06.13.2010 08:35 AM

Seize BP assets now

There are tens of thousands of gallons of oil that continue to gush into the Gulf of Mexico, destroying the environment and peoples’ lives. Since April 20, as many as 100 million gallons have spewed into the sea – which, last time I checked, is a body of water that connects pretty much everyone.

By now – with the oil reaching throughout the gulf, and expectations that it will hit much of the Atlantic coast by Summer – it is apparent that BP is not doing nearly enough. President Obama made a mistake in assigning so much of the early responsibility for a fix to the company that created the problem in the first place.

Not surprisingly, BP’s net worth has plummeted, and many expect they cannot survive the calamity. That is a problem because their ability to cap the pipe, and clean up the mess, is directly linked to their financial position. At some point soon, BP will petition itself into bankruptcy protection and attempt to walk away.

That can’t be allowed to happen. At this stage, I think the U.S. government needs to seize BP assets – and take full control – to ensure that remediation efforts continue.

A petition to that effect is found here.

Sign it if you feel as I do.


  1. Darrell says:

    I agree with WK, Obama needs to act NOW. Saving the Gulf should be priority, saving his Presidency can come later.

  2. Michael Watkins says:

    Signed, but with reservations. Signed because public pressure is very useful. But seizing assets can lead to a falling domino chain reaction; the risk of bankruptcy is probably quite low **at the moment** however nothing prevents government from making matters worse.

    If there were to be a time when risk of bankruptcy goes markedly higher it is likely years into the future when criminal and civil negligence and liability claims are making their way through the courts. Such proceedings took decades in the case of Exxon’s Valdez oil spill, and that company remains the largest and most profitable petro company on the planet.

    There’s also existing U.S. EPA legislation which provides for a ridiculously low cap on the liability of oil and gas companies. BP has already blown through all these caps in its spending. Affected states may have other legislation which supersedes the federal law in this case, and may have unlimited liability provisions.

    Even though BP’s market cap has fallen markedly, that in and of itself is not a portent of bankruptcy. If it were, thousands of public corporations would be dead in the wake of the 2008-09 meltdown.

    The bigger issue for BP is their debt load, now and into the intermediate future. At present their debt load is an entirely reasonable $25 billion, supporting operations on assets worth more than $130 billion USD. The company has the potential to generate cash flow of about $40 billion annually, a key measure of solvency in the oil business. That cash flow doesn’t stop from other operations while the disaster in the Gulf continues.

    The credit markets are pricing in an uncertain future, with credit default swap spreads having risen very markedly – probably unsustainably so, given that due to its very strong financial situation BP still holds an AA credit rating (better than many governments around the world). Due to the uncertainty surrounding liability claims, that credit rating might well be reviewed downward, driving their cost of borrowing up, but at this point my expectation is that such changes would be incremental, not paralysing.

    Even if borrowing costs did become a potentially fatal weakness for the company, the U.K. (and U.S.) government could extend loan guarantees to allow the company time to get through this and make everyone as whole as is possible given the circumstances.

    Could the company try a strategic bankruptcy despite its financial strength? Maybe, but political pressure from both the U.S. and U.K. ought to prevent that. At that point seizure becomes the threatened weapon of choice. The company or whatever form it might take in the future simply cannot operate around the globe without the express blessing of these governments. Canada can play a role here too.

    Don’t get me wrong, public pressure is important right now. I’m all for extracting a huge punitive toll on BP and all those responsible (including Transocean, symbol RIG).

    But even more important than getting even with those responsible is that lasting change on regulation has to be made, not just in the U.S. but in Canada and hopefully in other major off-shore oil producing countries as well, including the UK (North Sea).

    Make the playing field level around the world and arguments such as those being pushed by Danny Williams – that costs would be disproportionate and lead to investment dollars going elsewhere – go away. Oil gushing into our oceans and their currents at the rate of one Exxon Valdez every eight days knows no borders. It doesn’t matter if the problem originates in the Gulf of Mexico or in Nigeria or off-shore Canada’s Atlantic coast.

    It isn’t just off-shore producers that need a renewed focus aimed at them either. BP has opened a door unwillingly to a much higher degree of scrutiny that investigators and regulators should run through before it closes. Regulators in Canada and the U.S. often act more as industry facilitators than as guardians of the environment, a global, public, asset.

    Time for NEP II, the National Environmental Program?

  3. e says:

    tread carefully here:
    a. limited credit (its tightening again at this moment), sovereign debt crises is far from over
    b. limited oil production (should BP seize as a company, and it can happend in a month – not saying it will – but it can faster than you think)
    c. unchecked enviromental catastrophy (still ongoing)
    depression risk

    I’m not saying we have a depression, but this situation is big enough to tip the balance back in the direction of a depression.

    Fixing the enviromental catastrophy requires the US core of engineers to step in fast (as in yesterday). Seizing some assets will happen in time, but don’t force it before its time. Fix the mess first.

  4. Nasty Bob says:

    Fear not ! BP has a plan and will have no problem meeting their financial obligations ….. all they have to do is win next week’s Lotto Max and the Powerball in all US states that start with M.

  5. allegra fortissima says:

    “Energy companies, which make billions in profits each year …, certainly have sufficient money to ensure as much safety as humanly possible. Not doing so is criminal. Seen this way, we are dealing with a serious case of management failure…. Every person and legal entity has a responsibility for protecting the livelihood of all. One doesn’t need to go searching in the law books for such a requirement. A constitution and a bit of intellect are all that is necessary.” (Daily Sueddeutsche Zeitung)



  6. Wascally Wabbit says:

    Robert Reich – Clinton’s Labor Secretary – made a similar statement on ABC’s This week this morning.
    Might reflect the tinking in the White House.

  7. Elizabeth says:

    Done. I think it’s a continental problem, not just American. We should be sending money, people, vacations should be taken there as a sign of support, by Canadians and Americans. We could be volunteering for years, helping with the cleanup, helping to re-establish colonies of birds and new vegetation. Wetland biological managers, (my brother is one) should be converging, and helping out as well.

    Leaving the rest of this up to BP – I don’t think so. They’ve shown that their interest is self-interest already – why trust them with more? Seize BP, use what they have, and let Americans take over the rest.

    I’m really worried that this could kick off some kind of disastrous outcome, either environmental, or financial – which would end up being environmental after all. The Economy Is Tied To The Environment. But – I hope that it ends up transforming the US into something stronger, and different. I hope that they all pull together, that the continent pulls together.

  8. Namesake says:

    It may interest people to know that Robert Reich, Bill Clinton’s Secretary of Labor, has been advocating this, as well: see http://robertreich.org

    That numbnuts Evan Solomon did an embarassingly bad, Jiminy Glick-style interview with him on Power & Politics a few days ago. I can’t find it online, but it ran something like this:

    ES: So, you want to nationalize BP?
    RR: Um, no, I want the Administration to put its US division under temporary receivership, both to ensure that it pays its liabilities in the longer term and especially to get first-hand access to all their intelligence in the immediate term, to make sure they really are using all the assets and techniques at their disposal to stop the leak, and not holding off on some methods to try to protect the oil and their shareholders’ dividends.

    ES: So, you want to nationalize BP. Aren’t you afraid that this will just encourage other companies to act irresponsibly: they can just do whatever they want, and if they screw up, it’ll be, “Oh, nevermind: the government will just ride to the rescue and bail us out.”

    RR: Um, no: first, I’m only advocating this be done in major catastrophes like nuclear plant meltdowns and what is, after all, the worst environmental disaster we’ve caused, to date; and second, far from bailing them out, this is the government seizing and expending their assets to the fullest extent warranted: I can’t envision _any_ company executive relishing that idea…

    ES: So, you won’t admit it’s a dumb idea to want to nationalize BP; hmmph; coming up next, ….

    • Michael Watkins says:

      I keep giving Evan Soloman the benefit of doubt, assuming that he is merely trying to provoke outbursts and open up discussion, seeking as he should the clear truth.

      I’ve come to the opinion that he just isn’t very good at it. Sure, he has had some really good moments, but his ‘edgy’ approach isn’t working for him or the show. I much prefer Rosemarie Barton taking on that same role. A true gem.

  9. Joel Coates says:

    Jeezuz Murphy! Some of your commenters should be joining the “orange lunch brigade.”

  10. Jim says:

    Obama sieze BP?

    That’s funny!

  11. Ronald O'Dowd says:


    Thinking like a lawyer, one wonders if the litigation hole has been plugged. Remember, the Exxon Valdez — the amount the company eventually had to pony up was severely reduced on appeal.

    What does the law actually say? Is it water-tight or will we once again see a bevy of lawyers doing what they do best? End result: screwing the taxpayer…

  12. David says:

    While there is no doubt the oil spill is tragic, why is no blame being placed on Transocean, including petitions to seize their assets? Transocean owned the drilling rig and it was their employees that were (mainly) manning the rig. Is it because it is better optics for the American government, media and people to lay all the blame on a foreign company (BP) and not on an American company (Transocean)?

    Just wondering.

  13. allegra fortissima says:

    BP is 39% American owned and 40% British owned. It employs only 10,000 British in comparison to 22,000 Americans. 6 of the directors are British, 6 American. BP has 9 times the number of stations in the USA than Britain. It has 5 refineries in America compared to none in Britain.
    BP no longer stands for British Petroleum since when it merged with Amoco and Arco in 2000. Deepwater Horizon is an American rig staffed by Americans and the failed well head was American made.

    So, who is blaming a “foreign” company here?


  14. chris says:

    the amount is between 2 million and 2.5 million gals ………ready for this,,,,,,,,, sit down and get a barf bucket…………..ok ready between 2 and 2,5 million barrels A DAY!!!!!!!! FOR OVER 60 DAYS OVER 120MILLION GALS OF OIL SO FAR AND IT IS GUSHING SAVE THE GULF YES BUT HEY SAVE THE WORLD DRINKING WATER SUPPLY FOR THE PLANET WE ARE IN SERIOUS DANGER WITH THESE GREEDY PUNKS RUNNING THIS ,,,,,,,,,,,,,,,,,, AMERICAN PEOPLE MUST TAKE CHARGE NOW!!!!!!!! …………….OH YEAH , I APPROVE THIS MESSAGE

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