Friday, June 25, 2010

BP’s Other Big Leak

Watching Tony Hayward last week it became apparent to me that BP is turning its attention to its other big leak, the really important one… the money. The people at BP have a real serious problem in the Gulf, but they have a much bigger leak word wide. As big as BP is, it is still finite. There is just so much money and then its over. Also as BPs money and asset value dwindles so does its clout around the world. A weakened BP, once a formidable enemy and competitive adversary in the oil business, becomes a target. There is no love lost in the oil business. These are mean tough business people. You will notice the lack of compassion from the other big oil executives on Capital hill as they willingly thru BP under the buss. No love here. Of course they wouldn’t drill the well like that, of course they have better safety plans and of course they wouldn’t take short cuts just to save money. All nice until the media turned up their safety plans that were just as ridiculous as BP’s.

Hayward typifies the problem many businesses have. The guy running the show has no idea what’s going on. He has a bean counter mentality and leaves those nasty details like safety and protecting the environment to the lowly. Hayward was cannon fodder for the political hacks in Washington. At brief moments you could almost see the rage in Hayward’s eyes. Some of those posturing politicians may very well see a well funded opponent in their next election bid.

How does BP begin an exit strategy? Small business people are not exactly the bastions of honesty. It will be difficult to sort out the fraud from the realistic. The new claims program forced into place by the Obama administration will help provide some cover. If I were BP I would require all claims to include the last two years federal income tax filings. That will probably eliminate a third of the claims and cut the rest of the claims in half. State and local governments are not much better. Strapped for cash, they must resist the temptation that BP is the goose laying the golden eggs. BP can’t openly call these people thieves and cheaters …yet. But don’t be surprised when they finally do.

With every politician pounding on them, BP is looking for an out. BP cannot stand by and willingly fork out money to every whining small fishing boat operator and tourist shop around the Gulf Coast. There are people buying fishing boats so they can make a claim. The money leak has got to be plugged or BP will become a victim of its own mess. The environment not withstanding, BP is not about to become a sacrificial lamb or pelican as the case may be. From Iran to Texas to many oil people and investors have too much to loose. That is not the way this will play out.

There are already reports of BP playing hard ball with the media, and with claims. That will only get worse. Here’s the point. Sometime in the not to distant future, weeks not months, BP has got to start walking away from this. They must turn their attention to their own survival. Look for the new public face of BP to be a bit firmer. More like your typical oil baron. All of those nice TV ads saying we will be here until this is over are probably leaving out an important point; BP not the Obama administration will determine when it is over.
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Friday, June 18, 2010

The Oil is Coming…. The Oil is Coming… The Oil is Coming

No Matter how many walks along the Beach President Obama makes, or the many wishes of Governor Crist that the oil won’t come, or the consistent ignoring by County Administrator Lasalla, or the prayers of Mayor Foster…. THE OIL IS COMING.

You just can’t dump that much crap into the Gulf of Mexico, heat it up, stir it with a couple of tropical storms, turn it into a crude oil casserole and expect that none of it will wind up on the beaches here in Pinellas County. I’ll buy the fact that the area has been blessed for several years with no tropical storms but sooner or later the divine entity blinks or your luck runs out.

What is bothering me is the lack of planning. All we seem to really be interested in is getting a few bucks from BP to entice some hapless tourists to come on down so we can stick them in some over priced beach hotel rooms, sell them some cheap tee-shirts at exorbitant prices and in St. Petersburg’s case write a few extra parking tickets. The guy that owns the Trade Winds was classic. Whining about the poor tourist season and blaming in on the oil spill asking for millions from BP to pump up tourism. Did you notice we are still coming out of a recession?

BP may stand for Big Pockets in some people’s minds but there is a limit to everything. Instead of taking the typical small business, small minded, short sighted view of making this months sales, we better be thinking about how we save this place for everyone who lives here. Recent reports say tourism is a 6 billion dollar business in Pinellas County so how about you tourist business operators pony up some bucks to help your self.

If you think property values are in the tank now, just wait until you’re trying to sell your water front property with oil lapping up dock side and sweet smell of crude oil wafting through the air not to mention the oil soaked pelican staring at you from the dock pole.

Instead of bleeding BP for money to promote tourism let’s take that money and use it to train volunteers, and provide resources to cope with the oil when it gets here. The Pinellas County administration and the municipalities are not noted for their cooperation. It is time to put all of that bickering aside and put a strong action plan together to deal with the crisis. A bunch of 60+ year old volunteers out on the beach wheezing in the fumes while they search for tar balls is not a plan to deal with the crisis. Where is the boom, has the County or any City applied for the permits to build sand barriers, who is working with the Corps of Engineers? What is the plan to keep the oil out of Tampa Bay? Recent articles in the St. Petersburg Times indicate a lack of coordination and planning.

I can sympathize with the tourist business owners, I actually owned a couple of business on the beach myself. But listen carefully to those comments from Louisiana about loosing a life style. It could happen here too.
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Wednesday, June 9, 2010

What Does BP Stand For

BP Values verses Actions

From their WEB site here is BPs mission statement

From the BP mission statement:

In all our activities we seek to display some unchanging, fundamental qualities – integrity, honest dealing, treating everyone with respect and dignity, striving for mutual advantage and contributing to human progress.

From the BP group values section of the mission statement:
Health, Safety, and Environment

Health and safety: to ensure that there are no accidents, no harm to people and that no one is subject to unnecessary risk while working for the group.

From the BP Values Section Environmentally Sound Operations:

To conduct the group’s activities in a manner that, consistent with the board goals, is environmentally responsible with the aspiration of ‘no damage to the environment’. The group will seek to drive down the environmental impact of its operations by reducing waste, emissions and discharges, and by using energy efficiently.

BP what does it really stand for? Big problem, bad planning, big profits, bad management? So what happened? We will probably never know for sure. After all the layers of excuses are peeled away the one fact that will most likely emerge is BP was doing what all corporations do which is trying to spend the least amount they can to get the results they want. Simple definition: more profit, increase share holder equity, all of which can be defined in one word greed. The sad eyed BP CEO apologizing over and over is becoming more pathetic each day. Why was there no equipment or science to deal with a problem like this one? Simple. That investment does not add to share holder equity or executive compensation.

One thing is for sure the mission statement was no where to be found on the drilling rig. Whoever wrote it was some probably someone in marketing or public relations, and there is a good chance the CEO wasn’t aware it even existed. I like the Obama administration’s criminal investigation approach. These guys need to do some serious time in a real prison not a low security country club. I think a couple of BP executives doing the perp walk would send a real message to corporate America at least to the oil industry.

And to deal with the whole share holder equity thing, how about a class action law suit holding every BP share holder at the time of the incident personally liable for their proportionate share of the total cost. I think along with share holder equity there should be some shareholder responsibility. That would get some investors seriously watching the company’s operations and not just the share price.

-H-
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