Thursday, June 10, 2010

BP (NYSE:BP) Ready to do Battle over Liability

Saying there is a point where a line has to be drawn, an unnamed BP (NYSE:BP) source told Reuters they are preparing for a possible battle with the Obama administration over the growing demands related to the oil spill.

If the company wants to survive, this is inevitable, as the administration is trying to cast the costs of the moratorium they made on drilling in the Gulf onto BP, which is ludicrous at best.

This is partly in response to the comments U.S. Interior Secretary Ken Salazar made at a Senate hearing where he said he was going to ask that BP pay for the lost wages of workers laid off because of Obama's decision.

I wouldn't give in one inch on this if I were BP, as they have no responsibility to pay for what is increasingly seen as an over-response by Obama to the situation.

BP has rightly stated all along they would pay for clean-up and damages related to the oil spill, including loss of revenue of fisherman and others directly affected.

But to have to pay for things like the consequences of the moratorium on oil drilling, which could be extended for an even longer period of time, is viewed as excessive, and will probably be fought by BP.

According to the source, "At some point a line has to be drawn."

Growing resistance and outrage over the moratorium is what is the root of this, and now the administration is attempting to pass the costs of the decision onto BP.

The problem from the point of view of Obama responding to the disaster is it seems he and his advisers are unable to look at the overall picture and make decisions based on the many variables involved.

His lack of experience in governing has really been exposed in this crisis, and now he's trying to save face by not backing out of the moratorium by passing costs onto BP, which if he sticks taxpayers with it, will be very unpopular, and if they were to go on the unemployment rolls, would make Obama and the Democrats even look worse, as the numbers of the unemployed would increase.

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