more than financial but I am not too sure how it could materialize itself in the coorporate world...
ReplyDelete