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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (78411)	6/17/2010 2:00:29 AM
From: stockman_scott	Respond to of 149317

I don't give BP much credit at all...they haven't been honest with our government or our citizens...BP hasn't been honest about the magnitude of the blowout, the flow rates, the resources needed to do a credible cleanup, the safety conditions for cleanup workers, etc.. -- not the kinda company you want to trust given their terrible safety track record over the years and history of lying to the federal government (eg. consider how BP totally lied to the Feds about the integrity of their Alaskan pipeline - they faced some big penalties but didn't change their behavior). And I sure wouldn't call BP a very smart company...their ruthless cost cutting caught up to them with the way they cut corners on the Macondo well...nothing like trying to save an extra $20-30 Million when your outside contractors and some of your experienced transocean workers didn't agree with the moves...Did you listen to the recent Congressional hearings where the top execs from Chevron, Shell and ExxonMobil said they NEVER would construct a well the way BP did in the Gulf (they also have better designed wells using industry standards, more oversight on their rigs, mechanisms where the drilling gets stopped when their are significant issues, etc.)...BP's top folks in Houston and their decision maker on the Deepwater Horizon rig made some reckless decisions that were very, very risky and now the company has totally lost it's credibility and financial integrity in the marketplace...It's BP's culture that puts cost cutting over safety and that comes from the top down - that's a quick way to ruin your corporate reputation, destroy an ecosystem in the Gulf, and quickly get rid of over half of your company's market value...BP's definately not a very smart company...It's amazing that our Interior Department let them totally roll the dice with the Macondo well (and even give them special environmental waivers to make it easier). CHECK THIS OUT... BP has been 'rolling the dice on risk' ft.com Published June 17 2010 03:00 From Prof Alan Punter. Sir, Nigel Ash (Letters, June 15) wonders why it is BP investors and not insurers that are taking the brunt of the potential financial consequences of the Gulf of Mexico spill. A large part of the answer lies in BP's Annual Report and Accounts, 2009, page 44: "The group generally restricts its purchase of insurance to situations where this is required for legal or contractual reasons. This is because external insurance is not considered an economic means of financing losses for the group. Losses are therefore borne as they arise, rather than being spread over time through insurance premiums with attendant transaction costs. This position is reviewed periodically." BP took this radical decision in early 1991 and a statement along the lines of the previous paragraph has appeared in its Annual Report and Accounts every year since. In essence BP has self-insured; that is, it has not bought insurance for any exposures of above $10m for the last two decades. The reasons given at the time included that insurance premiums paid over the decade 1980 to 1989 had far exceeded insurance losses recovered, that BP knew its risks better than any insurance underwriter, and that such risks were bearable by BP. However, some observers believe that another significant factor in making this decision, not given publicly at the time, was a desire to cut costs and "roll the dice on risk". BP in the early 1990s was heavily in debt; the Financial Times in a story on August 10 1996 noted BP's "debt-induced crisis" when it cut its dividend in 1992. This "self-insurance" strategy appeared to pay off during the 1990s, but in the next decade there has been a litany of events: three serious incidents at BP Grangemouth in May and June 2000; the 15 deaths and more than 170 injuries at BP Texas City in March 2005 ("Cost-cutting blamed for refinery explosion", FT March 21 2007); damage to Thunder Horse rig in the Gulf of Mexico in July 2005; the oil spill from a corroded pipeline in Prudhoe Bay, Alaska in August 2006 - and now Deepwater Horizon. One reason for this series of lapses may be that, in not having to undergo the process and rigour of presenting and justifying its risk management programme and performance to insurance underwriters each year, BP has not benefited from having sufficient external expert advice on risk management - one of the non-financial benefits of buying commercial insurance. Alan Punter, Harpenden, Herts, UK Copyright The Financial Times Limited 2010.