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A rare and different perspective at the oil spill from beneath the surface. The AP's Rich Matthews got an exclusive look at the spill by joining a dive team who explored how the oil is impacting the…
AP – A BP logo is seen at a petrol station in Birmingham, England, Thursday, June 10, 2010. Shares in BP PLC … LONDON – BP shares fell Thursday in London as U.S. politicians pressed the British oil company to halt its dividend payments and fork out greater compensation for American workers and companies devastated by the massive Gulf of Mexico oil spill.
But markets were also beginning to heed warnings from analysts who said Wednesday's 15.8 percent sell-off of BP shares in New York was an overreaction.
BP shares dropped as much as 11 percent to a 13-year low at the open in London, then recovered some ground by early afternoon, trading 6.1 percent lower at 367.8 pence ($5.39). In New York, the stock opened 9.8 percent higher at $32.05.
BP has lost around half its market value since the spill began with an April 20 rig explosion in the Gulf.
The company has found itself caught in a trans-Atlantic squeeze between an angry U.S. administration and unhappy shareholders — some 18 million Britons hold shares or pension funds in the company.
Prime Minister David Cameron's office said the British leader would discuss the issue with President Barack Obama on a scheduled telephone call over the weekend.
"I understand the U.S. government's frustration because it is a catastrophe for the environment," Cameron said Thursday while on a visit to Afghanistan.
Investors are fretting about the rising costs facing BP after Obama suggested it should also pay unemployment benefits to thousands of oil workers laid off during a moratorium on deep-sea drilling triggered by the spill.
BP tried to reassure investors before the London Stock Exchange opened, saying it was in a strong financial position and it saw no reason to justify the U.S. sell-off, and many analysts agree that the company can withstand the crisis.
But most market experts also acknowledge that the political rhetoric surrounding the accident is outweighing financial fundamentals.
"We don't believe BP has a funding issue, but given the overwhelmingly hostile nature of the U.S. government the company may decide to suspend payments until the wells are capped and the clean-up sufficiently advanced to convince the U.S. that it can afford all the costs as well as pay dividends," said Evolution Securities analyst Richard Griffith. "Unilateral action against BP over its U.S. operations, be it unreasonable or illegal, hangs over BP."
Robert Talbut, the chief investment officer at Royal London Asset Management, a shareholder in BP, said "there is a lot of very irrational and short-term selling going on." But he added that talk of a potential sale of assets or takeover bid — PetroChina Ltd. has been suggested by some as a potential suitor — was not surprising.
"I can understand exactly why someone else would want to buy the BP assets because I think they are grossly undervalued at the moment," he said. "As a shareholder, it's not something I would welcome."
The politics of the spill crossed the Atlantic, with London Mayor Boris Johnson expressing concern Thursday about the "anti-British rhetoric that seems to be permeating from America."
Johnson said BP was paying a "very, very heavy price" for an accident.
"I would like to see a bit of cool heads rather than endlessly buck-passing and name-calling," Johnson told BBC Radio. "When you consider the huge exposure of British pension funds to BP, it starts to become a matter of national concern if a great British company is being continually beaten up on the airwaves."
The influential Financial Times newspaper ran a banner front-page headline "UK alarm over attack on BP."
Cutting the dividend would have a big impact in Britain, where the company accounts for about an eighth of dividend payments from companies in that country's blue-chip stock index, providing crucial income for retirees. In addition, about 40 percent of BP's shareholders are based in the U.S.
BP, which earned more than $16 billion last year, said Thursday the cost of the clean-up and containment efforts had now hit $1.43 billion.
Speaking to investors last week, CEO Tony Hayward wouldn't estimate the total bill, though he told analysts that minority partners in the rig would be expected to pay as well.
BP stressed on Thursday that it had "significant capacity and flexibility" to deal with ongoing costs, underlining its additional cash flow, strong debt to equity ratio and proven reserves.
The company reminded investors that it had indicated in March — before the explosion at the Deepwater Horizon rig — that its cash inflows and outflows were balanced at an oil price of around $60 per barrel.
It said its gearing was currently below the bottom of its targeted range and its asset base was "strong and valuable." The company had more than 18 million barrels of proven reserves and 63 billion barrels of resources at the end of 2009.
Killik & Co. analyst Jonathan Jackson said the shares would remain very volatile until there was a clearer idea of the potential cost but he remained positive on the stock.
"Despite the high risk involved in adding to holdings in the short term and the possibility of a temporary suspension of the dividend, we would continue to do so," he said.
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AP Reporter Robert Barr contributed to this story.
On June 2, a day before BP announced it had sheared through a leaking pipe at the bottom of the Gulf of Mexico, one of the very few steps forward in the company's 44-day campaign to staunch the worst oil disaster in American history, President Barack Obama finally stopped serving as the cleanup chief and became the commander in chief.
During a speech at Carnegie Mellon University in Pittsburgh, Obama pressed the nation to join him in viewing the catastrophe as a call to arms to pass comprehensive energy and climate legislation that would begin to limit the need to drill such deep and dangerous wells.
"If we refuse to take into account the full costs of our fossil fuel addiction - if we don't factor in the environmental costs and the national security costs and the true economic costs - we will have missed our best chance to seize a clean energy future," the president said. "The House of Representatives has already passed a comprehensive energy and climate bill, and there is currently a plan in the Senate - a plan that was developed with ideas from Democrats and Republicans - that would achieve the same goal.
"And, Pittsburgh, I want you to know, the votes may not be there right now," Obama added, "but I intend to find them in the coming months. I will continue to make the case for a clean energy future wherever and whenever I can. I will work with anyone to get this done - and we will get it done. The next generation will not be held hostage to energy sources from the last century. We are not going to move backwards. We are going to move forward."
Direct, Emphatic, Needed
The president's remarks, the most direct and emphatic links he's yet drawn between the BP Gulf disaster and the need for comprehensive legislation, seem plainly directed at opening a new narrative for national action in the Gulf disaster.
In response to demands that Obama "do something," the president appears to be pivoting from treating the disaster as an exercise in environmental restoration. He is now calling for potentially momentous changes in attitudes and policy at a time of intense domestic interest about oil, the economy, and the environment.
"An America run solely on fossil fuels should not be the vision we have for our children and our grandchildren," the president said at Carnegie Mellon. "We consume more than 20 percent of the world's oil, but have less than 2 percent of the world's oil reserves. So without a major change in our energy policy, our dependence on oil means that we will continue to send billions of dollars of our hard-earned wealth to other countries every month - including countries in dangerous and unstable regions. In other words, our continued dependence on fossil fuels will jeopardize our national security. It will smother our planet. And it will continue to put our economy and our environment at risk."
Cheered By Advocates
Climate and energy advocates this week responded to Obama's new urgency with proposals intended to move considerably farther in reducing fossil fuel consumption and climate change emissions than has been proposed in either the House bill passed almost a year ago, or the Senate bill introduced on May 12.
"The President's speech in Pittsburgh yesterday was the lead story in today's Washington Post," said Dan Lashof, the director of the Natural Resource Defense Council's Climate Center. "And for good reason. Using the Gulf oil disaster as proof that we need to end our dependence on fossil fuels, President Obama made his strongest case yet for enacting comprehensive energy reform that includes limits on carbon pollution. And he committed to round up the votes in the Senate to 'get this done.'"
John Podesta and Daniel Weiss of the Center For American Progress this week proposed a nine-step action agenda to change the rules of the game for oil development and use. Their proposal includes stepping up the administration's new fuel economy regulations, as well as electric vehicle production programs contained in last year stimulus bill to reduce oil consumption by 7 million barrels a day by 2030. That would mean cutting oil use by 37 percent from current rates of consumption. The CAP plan also calls for levying a fee on imported oil to direct new revenues to modern public transit, and to eliminate taxpayer subsidies for oil and other fossil fuel development, a goal embraced last year by leaders of the G20 group of nations.
"The horrible BP oil disaster has reminded Americans that we must reduce our oil use," Podesta and Weiss wrote. "We share the view that this presents an unprecedented opportunity to take bold action to achieve this goal."
More Than What's Been Done By White House So Far
The president's speech also attracted fresh attention to the National Oil Savings Plan proposed by Brendan Bell, who directs the climate change program for the Union of Concerned Scientists. Bell's proposal, which was distributed in Washington on May 21, projects reducing oil consumption 7.4 million barrel per day by 2030 by enacting new law and regulations that invest in modernizing and expanding public transit, accelerating energy efficiency programs for buildings, expanding biofuels production, and going further than the administration already has in raising fuel mileage standards for light and heavy vehicles.
Obama introduced the new direction in energy and climate strategy last week when he met with Senate Republicans and, according to a White House statement, told them "that the gulf oil disaster should heighten our sense of urgency to hasten the development of new, clean energy sources that will promote energy independence and good-paying American jobs. And he asked that they work with him on the promising proposals currently before Congress."
The president also toured Solyndra's solar thin-film manufacturing plant in Fremont, California and noted that even as "we are dealing with this immediate crisis, we've got to remember that the risks our current dependence on oil holds for our environment and our coastal communities is not the only cost involved in our dependence on these fossil fuels. Around the world, from China to Germany, our competitors are waging a historic effort to lead in developing new energy technologies."
More Steps
White House advisors and aides on Capitol Hill said the president's fresh focus on policy and not soley on oil pollution has produced new momentum for a comprehensive climate and energy bill this year. Advocates said that to really make a difference in fossil fuel consumption and emissions reductions, the bill would need to incorporate the energy-saving ideas proposed by the Center for American Progress and the Union of Concerned Scientists, and add several more including:
President Obama is scheduled to return to the Gulf coast on Friday, his third visit to the disaster zone in 5 weeks.
-- Keith Schneider
Late last year when Senator Lisa Murkowski announced she would vigorously oppose any effort to use the Clean Air Act to regulate carbon emissions, environmental leaders in Washington understood the significance of the Alaska Republican's challenge. A loyal ally of fossil fuel developers, Senator Murkowski attracts more campaign financing from the oil and utility industries than all but two other Senate lawmakers, according to federal election records.
The months-long skirnishing between Senator Murkowski and environmental advocates is now in its final hours, with both sides asserting they will prevail. At stake is a vote in the Senate scheduled for Thursday night on a "resolution of disapproval" introduced by Senator Murkowski last January and meant to disrupt the Obama administration's pioneering work to respond to climate change by limiting emissions of carbon dioxide and five other greenhouse gases in the U.S.
Though the Murkowski resolution faces an arduous route through a Democratic-controlled Congress and White House, the Thursday vote will be the most important Congressional test yet this year on where the United States is going on climate action and clean energy.
The details of what's been happening look like this: Senator Murkowski's resolution, which has 41 co-sponsors, would overturn the Environmental Protection Agency's formal scientific finding on December 7, 2009 that carbon dioxide and five other climate-changing pollutants endanger human health and the environment.
The EPA's "endangerment finding," introduced at the start of the United Nations climate summit in Copenhagen last year, was saluted by climate activists and government officials around the world. The finding made it legally possible to use the Clean Air Act, the nation's primary air pollution statute, to set and enforce new manufacturing practices and emissions limits that tamed the U.S. contribution to global climate change.
Moment of Reckoning For Both Sides
The vote couldn't come at a more opportune moment for climate advocates and the fossil fuel industry and should provide a helpful sorting out of the relative political influence of both sides.
The last six months have been a period of dismay for the American climate action community, challenged by the disappointing results in Copenhagen, and fighting back against the furious attack by pundits and lawmakers on the validity of climate science.
The last six weeks have been equally dismal for the oil industry, which has attracted new public scrutiny because of the horrendous oil spill in the Gulf, and the equally destructive environmental consequences of mining and processing oil from Alberta, Canada's tar sands.
If the resolution passes, an event seen as unlikely by Democratic Senate staffers, it would almost certainly have the effect of putting an even deeper trench in the already difficult path that comprehensive climate and energy legislation has in the Senate. Conversely, if the resolution fails by a wide margin, that result would likely build new legislative enthusiasm for a climate and energy bill this year.
Important players from both sides are making their cases. Americans United for Change today began three days of cable TV advertising in Washington, D.C., that explicitly link the BP Gulf disaster to the Murkowski resolution and the assertion that at Republicans are "working to gut the bipartisan Clean Air Act and give big oil a bailout."
Senator Murkowski issued a statement this week that accused critics of the resolution of misrepresenting her intentions. "There has been a great deal of misinformation spread about my effort by groups -- almost all of which are based outside of Alaska -- who want to cut the emissions blamed for climate change no matter what the cost," Murkowski said. Her spokesman, Robert Dillon, said the resolution is not about debating the science behind climate change. Rather, he told the Associated Press, it's about stopping an "out of control" government agency.
Senator Murkowski's conservative supporters contend that using the Clean Air Act to regulate carbon emissions is a regulatory overreach by big government. "Every sector of our economy -- transportation, power generation and manufacturing -- would be subjected to EPA's bureaucratic reach," said Tom Borelli director of the Free Enterprise Project at the National Center for Public Policy Research.
Endangerment Finding Put to Use
The Obama administration, meanwhile, has moved quickly to put the endangerment finding and its Clean Air Act authority into effect. In April the administration issued trend-setting fuel mileage and emissions standards for light vehicles that the agency said would save 1.8 billion barrels of oil and 900 million tons of carbon emissions from 2012 to 2016.
Last month, President Obama ordered similar mileage and emissions reduction rules for heavy trucks. The administration has also made plain its intention to use the Clean Air Act to regulate carbon emissions from some 7,000 industrial installations – refineries, utilities, manufacturers, and mining sites – but leave small businesses alone.
U.S. climate and clean energy organizations anticipated Senator Murkowski's challenge and began building support in January to defeat the resolution, which they called the "Dirty Air Act." Among the allies in the campaign were dozens of environmental organizations, labor unions, governors, President Obama, Democratic senators, and EPA Administrator Lisa P. Jackson.
Newspaper editorialists also weighed in, noting that the BP Gulf Spill has made it more urgent than ever to curtail the myriad hazards of America's addiction to oil. "Murkowski plans to offer a resolution," said the Washington Post on June 7, "making it less likely we move away from fossil fuels, making it less likely we act to prevent a foreseeable catastrophe (in this case, global warming) from occurring, blocking regulators from doing their jobs, and disrupting one of our best opportunities to prevent climate change rather than scramble to respond after its incalculable effects rip through our atmosphere."
In an article on Monday for the Huffington Post, EPA Administrator Jackson said the Murkowski resolution "abdicates the responsibility we have to move the country forward in a way that creates jobs, increases our security by breaking our dependence on foreign oil, and protects the air and water we rely on."
