JMI Capital Report
BP Seeks Amends: So Far So Good
By Will Patrick – December 8, 2011
TALLAHASSEE– BP is still doing everything it can to make amends for the Deepwater Horizon disaster. That’s the message conveyed by Geir Robinson, British Petroleum’s Vice President of Economic Restoration for theGulfCoastregion. Last Friday, the BP executive announced a three-point restoration plan to a small but influential group of stakeholders at the Associated Industries of Florida headquarters in downtownTallahassee.
Beginning with the eleven men that died on April 20, 2010, due to the now infamous platform explosion in the Gulf of Mexico, Robinson explained that above all, “Eleven people lost their lives and that’s terrible. Eleven lives is a huge loss, and that requires a huge response.” Compensation details for the families of the victims were not disclosed in the briefing.
Robinson highlighted BP’s efforts aimed at revitalizing theGulfCoastenvironment—a sore subject for many Floridians who saw their pristine beaches and theGulf of Mexicosoiled as a result of the oil giant’s negligence.
Robinson readily acknowledged the depth and intensity of the national outcry over the disaster and referred to the around-the-clock media coverage showing massive amounts oil gushing into the Gulf from BP’s severed well. Interestingly, Robinson admitted that the camera displaying the images of the gushing hydrocarbons was actually the property of BP on loan to CNN. Floridaresidents, along with the nation, watched those images in horror until the well was finally sealed on September 19, 2010, nearly five months later.
President Obama also weighed in during a primetime television speech on June 15, 2010 saying, “This oil spill is the worst environmental disaster America has ever faced…[the spill] is like an epidemic, one that we will be fighting for months and even years.”
So when Robinson claimed 90% of the Gulf shoreline now meets agreed upon cleanup standards, the BP executive’s claim seemed surprisingly optimistic. However, according to RestoreTheGulf.gov, a website sponsored by the Environmental Protection Agency, theGulfCoastshoreline is indeed 90% free and clear of the five million barrels of oil that surged and spread across the Gulf.
By both BP’s and the federal government’s account, the Gulf waters are now safe from a “human, economic, and toxicology point of view.” That’s good news forFlorida’s four largest Gulf related industries: tourism, seafood, rental properties, and recreational fishing, respectively.
Robinson’s final commitment on behalf of BP was to restoreFlorida’s economic vibrancy to pre-spill status. The commitment entails interim compensation for businesses, individuals such as fisherman, and state and local governments that lost revenue as a result of the spill and the subsequent cleanup.
Robinson was quick to point out that BP volunteered the unprecedented amount of money dedicated to the Gulf region’s economic recovery—a trust fund of $20 billion. The trust fund has also been a point of contention with the White House, Robinson admits. In his words, Kenneth Feinberg, the government appointed administrator of the BP Victim Compensation Fund, “thinks the $20 billion trust fund belongs to him.” When pressed for a characterization of BP’s relationship with the White House, Robinson explained that behind closed doors the relationship is positive and productive though publically that’s not always the case.
To date about $7.4 billion of the trust fund has been paid through the five state Gulf regional claims process, which $2.7 billion has been directed toFlorida.
When asked if the entire $20 billion fund was going to be paid out in full, Robinson stated that his core task is to weigh “the perception of damage versus the real damage” caused by BP’s negligence. This, he intimated, will take time and is certain to be legally contentious in many cases and is therefore impossible to know at this point.
Currently, 45% of the claims made against BP have been deemed fraudulent or unfounded. One claim came from a New Yorker citing emotional anguish that stemmed from months of watching news coverage on the spill as grounds for a financial payout. But the vast majority of claims come from small business owners like Baker Clark, aNavarre, FL, Best Western Hotel owner who has experienced a 50% drop in revenue due to the spill and its lasting perception. “All I want is to be paid what I should’ve earned,” Baker Clark told the USAToday.
VP Robinson ended the briefing by saying that the claims process will take the time it takes, and as long as BP caused the damage and the claims are approximate both in time and location, then the victims will receive their fair compensation.
BP grossed $297 billion in revenue in 2010 according to its website, but reported a net loss of $3.719 billion for the year. This year BP is projecting a $21 billion net profit.