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Giles Slade Headshot

New Decade Defined by New Crisis

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Tuesday night: President Obama's address recommends establishing an escrow account for BP's assets in order to guarantee the Deepwater Horizon Oil Spill cleanup is properly financed by the responsible party.

America is listening. Will BP?

People are angry at BP. They're cycling naked in the streets, throwing brown paint on BP signs and boycotting Arco stations. We're also blaming the man in charge for not fixing this awful mess probably because we are powerless to control it. Still, the habit of blaming Obama for the oil spill is half-hearted. After 18 months of tireless work, the man has shown he is made of substantial stuff.

I'm much more interested in why BP's Board of Directors has not yet fired Tony Hayward.

Clearly, President Obama sees Hayward's departure as the beginning of the resolution of this Oil Spill crisis. I think keeping the pressure on BP is the right thing to do. Negative rhetoric sends the oil company's stock prices down, down, down. BP shares are nearly half what they were before the rig exploded. This precipitous drop squeezes BP's board from two directions. The first is obviously the shareholders. But it is the second source of pressure that will be more telling. Since most English pensioners have a small piece of BP tied up in their nest egg, the new government of the UK is vitally interested in BP's fiduciary well being.

The status of British pensions played a large role in the recent election that ousted Gordon Brown. New English PM David Cameron needs to protect his electorate's interests and begin his relationship with America on a positive footing. But even without Cameron's help, Obama's conscious policy of driving BP stock prices into the ground, will prevent Hayward's tenure from lasting much longer. Hayward has become the goo in a Boston Cream pie that is now resting on Obama's chair.

The fact that Tony H. is still with us at all is probably just an issue of timing. No doubt, BP's board would like to fire their ineffectual CEO as of a few weeks ago, but they've compromised by committing to wait until some date at which Hayward promises he'll have the mess well in hand. I'd guess the ultimate deadline is June 20th, two months after the initial explosion which killed 11 oil rig workers. No one wants to pass this milestone without the situation being well-in-hand. In the run-up to June 20th, Hayward is scheduled to meet with the President after Tuesday's address, and then with Congress later in the week. It will be a rough few days for Mr. Hayward.

Unfortunately, it will take much longer than the next week for personnel aboard the Development Driller III to drill a relief-well to intercept the leaking well-bore 18,000 feet below the sea floor. They're at 14,000 feet now and feel they need until August to reach the remaining depth. If they succeed, the issue of successfully capping the leaky well becomes a mute point. BP can fill the old well-bore with mud and pump the same oil out of a new wellhead. The only thing left will be to pay everyone off and begin a few ($10+) billion dollars worth of a cleanup which will last a minimum of five years.

In the meantime, the appearance of success is BP's only message. So there are no decisive figures available on how much oil is really leaking out of the hole in the bottom of the ocean. There is no certitude about the other leaks 40 miles away from the rig. There is no clear figure on how much crude BP is currently collecting (although Thad Allen will say it's not nearly enough).

In addition to all this missing information, there is a significant amount of spin. BP guarantees all money earned from the sale of the recovered oil will go to Gulf shoreline wildlife funds. BP reassures all parties that it has begun paying out claims by small businesses harmed by the spill. BP is buying up Google searches for "oil spill" and redirecting them to its own shiny corporate website. Oil is still polluting the waters of the Gulf but the cleanup of the BP brand is already underway.

After 55 days, the U. S. Geological Survey now puts the amount of oil entering the Gulf of Mexico since April 20th at somewhere between 42 and 84 million gallons or -at a minimum- about 4 times the size of the Exxon Valdez disaster of 1989. Although BP is currently capturing some of the escaping oil, it's another 47 days until August 1st, and the possibility that this disaster will grow until it is somewhere between 5 and 8 times the size of the Alaskan spill is offensive and unacceptable. (To figure out just how offensive watch the video of a reporter scuba diving into the oil spill here.)

So... in the backrooms of the uppermost echelons of BP, resumes of other successors are now circulating through BP's corridors: a decision is being shaped. We'll be hearing more about the new guy in the next few weeks. He'll be decisive. He'll be charismatic. He'll be pro-American. He'll be able to look the Pentagon - BP's largest customer - straight in the eye. Tony Blair would be perfect, but he's probably not available.

Nonetheless, whoever replaces Mr. Hayward will end up being a whole lot cheaper for BP and for England than Tony Hayward who has now taken Osama Bin Laden's place as the most hated man in America. In an interview that comes out tomorrow in Politico, Obama expresses the belief that we have turned the corner from the defining moment of the first decade of this century. 9/11 has now been replaced by a new and terrible crisis that will "shape the nation's psyche for years to come".

America is no longer in war mode: this is an environmental crisis requiring new tactics, new strategies and a new and informed journalism committed to addressing science issues. (I'd like to take this opportunity to emphasize this last point to all publishers who gave up acquiring "environmental books" two years ago. "Surf's up again, boys. Catch the wave.")

Meanwhile, Mr. Hayward must go. The countdown is on.

More later...


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