BP and taxpayers

[gingercat12]

Am I the only one worrying about BP eventually being bailed out by British taxpayers? It would not be the first case (see our glamorous banking system). They are too big to fail (just think about our meagre pensions) and do not seem to have a handle on the oil spill at all.

I am more worried about the US govt. nationalising BP's assets (even if supposedly temporarily). That would cause other companies the world over to stop investing in the USA; the US economy would tank badly as a result, and if they tank, the whole world will go down with them.

good point. I never thought about that. I thought they were fully private, are we actually liable in some way?

I would also be worried about pensions... There will be loads of them who've invested in oil companies as a "sure thing" lately. We should also all be worried about how much money will be lost in tax revenues from BP if they're not profitable.

This could be really, really bad news for the UK all round.

yes there will be losses in pensions and dividends I expect, plus a hit on profits.

I can't imagine the US nationalising BP. It simply isn't a 'too big to fail' company in America.

Personally, I'd get it out of your investments. There is now talk about suspending the dividend until the oil spill/financial liabilities have been covered. The value of the stock has plummeted since the spill began, and if the (very generous) dividend is suspended, why in the world would an individual/pension fund/etc want to own it?

I think you are right to be worried about the future of the company. Personally, I don't think it can/will survive. Thoughts posted on another thread reproduced here:

I am not so sure that BP will survive this disaster. BP has lost one third of its' market value since the oil spill began.

All the figures quoted (money spent to date, and money projected) to stop the flow of oil doesn't begin to address the company's liability to the businesses/communities/individuals damaged and/or destroyed by the spill. There will be huge environmental costs, not to mention astronomical legal fees. Those figures will dwarf the money spent to stem the flow. If BP is found to be negilgent in the oil spill, the financial costs could (and probably will) crush the company.

And then there is the issue of the coming indictments/criminal charges from the US Federal government - all this results in a liability list that will go on for years, and that even BP, with its $20 billion free cash flow and $12 billion dividend to draw on cannot withstand.

I am so happy that I am not the only one fretting.

Earlybird I can't see them surviving either. They made Obama look totally incompetent, so I do not think they can expect much favours from that corner.

BelleDame I suppose the pension funds must be absolutely frantic trying to get out.

Claig I do not think we are liable, but then we weren't liable for the banking system.

I'll go and find the other thread.

gingercat12 - can you elaborate a bit on how you think Obama has been made to look incompetent? What do you think he/his administration should have done differently?

No-one looks good here.

BP didn't conduct appropriate safety checks, subcontracted out too much of the crucial work, and ignored some of the ones they did do.

Obama dithered (maybe he spent too much time with Gordon Brown), is incredibly weak politically as a result, and is now overcompensating by trying to destroy BP.

Whatever happens the British exchequer, not to mention countless British pensioners via their pension funds, are all screwed.

On this narrow point, the best hope for Britain is that the Republicans take back control of at least the House, and permanently take away the Senate supermajority. It might all be too late by then though.

Earlybird BP made Obama think this is a small oil spill, and his early comments were all about how everything is under control and that it is not the end of the world (I cannot find the exact quotes I am sorry). Although they say he was deeply concerned right away. Anyway, the public perception was that the weeks were ticking by, and not much has happened, and in the US it was all compared to Hurricane Katrina - quite unjustly IMHO. The increasingly threatening rhetoric towards BP really only started in earnest not so long ago.
I think their PR should have gone into overdrive straight away instead of just him giving a right bollocking to his aides ('Plug the damn hole' - I remember this quote).

longfingernails What makes you think Republicans who have been proving themselves increasingly incompetent for 8 years can make it better for us?

The US can't nationalise BP!

This isn't a time to get rid of BP it's a time to fill your boots with their shares. The reaction is way over the top.

BP won't fail...you don't understand the economics of the company or how these things work...BP is mainly owned by US banks anyway. No one is going to nationalise them (although they should be nationalised by the UK govt imo but that's another thing...)

Jesus...no one's pension is screwed this is all crazy talk.

You are talking top whack $10bn. Big deal...how much do you think a major oil field costs?

All the work at the field was overseen - as are all fields in the US Gulf - by the US mineral management service...

Why not do some reading about the company, or even bother to look at its accounts...all there on the old internet...

Who said they will nationalise BP?!

I would rather not react to the rest of your patronising post. FYI I do know how much an oilfield costs. And not only from googling it like you.

What exactly was Obama expected to do?

We need a beta dad on this thread. He has "knowledge" of the industry.

I would agree with Coolfonz.

This is a rare buy opportunity for BP shares.

Have any of you actually looked at the financials for BP?

There is a wider concern that oil and gas is becoming a sunset industry, but it'll go for a good few years yet.

In the meantime, BP has a fantastically strong balance sheet. It could afford several hundred spills of this nature. Its share price was overvalued next to its peers, now it's taken a hammering, especially as it may not pay a dividend. So now is the time to invest in BP, actually.

"a buying opportunity".

Anyone heard that quaint old expression about bottom pickers getting smelly fingers?

Looks like investing is not your game, alouiseg. Better to have a bath instead.

Obama is not the kind of politician who gets emotional. "Plug the damn hole" would have sounded ridiculous coming from him.

There are a lot of companies that were thought to be too big/rich to go bankrupt. I really don't see BP surviving this long-term but it will be quite a while before it actually goes under. Buying shares would not be my first choice.

Sorry, I misread your post. Did he really actually say Plug the hole? Rather out of character. But still, we are used to him dealing with things in a calm manner so getting excited and passionate would still have seemed weird.

Not old lady type investments of squirrelling away a few shares. No that's really not my game. I'll be in and out with a profit before the old dear has got off the phone to her broker ;-)

I think the first thing that would happen is obama would force bp out of america, he cant admit that the americans love of oil hungry lifestyle cant be sustained whilst being overly harsh on all oil companies, bp become the scapegoat, bp have enough assets outside of america to continue, its just whether america want them to pay for the clean up costs or not.

Clueless, I really hate to see this go into a Blame the Victim/Bash America thread. The US, particularly now that we have gotten Bush-the-oil-president out and Obama in, has made strides towards becoming less dependant on oil. Yes, it's taken too long and it will take longer still but there are many, many Americans committed to reducing our dependency on oil. And I don't think there is any question of whether we will want BP to clean up their mess. Their rig, their responsibility. Sure we'll bring in transocean and halliburton too but BP is not going to get off the hook.

It's interesting to see that Transocean and Haliburton get so few mentions in the press. I'm sure that the rig operator must primarily be to blame, but I'm equally sure that BP's lawyers will be looking carefully at the equipment suppliers...

jabberwocky, we all live in an oil hungry world, one of my best friends works for friend of the earth and finds it ironic how high his job commits him to flying so much and contributing to the never ending demand for oil, governments can make it very difficult for companies to do business there and the result is the big players move out when the oil price is low, leaving the small guys to run it and go under as soon as there is a problem, I am not blaming the locals who are suffering at the hands of the oil spill, just being realistic, if you want oil companies to continue to work in your country you cant make it too hard for them, I agree transocean has to be brought into it.