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Did BP Just Blow Up The Obama Presidency?

Posted: Updated:

(See late Saturday Evening, Sept 4, UPDATE below)

Forget about the new oil well explosion in the Gulf of Mexico. The big breaking news is BP's attempt to leverage its promised $20 billion Gulf Restoration Fund to get the US government to let it keep drilling for oil in the Gulf.

The New York Times reports:

BP is warning Congress that if lawmakers pass legislation that bars the company from getting new offshore drilling permits, it may not have the money to pay for all the damages caused by its oil spill in the Gulf of Mexico.

[... ]

"If we are unable to keep those fields going, that is going to have a substantial impact on our cash flow," said David Nagle, BP's executive vice president for BP America, in an interview. That, he added, "makes it harder for us to fund things, fund these programs."

BP's global operations generated more than $33 billion in profits in 2009, so coming up with $20 billion shouldn't be an issue.

But, as the Wall Street Journal reported on Aug. 10, the Obama administration has permitted BP to finance the $20 billion exclusively from its Gulf of Mexico drilling operations:

The Obama administration and BP PLC are close to a deal to use future revenues from the oil giant's Gulf of Mexico operations to guarantee its $20 billion cleanup and compensation fund, a move that would give both sides an incentive to continue production in the Gulf, scene of the U.S.'s worst-ever offshore oil spill.

In his June 15 Oval Office address, President Obama explicitly said he would hold BP responsible for cleaning up the Gulf and compensating all those affected (Video link here): "We will make BP pay for the damages... This fund will not be controlled by BP... BP will pay for the impact this spill has had on the region."

And when he met with BP's executives on June 16, BP's Chairman, Carl-Henric Svanberg said they would pay to restore the Gulf, no strings attached (Video link here): "... a framework that will show the American people that we mean what we say... We will look after the American people."

Who would have guessed that a president who appeared to recognize the illegal as well as immoral nature of BP's business practices (after all, people died) would actually negotiate with them over the terms of the penalty they'd be paying?

Negotiating the terms of BP's penalty? Setting the stage for BP holding the $20-billion fund hostage to getting its way with the Congress of the United States?

Couldn't that be called "extortion"?

This is not how I thought the Obama administration would be treating BP in the face of this tragedy. BP does not deserve to be compensated for paying its debt to society.

This $20 billion is a penalty for operating the way it does. It is not some bizarre new form of political contribution.

The incompetence of the Bush administration is why the Katrina disaster was ultimately as tragic as it was. Will it turn out that the Obama administration was the opposite -- too smart for its own good -- and as a result produced the same result?

Playing cute -- financially speaking -- with BP is no way to deal with this kind of corporate behavior. And it may turn out to have been no way to insure that BP pays its debt to society without thinking it can get something in return.
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UPDATE Saturday, Sept 4, 11:59pm

To those who wonder what to do - since not only is the process of government ugly to watch (the "don't watch sausage being made" analogy) but the results are pretty unhealthy as well - let me offer this bit of history: When the quality of the product or service being offered by any industry falls to totally unacceptable levels, customers look for an alternative. They don't just take any alternative. They do research into what high quality products or services are out there, and then they "choose wisely".

The Tea Party offers an alternative. But when you look at the quality of what they are offering, you see it is very unhealthy too. They want to govern a divided country. "Real Americans" against everyone else... according to their definition of who is "real" and who isn't.

There is an alternative methodology and governing structure that - operating completely within the provisions of the Constitution - is capable of offering a continually improving level of high quality service to "we the people". But this structure mostly exists in the halls of academia at the moment. (A less robust version but still valuable for study purposes is the Baldridge National Quality Program created by Pres. Reagan.) You can read about this method in the books of Dr. Russell L. Ackoff, one of the pioneers of the social systems sciences. Check out his books "Redesigning Society" and "Idealized Design" to learn more about what I'm talking about. The purpose of my work is to move these methods and principles into society as a whole.

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