Does 'B' in BP stand for 'Bankrupt?' Not yet - but let's wait and see
When you think about how non-feasible that scenario is, I can think of an even better one: Once upon a time, a company named Enron convinced us -- including the half-asleep media watchdogs -- that the rolling power blackouts in California were the result of real electricity shortages. We now know that's not the case. But when it comes to a new major energy story and another power giant, why are we so damn quick to believe the industry line yet again?
This time the company is BP, and the scenario is the biggest oil spill in, oh, the History of Planet Earth. Which ain't even plugged up yet, despite all the petrochemical equivalents of chewing gum and thumbs in the dike to fix it. "There's a hole, there's a hole, there's a hole in the bottom of the sea..."
While you sing along, so sing the so-called "experts" in a chorus of shaking heads. And they're lining up to say, in between bites of caviar and key lime pie with their Wall Street buddies, that the notion of BP possibly going bankrupt over this is preposterous ... ridiculous ... not feasible. They have billions of billions of dollars, you know. Oh, those proles in the working class think so small. And didn't Jon Pack, a BP spokesman in Houston, tell Reuters that the company has not been in discussion with anyone regarding bankruptcy? It's only $1.4 billion in costs so far, and BP has hundreds of billions to play with.
Really? To those reading this who think, "Oh, well, l guess BP will get away with it and live to profit another day," I say this:
Don't believe it. Not. One. Word. Let me explain why.
Anything is possible, and we're no longer in the days of President (oops, did I say president?) Dick Cheney and his secret meetings with energy companies. And just as we forget that "Kenny Boy" Lay was a close bud and No. 1 sugar daddy for the Bush-Cheney campaign coffers, we also forget that we're coming off eight years where Big Oil was allowed to dictate to the White House how it wanted to be policed in terms of the energy business and environmental regulation -- which is to say, not at all.
Here's what you need to know: On public radio's "Fresh Air" Friday, ProPublica investigative reporter Abrahm Lustgarten told Terry Gross that he uncovered BP internal documents that show the oil giant knew of safety issues as far back as 2001 -- and chose to disregard them.
Lustgarten said: "You start to see a couple of central themes ... a consistent emphasis of profits over production over safety and maintenance and environmental compliance, meaning they were putting profits ahead of safety. And finally, a systematic disregard for maintenance of their equipment. It's a process that they call 'run to failure' where they would use the equipment for as long as possible while investing as little effort and money in maintaining it as possible."
Now, then: How many of these so-called experts who are speculating on BP's future know about these findings? My guess is, uhm, probably none.
The Obama administration has voiced its intentions to make BP pay for every penny of the cleanup and the environmental damage this leak has caused. Lest we forget that even as you read this, oil is STILL leaking. You can see NPR's camera feed of the live leak and hear the "Fresh Air" segment on BP here.
Here's what else you need to know, and it's where all of us as consumers become part of the story. Even as BP's stock price continues to plummet, the television analytics company Ace Metrix claims people aren't buying BP's new TV ad campaign attempting to apologize for the spill (known as "Tragedy That Never Should Have Happened").
The findings are stunning: 20% of those who have purchased BP gas in the past said they will never buy from BP again, and 31% said they will buy less. Moreover, 3 out 4 respondents said that they thought BP CEO Tony Hayward is not the right person to lead BP out of this disaster. How will those numbers trend if this disaster drags on into the winter?
I ask you: Do the experts predicting BP will survive just fine know about this statistic? And your power as consumers as demonstrated by these facts? Again, probably not.
But here's the irony: If for some reason BP does go bankrupt, it's a reasonable bet that if we're boycotting BP at the pump, we will in fact stick it to ourselves. No BP, or a BP in Chapter 11, could well mean that taxpayers will have to step in to finance the multi-billion dollar cleanup. Now I'm starting to have funhouse-mirror visions of the TARP bailout and rich Wall Street bankers turning our tax money into their bonus money.
Those of us in the media could step forward and sort all this now, out in a way that sparks moral indignation, and lawmakers to act before the oil spill contaminates our tax assets, too. But alas, the media is too quick, too often, to rely on babbling pundits for analysis of how a company might fare.
One such "expert" is oil industry analyst Trilby Lungberg. NPR uses her often in their headline news, and she's author of the Lundberg Survey. Well, here's something I pulled up off her website. Ask yourself is this makes her sound like an expert, or an Oil Industry Apologist.
In an October 2007 anti-ethanol rant, Lundberg sounds an awful lot like a BP executive: "I hope that the National Petrochemical and Refiners Association's guts, considering that it represents the disrespected petroleum industry, stays (sic) tough and its members regain stand-up pride in supplying the best and least costly economic and strategic energy source." Hmm. "Stand-up pride?" "The best and least costly strategic energy source?" I can hear Exxon's CEO clapping so hard that he just knocked the Kobe steak off his china. Note to Lundberg: Ever heard of solar or windmills?
Don't believe everything you read people, even in this article. Check the facts out for yourself. And if BP's effort to refute the Obama Administrations assessment of this spill pisses you off, I'd still suggest you vote with your pocketbook. That's your power as a consumer. And mine: I haven't bought a dime's worth of Exxon gas since a drunk ship's captain drove the Valdez like a bumper car all those years ago, and inflicted a disgraceful travesty on Alaska's wildlife and economy.
Your displeasure expressed as buying gas elsewhere is already having a tangible effect on BP stock, making the company at the very least a ripe takeover target ... and, I would argue, an all-too-viable candidate for bankruptcy if you extrapolate the graph, the evidence of BP's bad-faith behavior, and that pesky, leaky oil rig, into the year 2011.
To poo-poo such a notion is to turn back the clock to the day before the April 20 oil rig explosion. Who would've wagered then that a freaky spill, now months in duration, would turn the Gulf of Mexico into a sludge pot? It can happen. It's happening now.
Remember: We all though Enron was invincible. We all thought those blackouts in California were real. We all thought BP might've been playing by the rules prior to this.
Not true, not true, not true. Though if Kenneth Lay returns from the "dead" to take the reigns at BP, I suppose I'll recant it all.
Lou Carlozo is the editor of Money College, and a WalletPop blogger.