There's a lot being said about the deal made with the Obama administration and BP (NYSE:BP) where they will be allowed to use oil and gas assets based in the United States as collateral for the $20 billion compensation or escrow fund.
The basic idea is the administration and BP have gotten too close, and it'll undermine imposing sanctions on BP by the government.
An advocacy group, Public Citizen, described their concerns this way, "It threatens to inhibit ongoing criminal probes of the company's probable negligence. 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."
Admittedly, from various ways of looking at the BP debacle, it's a catch-22. You don't want the government in bed with companies, many don't want the government and business merging into a form of fascism, others want BP to be shut out of the Gulf market in the U.S.
The problem is, if most of these things were abandoned, then BP wouldn't be able to pay for their liabilities. It's as simple as that.
No government, and even BP, is going to say we'll shut down the Gulf operations to make some people feel good. BP couldn't survive, and every victim would remain that, as there would be no money coming in.
Then you have the pension funds invested in BP, the thousands of workers that would be out of jobs, etc.
The point is so many things are now interconnected in such a way as to destroy one would be to destroy another. And there would be many unintended consequences that would result.
I'm not a proponent in any way of government and business working together. We should be in a free market where businesses make decisions and government leaves them alone.
But the gravitation of business and government blending has been going on for some time, and leaves us in this situation where now people are raising their voices in opposition.
In the case of the government and BP it's far too late. The circumstances are already laid out, and there is no way the government would bail out BP by paying victims with taxpayer dollars. The only solution is for BP to pay for it, which is the right solution.
The idea that BP is going to be allowed to continue to operate in the Gulf of Mexico is what has people upset here, and if they weren't, who would pay for all the billions in bills owed?
The answer is nobody, and that's not going to be allowed to happen.
Showing posts with label Public Citizen. Show all posts
Showing posts with label Public Citizen. Show all posts
Thursday, August 12, 2010
"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.
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.
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