The BP oil spill in the Gulf of Mexico continues to gush a month after the oil rig explosion. Is it time for top brass at BP or from within the government to take the fall?
By Eric Rosenbaum, TheStreet.com Staff Reporter
The Obama administration stepped up the level of rhetoric aimed at BP on Sunday, when Secretary of the Interior Ken Salazar told the press that he was “not completely” confident BP was on top of the oil spill situation in the Gulf of Mexico.
Interior Secretary Salazar had some strong words of warning for BP, saying “If we find they’re not doing what they’re supposed to be doing, we’ll push them out of the way appropriately.”
Throughout the now month-old oil spill crisis, the Interior Secretary has been “applying a boot to BP’s neck” to make sure the oil giant was employing all of its resources in fighting the oil spill. Outside BP headquarters in Houston on Sunday, Salazar again repeated his favorite phrase about the government keeping its boot on BP’s neck for results. Now that a month has passed and success has eluded BP’s efforts, though, Obama’s Interior Secretary seems to be getting ready to move his boot from BP’s neck to the oil company’s rear-end.
BP chief operating officer Doug Suttles was back on U.S. television on Monday morning, in his now all-too-familiar role balancing frustration with optimism.
BP’s television point man turns up several times a week on the circuit of morning shows to express the frustration from BP in terms of its failed efforts to fight the oil spill in the Gulf of Mexico. The BP executive’s comments are generally framed within an optimistic long-term outlook for the Gulf, and a reminder that BP is doing all it can, even if it has so far fallen short of the mark.
On Monday morning, BP’s COO again said all the customary words, pleading with the public, and responding to the Interior Secretary’s comments. “What I do know is, everyone is frustrated. I think the people of the region are frustrated. I know we are, I know the government is…. The fact that it’s taken this long is painful to everybody,” Suttles said.
The fact that the oil spill is occurring 5,000 feet below the surface of the ocean is the one fact that gives BP a little breathing room, as there is no existing baseline for success or failure.
The real damage was not the back-and-forth of words between BP and the government, but the more than 65 miles of Louisiana shoreline that were newly under siege from advanced heavy crude oil over the weekend. Close to 150 miles total of Louisiana coast line were under attack from the oil by the weekend, the state government said.
Louisiana’s governor Bobby Jindal was more focused on the state effort than BP’s continued failure, saying that it was pushing ahead with a plan of using containment booms, and berms made of sandbags, to stop the oil gushing out of the BP underwater well from contaminating more shore line. Jindal said over the weekend at a press conference that resources from BP and the federal government were still inadequate weeks into the oil spill, and a second Louisiana state official said on Monday morning that it was time for the state to take the situation into its own hands.
Should those hands include an ax and should BP or the federal government, or both, have their heads on the chopping block?
While Louisiana says that the U.S. Coast Guard has fallen short in its assistance, the U.S. Army Corps of Engineers also is considering a broader dredging plan that would construct sand berms across Louisiana barrier islands.
The latest mix of frustration and optimism came from BP’s Suttles on Monday morning when he said that the “top kill” approach to stop the oil spill would not be tried until Wednesday. Last week, Interior Secretary Salazar had said that BP was expected to attempt the top kill by this past Sunday. The top kill works by injecting heavy drilling mud into the leaking well and then allowing underwater engineers to cement the well shut.
There is still no good estimate from the government or BP about the total level of oil spewing out of the underwater well. Scientific estimates range from 6 million gallons of oil to above the 11 million gallons that would indicate the BP oil spill has already eclipsed the Exxon Valdez as the worst oil disaster in U.S. history.
There were photos of pelicans, which had just been removed from the endangered species list six months ago, now covered in oil. More fishing waters and oyster beds were under siege, as BP failed not just the pelicans, but also Louisiana’s fishing industry.
Interior Secretary Ken Salazar, Homeland Security Secretary Janet Napolitano, and Congressional delegation were back in the Gulf region on Monday, as the Obama administration makes every effort to — at least on the surface — show that it is going all out.
The price tag to BP for its failed efforts to contain the oil spill have now reached above the $760 million mark.
BP is not alone among the oil industry players facing scrutiny in the oil spill. The failed blowout preventer manufactured by Cameron continues to be a primary suspect in the oil spill disaster. Deepwater Horizon rig operator Transocean (Symbol : RIG) has faced the firing line in Washington D.C. right alongside BP — in fact, both companies have been passing the blame back and forth.
Halliburton (Symbol : HAL) officials have also been called to the nation’s capitol to provide testimony with regards to its role in cementing BP’s underwater well.
Yet it’s really come down to BP against the federal government — or, depending on your point of view, BP and the federal government both failing the American public.
As far as the cost being assigned in the paychecks or power posts of BP or government officials, though, the oil has yet to reach its mark. The government official in charge of the Interior Department’s heavily criticized Minerals Management Agency, Chris Oynes, announced he would resign last week, but government officials would not say if it the resignation was related to mismanagement.
BP CEO Tony Hayward has said throughout the oil spill crisis that he knows judgment ultimately rest on his shoulders.
BP’s share price hit another new 52-week low on Monday morning, as more investors and analysts worried if the oil giant could ever compete successfully for U.S. business after this disaster.
It’s not likely that the resignation of Oynes or BP CEO Hayward — and for that matter, the dismissal of any executive or government official — would do anything to stop the gushing oil.
BP pledged on Monday morning to donate $500 million for the creation of an independent scientific research fund. Is it enough, or just the latest in BP’s desperate efforts to placate the American public since it can’t actually stop the oil spill?Indeed, is it time for a big price to be paid in BP’s executive board room, or in the ranks of the Obama administration? Take our poll below to see that TheStreet has to say.
— Reported by Eric Rosenbaum in New York.