Tags: Britain | BP | lecture | Obama

Brits Not Pleased With Obama BP Slams

Tuesday, 15 Jun 2010 10:32 AM

LONDON — While U.S. President Barack Obama returned to the Gulf Coast to track the growing devastation caused by the blown-out BP oil well, BP's board of directors huddled behind closed doors here Monday to prepare for a showdown with the Obama administration in Washington on Wednesday.

A corporate spokesman for the global oil company headquartered here in London said there would be no comment on what was discussed at the BP board meeting, then added: "The chairman and senior management are now preparing for their very important meeting at the White House on Wednesday."

In advance of that meeting, Obama is to deliver a speech from the Oval Office today at 7 p.m. in which he is expected to call for BP to establish an escrow account to cover billions of dollars for the cleanup and the economic fallout the spill has caused. If Obama wanted to get the attention of BP's senior management with his seriousness of purpose and his comments last week about finding out whose "ass to kick," he has succeeded beyond Rahm Emanuel's wildest expectation.

Obama’s populist ire against “British Petroleum,” as the White House consistently refers to the company even though it has officially changed its corporate name to just BP, has threatened to overwhelm all other aspects of the story as it is reported here. After his comments Monday comparing the Deepwater Horizon oil-spill disaster to Sept. 11, BP's share price that had seemed to bottom out and even gain a bit during the day plummeted even further.

Not everyone in Britain is pleased that the president has inserted himself into the situation with such heated words, particularly not British Conservatives like the foppish mayor of London, Boris Johnson, and a crusty parliamentarian known as Lord Tebbit, who perhaps over-employed the alliterative by calling Obama’s words “partisan political presidential petulance.”

Norman Tebbit, who served in three cabinet positions in Margaret Thatcher's government, and who remains one the most vociferous old guard Conservatives, railed against Obama in his weekly blog for the Daily Telegraph, writing, "The whole might of American wealth and technology is displayed as utterly unable to deal with the disastrous spill — so what more natural than a crude, bigoted, xenophobic display of partisan political Presidential petulance against a multinational company?"

Tebbit then raised the temperature, adding, "It is time that our American friends were reminded that they sang a different tune when the American company Union Carbide killed many thousands of Indians at Bhopal. Not to mention when the American company Occidental killed 167 people on a North Sea oil rig in 1988."

Whether the comparisons are relevant or fair is beside the point. What comes shining through is a feeling of deep resentment among many in the British establishment about the verbal assault on what was — the day before the Deepwater Horizon oil rig exploded — Britain's largest company.
Since that day, April 21, BP has seen more than 40 percent of its market value evaporate. That's about an $82 billion dollar decline in six weeks.

Johnson, the Conservative mayor of London, also came out swinging to defend BP, saying, "I do think there's something slightly worrying about the anti-British rhetoric that seems to be permeating from America. I would like to see a bit of cool heads rather than endlessly buck-passing and name-calling."

He took particular aim at the administration's demand that BP suspend its quarterly dividend payment and put the money in an escrow account to be used to pay compensation.

"When you consider the huge exposure of British pension funds to BP," Johnson told the BBC, "it starts to become a matter of national concern if a great British company is being continually beaten up on the airwaves. It was an accident that took place and BP is paying a very, very heavy price indeed."

Johnson is right about BP's importance to British pensions. The company paid out $10.5 billion in dividends last year, 15 percent of that income went to British pension funds. According to a BP spokesman, roughly one pound in every seven paid out by Britain's private pension companies last year came from BP.

Where Johnson is perhaps wrong is in describing BP as a great "British" company. Its origins are British certainly, but it is a classic multinational, and, if you flag a company by where it has the largest operations, it could just as easily be called "American." Even if the Obama White House does insist on calling them British Petroleum.

The company began life a hundred years ago as Anglo-Persian Oil Company and became the first Western company to explore for oil in the Middle East. It was a public private partnership. In recent decades it grew the new fashioned way, by mergers and acquisitions, mostly of American companies.

In 1978 it acquired Standard Oil as part of the opening up of Alaska's Prudhoe Bay. In 1987, the company was fully privatized by Margaret Thatcher and began its growth into the behemoth of today.
This was followed in 1998 by Amoco and in 2000 by ARCO. BP now has 22,000 employees in the U.S. compared with 10,500 in Britain.

Obama and assorted Congress folks' comments are seen here as grandstanding with potentially devastating unintended consequences.

Stephen Hargrave, a professional investor, says, "It's understandable the president wants to show he's in charge, especially with elections not so far away. But given the lack of better technology available from any other source, it's also hard to see how political grandstanding will get the problem solved any faster — and it might just make it harder for BP to come up with the money to pay compensation to those directly affected."

Geoffrey Wheatcroft, gadfly columnist and frequent contributor to the New York Times, wrote in the Daily Mail: "If a dark cloud of oil can now have a silver lining, then it might at least lead us to reassess our ignoble relationship with Washington. If the American president is going to ignore or even damage British interests, then let him."

Then he asks, rhetorically, "But might not our own government stand up for those interests? For a start, some of the money we've all lost through the BP debacle, and presidential venom, could at least be recouped by bringing our troops home from a hopeless American war in Afghanistan." Which brings us to reality.

British Prime Minister David Cameron had a highly publicized telephone conversation Sunday with Obama. No comment was made on the substance of the discussions but Cameron said he understood Obama's "frustration" about the situation. But it's not clear if BP is the only thing the two men discussed. Cameron has just come back from a two-day visit to Afghanistan ... It is reasonable speculation that the two men also talked about Afghan President Hamid Karzai, Kandahar and how long British troops will remain in country and that may well have been the more important bit of their conversation.


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LONDON — While U.S. President Barack Obama returned to the Gulf Coast to track the growing devastation caused by the blown-out BP oil well, BP's board of directors huddled behind closed doors here Monday to prepare for a showdown with the Obama administration in Washington on Wednesday.
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2010-32-15
Tuesday, 15 Jun 2010 10:32 AM
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