White House, BP Headed for Showdown on Spill?
The relationship between the White House and beleaguered energy giant BP may become increasingly combative over the costs of the massive Gulf oil spill, as the U.S. seeks to widen the scope of BP's damage liability.
Efforts to contain the undersea oil leak appear to be progressing, but cleaning up the millions of gallons of oil in the Gulf of Mexico and paying out damage claims to affected residents in the region remains a daunting task for the British energy company.
The oil giant said it expects to spend $84 million through June alone to compensate people for lost wages and profits. That number could grow as new claims are received. When it is all over, BP could be looking at total liabilities in the billions, perhaps tens of billions, according to analysts.
Special Section: Disaster in the Gulf
Now the U.S. government is "planning to take action" to make sure BP sets aside enough money to cover spill-related damages, a senior Justice Department official told Reuters.
And the pool of claimants may be getting bigger. The U.S. is expected to ask BP to repay salaries of oil rig workers who lost their jobs when the government imposed a six-month moratorium on deepwater drilling.
"The moratorium is as a result of the accident that BP caused. It is an economic loss for those workers, and ... those are claims that BP should pay," White House spokesman Robert Gibbs said Wednesday.
A BP source told Reuters that the company is concerned over the widening scope of possible payments and said it might be heading for a showdown with the White House. The company may argue that the government is responsible for moratorium-related losses, not BP, the source said.
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Ask CBS News: Is BP Hiding Anything?
Tempers Flare in Gulf as BP Burns Oil
How Much Oil Has Leaked?
Scared Investors Send BP Shares to 14-Year Low
Read Adm. Allen's Letter to BP CEO Tony Hayward
BP Given 72 Hours to Develop Better Plan
BP's Spill Contingency Plans Vastly Inadequate
Oil Spill Wildlife Devastation
Meanwhile, U.S. Associate Attorney General Thomas Perrelli told a Senate Panel that the Justice Department is looking at the possibility of issuing an injunction against the company to stop paying its dividend.
In New York, BP stock dropped $5.45, or 16 percent, Wednesday - easily its worst day since the April 20 rig explosion that set off the spill. In the seven weeks since then, the company has lost half its market value.
In London Thursday, the stock had dropped as much as 11 percent to a 13-year low at the opening as experts warned dividend payouts would likely be postponed. However, it recovered some ground by midmorning, trading 4.3 percent lower at $5.47, as analysts suggested the sell-off was overdone.
In a statement released early Thursday morning, BP PLC said it isn't aware of any justification for the sharp sell-off in its shares in U.S. trading. The company underlined what it said was a strong financial position in the statement, released just before the London Stock Exchange opened, claiming "significant capacity and flexibility" to deal with the cost of responding to the spill.
But analysts clearly blamed the pressure BP faces from the U.S. government.
"We don't believe BP has a funding issue but given the overwhelmingly hostile nature of the U.S. government the company may decide to suspend payments until the wells are capped and the clean-up sufficiently advanced to convince the US that it can afford all the costs as well as pay dividends," said Evolution Securities analyst Richard Griffith. "Unilateral action against BP over its U.S. operations, be it unreasonable or illegal, hangs over BP."
The Obama administration has ramped up its rhetoric in the last week over BP's spill response. In an interview with with NBC's "Today Show" Tuesday, President Barack Obama said he wanted to learn all he can about he spill in order to "know whose ass to kick."
On Wednesday, Coast Guard Adm. Thad Allen sent BP CEO Tony Hayward a letter demanding more openness regarding the company's claims process, which has increasingly frustrated Gulf coast residents.
Fishermen, property owners and businesspeople who have filed damage claims with BP are angrily complaining of delays, excessive paperwork and skimpy payments that have put them on the verge of going under as the financial and environmental toll of the seven-week-old disaster grows.
"Every day we call the adjuster eight or 10 times. There's no answer, no answering machine," said Regina Shipp, who has filed $33,000 in claims for lost business at her restaurant in Alabama. "If BP doesn't pay us within two months, we'll be out of business. We've got two kids."
BP spokesman Mark Proegler disputed any notion that the claims process is slow or that the company is dragging its feet.
Proegler said BP has cut the time to process claims and issue a check from 45 days to as little as 48 hours, if the necessary documentation has been supplied. BP officials acknowledged that while no claims have been denied, thousands and thousands had not been paid by late last week because the company required more documentation.
Allen this week created a team including officials from the Federal Emergency Management Agency to help with the damage claims. It will send workers into Gulf communities to provide information about the process.
Under federal law, BP is required to pay for a range of losses, including property damage and lost earnings. Residents and businesses can call a telephone line to report losses, file a claim online and seek help at one of 25 claims offices around the Gulf. Deckhands and other fishermen generally need to show a photo ID and documentation such as a pay stub showing how much money they typically earn.
To jump-start the process, BP was initially offering an immediate $2,500 to deckhands and $5,000 to fishing boat owners. Workers can receive additional compensation once their paperwork and larger claims are approved. BP said it has paid 18,000 claims so far and has hired 600 adjusters and operators to handle the cases.
CBS/AP Efforts to contain the undersea oil leak appear to be progressing, but cleaning up the millions of gallons of oil in the Gulf of Mexico and paying out damage claims to affected residents in the region remains a daunting task for the British energy company.
The oil giant said it expects to spend $84 million through June alone to compensate people for lost wages and profits. That number could grow as new claims are received. When it is all over, BP could be looking at total liabilities in the billions, perhaps tens of billions, according to analysts.
Special Section: Disaster in the Gulf
Now the U.S. government is "planning to take action" to make sure BP sets aside enough money to cover spill-related damages, a senior Justice Department official told Reuters.
And the pool of claimants may be getting bigger. The U.S. is expected to ask BP to repay salaries of oil rig workers who lost their jobs when the government imposed a six-month moratorium on deepwater drilling.
"The moratorium is as a result of the accident that BP caused. It is an economic loss for those workers, and ... those are claims that BP should pay," White House spokesman Robert Gibbs said Wednesday.
A BP source told Reuters that the company is concerned over the widening scope of possible payments and said it might be heading for a showdown with the White House. The company may argue that the government is responsible for moratorium-related losses, not BP, the source said.
Sheriff Fears Illegal Immigrants Cleaning Oil
Ask CBS News: Is BP Hiding Anything?
Tempers Flare in Gulf as BP Burns Oil
How Much Oil Has Leaked?
Scared Investors Send BP Shares to 14-Year Low
Read Adm. Allen's Letter to BP CEO Tony Hayward
BP Given 72 Hours to Develop Better Plan
BP's Spill Contingency Plans Vastly Inadequate
Oil Spill Wildlife Devastation
Meanwhile, U.S. Associate Attorney General Thomas Perrelli told a Senate Panel that the Justice Department is looking at the possibility of issuing an injunction against the company to stop paying its dividend.
In New York, BP stock dropped $5.45, or 16 percent, Wednesday - easily its worst day since the April 20 rig explosion that set off the spill. In the seven weeks since then, the company has lost half its market value.
In London Thursday, the stock had dropped as much as 11 percent to a 13-year low at the opening as experts warned dividend payouts would likely be postponed. However, it recovered some ground by midmorning, trading 4.3 percent lower at $5.47, as analysts suggested the sell-off was overdone.
In a statement released early Thursday morning, BP PLC said it isn't aware of any justification for the sharp sell-off in its shares in U.S. trading. The company underlined what it said was a strong financial position in the statement, released just before the London Stock Exchange opened, claiming "significant capacity and flexibility" to deal with the cost of responding to the spill.
But analysts clearly blamed the pressure BP faces from the U.S. government.
"We don't believe BP has a funding issue but given the overwhelmingly hostile nature of the U.S. government the company may decide to suspend payments until the wells are capped and the clean-up sufficiently advanced to convince the US that it can afford all the costs as well as pay dividends," said Evolution Securities analyst Richard Griffith. "Unilateral action against BP over its U.S. operations, be it unreasonable or illegal, hangs over BP."
The Obama administration has ramped up its rhetoric in the last week over BP's spill response. In an interview with with NBC's "Today Show" Tuesday, President Barack Obama said he wanted to learn all he can about he spill in order to "know whose ass to kick."
On Wednesday, Coast Guard Adm. Thad Allen sent BP CEO Tony Hayward a letter demanding more openness regarding the company's claims process, which has increasingly frustrated Gulf coast residents.
Fishermen, property owners and businesspeople who have filed damage claims with BP are angrily complaining of delays, excessive paperwork and skimpy payments that have put them on the verge of going under as the financial and environmental toll of the seven-week-old disaster grows.
"Every day we call the adjuster eight or 10 times. There's no answer, no answering machine," said Regina Shipp, who has filed $33,000 in claims for lost business at her restaurant in Alabama. "If BP doesn't pay us within two months, we'll be out of business. We've got two kids."
BP spokesman Mark Proegler disputed any notion that the claims process is slow or that the company is dragging its feet.
Proegler said BP has cut the time to process claims and issue a check from 45 days to as little as 48 hours, if the necessary documentation has been supplied. BP officials acknowledged that while no claims have been denied, thousands and thousands had not been paid by late last week because the company required more documentation.
Allen this week created a team including officials from the Federal Emergency Management Agency to help with the damage claims. It will send workers into Gulf communities to provide information about the process.
Under federal law, BP is required to pay for a range of losses, including property damage and lost earnings. Residents and businesses can call a telephone line to report losses, file a claim online and seek help at one of 25 claims offices around the Gulf. Deckhands and other fishermen generally need to show a photo ID and documentation such as a pay stub showing how much money they typically earn.
To jump-start the process, BP was initially offering an immediate $2,500 to deckhands and $5,000 to fishing boat owners. Workers can receive additional compensation once their paperwork and larger claims are approved. BP said it has paid 18,000 claims so far and has hired 600 adjusters and operators to handle the cases.
(AP/CBS/NOAA)
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the president of the united states is the most powerful position in the freaken world. It's not my job. It's HIS! I dunno, maybe he could have enlisted all that international help that was offered and he refused.
Maybe he could have enlisted the navy and coast guard. Maybe he could have enlisted the army "corpse" of engineers. Maybe he could have worked with the affected states to figure out a solution. Maybe he coulda called the BP CEO to ask him your question.
by maintain_integrity June 10, 2010 1:03 PM EDT
Hey jgg, the fox propaganda you parrot is unfounded and lame.
actually, what's lame is your response to my post which was true and accurate. This has nothing to do with fox. But thanks for not calling me a "racist". I'm looking forward to your mentioning "bush" in your next post.
Hey jgg, comparing this BP epic environmental disaster to the Exxon Valdez spill of limited quantities from a tanker on the surface, is ridiculous.
You're trying to compare drops of water to oceans.
I absolutely agree with you. When the leak was first discovered we were told it was no big deal. In fact it didn't even register on the exxon valdez scale. It only proves the point that obama should have jumped on it immediately and didn't do squat.
The other 3,000+ platforms/wells are drilling away just fine without incident...
--------
Actually that isn't true. The other day there was an article saying that they found another one leaking and it isn't too far from this one. They were looking at satellite photos and noticed it.
Search this..."BP Rig Not the Only One Leaking Oil in Gulf"
I guess the other 2,999 are drilling just fine....
Not necessarily.: ) They just happened to notice that one because they were looking to see how far spread this one was. And they were obviously trying to hide it because no one said anything about it and the pictures were showing them spraying dispersant.
You may ask well if this happened off your shores you would do the same - well no we wouldn't we would be entirely focussed on the clear up and damage limitation - as a nation we would focus on the problem and then let the hawks look for the blame once we had it under control and our government would not sit back like your administration.
Before you start commenting - yes BP should be accountable for lost income - yes bp should shoulder the responsibility of the clean up - yes BP should take ownership - but remember BP employs lots of people in the US and your news orgs and government are putting there livelyhoods at risk as well. This would surely not help Obama's stats on unemployment.
Compensation for oil rig workers! your government made that decision and should live or die by the sword - they are obviously not that strong and yet again blame BP!
If Obama wants a confrontation then I say to Tony "bring it on"
Why did you elect a little baby boy that has to be constantly defended and apologized for? Why do you bother breathing? Why bother trying to feed yourselves just to continue a life of hatemongering and lying and poking your head out Obama's backside long enough to apologize for his ineptitude? What does it feel like to be worthless, mindless, brain dead fanatics controlled by George Soros? How do you manage to slink from Pelosi's backside to Hairy Reid's to Obama's without taking a breath in between? Please answer me these questions first and I will ask more of the thousand others along the same lines that i find so fascinating about you two. Thank You
Republicans and right wingers will be happy, business won and government did not enter business arena.
If were not supposed to help the banks or auto sectors, why should we do anything about BP?
That's the drill baby drill, no government interference ideal in a nut shell
BTW, drove past my local BP station this morning. Yep, you guessed it. SUVs sucking up the gas. Go figure.