http://www.treehugger.com/files/2010...gulf-spill.php
So far in its coverage of the BP Gulf spill, the media has made much of the fact that the company's daily profits are higher than its daily cleanup costs, and that after raking in $17 billion in profits last year alone, such costs are but a drop in the bucket. But that's changing fast -- and if a few other factors come to pass, it's possible that the Gulf spill will end up bankrupting the oil giant. Speculators are calling this possible outcome the "Texaco scenario." Here's how it would work.
WATCH SLIDESHOW: Amazing, Devastating Photography of the Gulf Oil Spill
Andrew Ross Sorkin details the possibility in his New York Times Dealbook column:
BP's costs for the cleanup could run as high as $23 billion, according to Credit Suisse. On top of that, BP could face an additional $14 billion in claims from gulf fisherman and the tourism industry. So while conservative estimates put the bill at $15 billion, something approaching $40 billion is not out of the question. After all, little about this spill has turned out as expected.
The company has about $12 billion in cash and short-term investments, but there is already a debate about whether it should cut its dividend out of fear that it could run out of money ... But all those numbers don't account for the greatest possible threat: a jury verdict against BP. Such a verdict might push the cost of the spill into the hundreds of billions. If that happened, even BP might buckle.
And such a verdict is far from unlikely -- as you're likely aware, the US Justice Department has already opened a criminal investigation into BP's actions leading up to the spill. Analysts are calling this outcome the 'Texaco scenario' after the case in 1987 where that oil company lost a $1 billion lawsuit and had to file Chapter 11 after being unable to raise the cash. Sorkin continues with this what-if scenario:
Imagine the BP case playing out in a Louisiana courtroom, against the backdrop of an oil-choked local economy, high unemployment and an angry public. How high can you count?
Under the Oil Pollution Act of 1990, BP's liability for economic devastation -- above the cost of the cleanup -- is capped at $75 million, a number Mr. Hayward has already said he plans to blow through. But if BP is found to have violated safety regulations, which seems likely, that cap becomes irrelevant.
In which case, BP could feasibly go bankrupt. And then the poor, overworked BP CEO would finally get his life back -- just probably not in the manner in which he hoped.
And even if the company doesn't go bankrupt, it will still likely be a major acquisition target for other larger oil companies like S and Exxon, who are reportedly already eying the falling company.
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Great. As much as I hate BP (and have for long before this disaster), the last thing we need is big oil becoming bigger oil.
I would restate the le question. As it stands, it would be advantageous for them to use the bankruptcy laws not to pay damages. The question is, weather they will use that unethical route or not. They have plenty of money and assets to borrow against in a known profitable field to stay out of bankruptcy.
i agree with WC
That depends. There stands a good chance that the Fed could force BP to make payments on this. If that's the case, they may be forced into bankruptcy.
I don't think they're getting out of this. They've got too much bad press already. It's exploded, both literally and figuratively, right in their faces.
since when have ethics mattered to the free martkets at all cost crowd?
lol declare bankruptcy, force obama to open feds wallets to fix this mess which bp is responsible....election yr anyone?
lol ethics
Here's my question... wtf is up with the BP CEO? Has he not attended a single crisis management class? He's like a walking example of everything NOT to do and say during a crisis.
One question for OP.
Are you a ?
If so, chug a .
Ig, why are you here? I mean, if you want to be a troglodyte, feel free. But you could do that by living under a bridge, throwing stones at children and eating small animals. That way we could be spared your ignorance.
That's as bigoted as implying all blacks are thugs.
Do you stand by that bigoted remark?
You lost me there.
Just what do you expect him to do?
You apologize, say you're doing everything you can to fix it, and you DON'T deviate from that line.
Here are just some of the things that the CEO has said:
http://www.nowpublic.com/environment...g-2624196.html
You should probably wait until the spill is, you know, stopped, before you assess the impact. Otherwise you look like a horse's ass.I think the environmental impact of this disaster is likely to have been very, very modest."
How callous does this sound? You never complain about how your company's mistake is messing up your life. Did he even think to stop before he spoke, to picture how it would sound? He's since apologized, but damage done."We're sorry for the massive disruption it's caused to their lives," Hayward said."There's no one who wants this thing over more than I do, I'd like my life back
http://www.newsweek.com/2010/06/02/w...he-world-.html
I mean, how many gaffes should one CEO have in a crisis?On April 29, The New York Times reported that Hayward, apparently exasperated, turned to fellow executives in his London office and asked, “What the did we do to deserve this?"
cool story bro
Too bad you aren't as critical of liberals.
It's shameless the way you flirt with me.
Do you have an actual rebuttal or just another strawman?
Could BP go bankrupt?
Well Obama certainly hopes so. Unless they promise to turn everything
over to the unions. SEIU more than likely would love to run BP.
Obama is not to popular in England right now. Seems his ability to
control people is failing. But that is what happens when you send a
community organizer out to do a man's job.
Oh dear god, man!! Calling all black people thugs is totally different than calling all capitalists unethical.
The term "free markets at all costs" = a sure way to cross ethical guidelines. It's not even close to attributing a person's skin color (an obvious physical attribute) with the tendency to be thuggish.
BP is one of the top 5 most profitable oil companies, right? And prolly one of the most profitable in the world. They could pay for the spill and local economic losses easily...I can't imagine why/how they'd be allowed to file bankrupcy. Sounds like a twisted ing joke.
We ran out of money.
^ C'mon, who is saying that ? And who is buying it? DAMMIT DAMMIT DAMMIT! >.<
Bull you bigoted ass.
Can someone clarify for me, since I don't know anything about bank laws, that all BP has to do is say it has no money to be led as "bankrupt"?
Presumably, a judge will verify the bona fides of the pleadings and enforce fairness to BP's creditors, if BP really stands to go bankrupt.
The likeliest scenario in my mind would be the lost lawsuit or the gigantic fine. That's one to ten years off, IMO.
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