"Public Citizen" Group Opposes BP (NYSE:BP), Government Partnership

Fears a deal to use U.S. oil and natural gas production as collateral for the $20 billion escrow fund by BP (NYSE:BP) has one advocacy group up in arms about potential conflicts of interest in the relationship of BP and the U.S. government.

A new BP subsidiary is being created in order to place production payments from the oil and gas wells worked by BP in Gulf waters.

The escrow fund will have first priority on the security interests in the oil and gas production coming from the wells. Revenue from the wells will be used as collateral in relationship to the fund.

Public Citizen advocacy group sent a letter to Obama saying this:

"A criminal investigation resulting in sanctions imposed against BP - including banning the company from federal leases in the Gulf - will be at odds with the government's agreement to use BP's leases as collateral for the fund."

"The administration might be less likely to address those problems if it means the company can't continue its profitable business-as-usual style," referring to worker safety and environmental record of BP.

The group is frustrated that BP will have what they call a "robust presence in offshore drilling," even with their alleged poor record.

Even if the pressure ramps up on the Obama administration concerning this, it won't matter. BP will continue drilling in the Gulf, and even the idea they were going to be cut back somehow in wake of what happened is naive at best, as if the company were to fail, there would be no payments related to damage and claims made by the oil giant.

Of course the company must continue to operate in a profitable business-as-usual style, as that's what business is. But to think they were going to become some type of non-profit organization, operationally, isn't ever going to happen.

This doesn't mean issues aren't to be addressed, but they can't be addressed unless there's a viable and profitable business to address them.

One thing that is correct, is the lines between government and business should not ever be blurred, and any time that happens, bad things can happen.