BP In No Danger of Going Bankrupt
Given the weeping and wailing that has been going on among some in Congress and in blogtopia regarding the threat to BP’s solvency posed by having to set up a $20 billion escrow fund, this post, which I came across via Memeorandum, is a tonic. After noting Mississippi Gov. Haley Barbour’s publicly expressed anxiety about BP’s ability to “make the income that they need to pay us” (video at link), the Climate Progress blogger provides a reality check:
Of course, the whole point of the escrow account is to assure that BP — not the taxpayer — is on the hook for the Gulf oil disaster bill. Despite CEO Tony Hayward’s recent claim that the oil giant has paid every claim, BP has actually paid fewer than half and has been less than transparent about the process.
It’s unclear why Barbour is so worried about BP not having enough funds for the account. The company made $163 billion in profits from 2001 through 2009 and nearly $6 billion in the first quarter of 2010 alone. As the Washington Post noted, in the early days of the spill, BP paid $17.5 million per day while the company made on average $93 million per day in the first quarter.
BP made these record profits while ignoring safety regulations and lying about ignoring safety regulations. In fact, a major part of the reason why BP was able to make these kinds of profits is precisely because they put all their research and development resources into improving the technology of drilling; i.e., finding ways to drill deeper, to increase production, and so on — and spent no time or money making sure that these new technologies could be applied and operated safely, or into how to fix accidents if they did happen. They did not bother to consider what sorts of safety issues might accompany new technologies, much less finding solutions to those issues and testing them out to make sure they worked. And then they lied about what they hadn’t done, to government agencies who accepted what they were told and never bothered to check it out or to make BP (or any of the oil companies) follow the rules.
And now, BP is excusing its own mendacity by pointing to those regulators and saying, Look, it’s their fault because they didn’t make us follow the rules. Check out this latest example (emphasis added):
In response to [Sen. Chuck Grassley's] request in a letter, BP said it never follows a federal law requiring it to certify that a blowout preventer device would be able to block a well in case of an emergency. The inquiry stemmed from a hearing in May into the Gulf oil spill from the explosion and fire which sank the Deepwater Horizon rig.
But, at the same time, the British oil giant blamed the federal oversight agency, Minerals Management Service, for not asking it to comply with the law.
On the issue of the blowout preventer’s capabilities, Grassley asked BP to show that it is in compliance with the Code of Federal Regulations Chapter 30, Section 250.416(e), which requires oil companies to provide the Minerals Management Service with proof that the massive safety devices they use to close off wells are “capable of shearing the drill pipe in the hole under maximum anticipated surface pressures.”
The company responded that it applies for permits to drill oil wells “in accordance with the process prescribed by MMS officials,” but goes on to say that it was not “MMS practice” to require anyone to comply with that particular section of the law.
“I find it very disturbing that BP asserts that the ‘practice’ in oil drilling is to avoid current laws designed to keep our beaches safe,” Grassley responded in his letter. “And I am outraged that MMS is looking the other way.”
You don’t have to excuse the MMS’s appalling and by now well-documented failure to enforce regulations to look at that explanation from BP and ask what the bloomin’ hell kind of answer THAT is.