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OMG Benzene And Hydrogen Sulfide: The Real Dangers From The Gulf Of Mexico Oil Spill?
While most of the attention so far has been on the millions of gallons of oil that have escaped from the damaged BP rig in the Gulf of Mexico, many environmentalists are now wondering if the real danger to humans from this whole crisis may be the massive amounts of benzene and hydrogen sulfide that are escaping into the air. Hydrogen sulfide is a chemical asphyxiant, similar to carbon monoxide and cyanide gases. It causes "biochemical suffocation" by inhibiting cellular respiration and the uptake of oxygen.
Benzene is a highly carcinogenic gas that can cause death if inhaled at high enough concentrations. Not only that, benzene has been shown to cause leukemia in all its forms. High levels of both gases have been detected at testing stations in the Gulf of Mexico. In addition, it is being reported that many fishermen in the Gulf that have been assisting with cleanup efforts have been getting seriously ill from breathing that air. There have been reports of symptoms including headaches, nausea, dizziness, burning eyes, coughing, sore throats, and stuffy sinuses.
So as this oil spill continues and even more of these gases are released, are people across the southeast United States about to start breathing air that is filled with highly toxic gases? Are we about to see the American Dream turned into a total nightmare for tens of millions of Americans? What some scientists are now telling us about the release of these gases is truly frightening.
At some testing stations in the Gulf of Mexico, levels of benzene have been detected at over 3000 parts per billion (over 3 parts per million). The U.S. Occupational Safety and Health Administration has set a maximum workplace exposure limit of 1 part of benzene per million parts of air during an 8 hour workday. So already some testing stations in the Gulf of Mexico have detected levels of benzene that are three times higher than what the OSHA considers to be safe.
Not only that, but WWLTV in New Orleans is reporting that hydrogen sulfide has been detected in the Gulf of Mexico at levels as high as 1,192 parts per billion. The concentration threshold at which humans begin to experience physical symptoms from hydrogen sulfide is about 5 to 10 parts per billion.
Needless to say, this is beyond alarming.
On May 14th, WWLTV in New Orleans ran the following video report on the levels of hydrogen sulfide and benzene in the air at that time....
VIDEO: http://www.wwltv.com/news/gulf-oil-spill/Oil-Spill-Raises-Concerns-About-Air-Quality-Along-Coastal-Louisiana-94202149.html
So what kind of damage can breathing these two chemicals do?
Let's break them down one at a time.
Benzene
Breathing high levels of Benzene can cause the following....
*Drowsiness
*Dizziness
*Rapid Heart Rate
*Headaches
*Tremors
*Unconsciousness
*Death (at very high concentrations)
Long-term exposure to Benzene can do a ton of damage to the human body. Benzene actually enters cells and damages DNA material. In addition, benzene is known to cause harmful effects on bone marrow and it can cause a decrease in red blood cells, leading to anemia.
For women, long-term exposure to benzene can result in irregular menstrual periods and a decrease in the size of their ovaries.
In addition, as mentioned previously, benzene is a known cancer-causing agent. In fact, the Department of Health and Human Services tells us that exposure to benzene is known to cause leukemia.
Hydrogen Sulfide
Breathing high levels of hydrogren sulfide can cause the following....
*Eye irritation
*Respiratory irritation
*Nausea
*Dizziness
*Coughing
*Headaches
*Breathing Difficulties
*Fluid In The Lungs
*Shock
*Convulsions
*Comas
*Death (at very high concentrations)
Hydrogen sulfide is considered a broad-spectrum poison, meaning that it can poison several different systems in the body at the same time. As mentioned previously, hydrogen sulfide is a chemical asphyxiant. It is similar to carbon monoxide and cyanide gases. It can be extremely deadly at high concentrations.
So if the levels of these two gases continue to climb, will some areas along the Gulf coast need to be evacuated?
That is a legitimate question.
Right now this is a development that needs to be very closely watched, but so far the mainstream media does not seem that alarmed by the buildup of these gases.
Just as the authorities insisted that the air was safe to breathe at ground zero after 9/11 (but were proven horribly wrong later), they are also promising that the air in the Gulf of Mexico is safe to breathe now.
But if you live in that region you are going to need to do your own research. BP does not care about you and they are not going to let you know if the air is a health danger to you and your family. Do not just blindly rely on what the "authorities" tell you to do. If things continue to get worse with these gases, you are going to have to make your own decision about whether or not it is best to get away from the coast for a while.
Benzene and hydrogen sulfide are nothing to scoff at. Both gases can have very serious health effects. If any of you out there have any additional information on these matters, please let us know and we will do our best to get it out to our readers.
http://endoftheamericandream.com/archives/benzene-and-hydrogen-sulfide-the-real-dangers-from-the-gulf-of-mexico-oil-spill
WP: Could the BP oil spill increase GDP?
Annie Lowrey notes a J.P. Morgan Chase analysis suggesting the BP spill will actually raise the country's GDP, at least in the short term. "Cleaning up the spill will likely be enough to slightly offset the negative impact of all this on GDP, J.P. Morgan said," summarizes Luca Di Leo. "The bank cites estimates of 4,000 unemployed people hired for the cleanup efforts, which some reports have said could be worth between $3 and $6 billion."
This is a nice object lesson in the inadequacy of GDP as a measurement of societal well-being. I could blow up the biggest building in every city in the country and the resulting reconstruction effort could mean a big temporary increase in GDP. But blowing up buildings is not a sustainable way to grow your economy. GDP, of course, has its uses, and as Bruce Bartlett points out, it provides a rich source of historical data and we wouldn't want to abandon it completely. But there's no reason we couldn't also use more comprehensive measures, and this Urban Institute report (pdf) gives a nice overview of what they would look like.
http://voices.washingtonpost.com/ezra-klein/2010/06/could_the_bp_oil_spill_increas.html
BP Swaps Rise to Record at 35% Odds of Default: Credit Markets
June 15, 2010, 9:35 PM EDT
By John Detrixhe and Shannon D. Harrington
June 16 (Bloomberg) -- Credit investors are pricing in an almost 35 percent chance BP Plc will default within five years as it tangles with the Obama administration over cleanup costs and claims for the biggest oil spill in U.S. history.
The rising risk implied by credit-default swaps is up from 7 percent a month ago, according to the International Swaps and Derivatives Association’s standard model. BP swaps climbed 68 basis points yesterday to a record close of 506 basis points, CMA DataVision prices show. Investors are demanding 800 basis points more in yield to own BP debt due next year rather than Treasuries.
Pressure is building on BP with Chairman Carl-Henric Svanberg called to a meeting at the White House today to discuss setting up an escrow account to pay residents for damages from the accident. BP, which had $27.7 billion in cash flow from operations in 2009, was cut six levels to BBB from AA by Fitch Ratings because of mounting costs from the well that’s spewed crude into the Gulf of Mexico for eight weeks.
“There’s still so much uncertainty as to what ultimately the liability is and what the government is going to do,” said Jason Chen, a partner and head of research at hedge fund Sancus Capital Management in New York, founded in August by former JPMorgan Chase & Co. traders.
BP’s $750 million of 1.55 percent notes due in 2011 dropped 2.1 cents to 92.25 cents on the dollar yesterday, the lowest on record, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds traded the most ever, according to data compiled by Bloomberg.
Approaching Distressed
The securities, which traded as high as 101.2 cents in February, pay a spread of 804 basis points. That’s approaching distressed levels, which refers to companies in default or with relative yields of more than 1,000 basis points, or 10 percentage points.
Tristan Vanhegan, a spokesman for London-based BP, declined to comment on default-swap and bond prices.
Elsewhere in credit markets, the extra yield investors demand to hold corporate bonds instead of government debt was unchanged at 198 basis points, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index. Yields averaged 4.133 percent.
Teva Pharmaceutical Industries Ltd., the world’s biggest maker of generic drugs, tapped the bond market for the first time in more than four years, selling $2.5 billion of debt in three parts.
Proceeds from the offering by the Petah Tikvah, Israel- based drugmaker may be used to repay $800 million drawn from a line of credit in connection with its 2008 purchase of Barr Pharmaceuticals Inc. and to finance the acquisition of Ratiopharm GmbH, according to a prospectus filed with the U.S. Securities and Exchange Commission.
Phoenix Financing
Phoenix Group, the indebted drug wholesaler started by deceased billionaire Adolf Merckle, is close to obtaining as much as 3.6 billion euros ($4.4 billion) in financing, according to two people familiar with the negotiations.
Phoenix, based in Mannheim, Germany, may reach an agreement with banks by early next month on 2.6 billion euros in syndicated loans to refinance existing debt, said the people, who spoke on condition of anonymity. The company also has plans to sell as much as 1 billion euros in hybrid bonds, they said.
Bank of America Corp. plans to sell $1 billion of bonds backed by automobile loans as soon as this week, according to a person familiar with the offering, who declined to be identified because terms aren’t public.
Credit Risk
A benchmark measure of corporate credit risk in the U.S. fell for a fourth straight day, the longest streak since April.
The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 4.5 basis points to a mid-price of 118.6 basis points, the lowest since June 3, according to Markit Group Ltd. In London, the Markit iTraxx Europe Index of 125 companies with investment-grade ratings climbed 1.6 basis point to 127.75, Markit prices show.
The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan declined 5 to 133 as of 8:40 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show.
The indexes typically fall as investor confidence improves and rise as it deteriorates. Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
Greek Bonds
Credit-default swaps on Greece, which has the second- largest budget deficit in the euro region after Ireland, signaled a 48.5 percent probability of default within five years. The country’s credit rating was cut four steps to below investment grade on June 14 by Moody’s Investors Service, which cited “substantial” risks to economic growth from austerity measures tied to European Union and International Monetary Fund aid.
The cost of insuring $10 million of Greece’s bonds for five years jumped $55,500 to $811,000 a year, making the nation’s debt the third most expensive to protect after Venezuela and Argentina, according to CMA.
In emerging markets, the extra yield investors demand to own bonds relative to government debt fell for a second day. Spreads tightened 8 basis points to 314 basis points, the narrowest since June 3, according to JPMorgan’s Emerging Market Bond index.
Argentine warrants linked to gross domestic product rose to the highest price in a month as investors bet growth in South America’s second-biggest economy will trigger payments.
The dollar-denominated GDP warrants rose 0.1 cent on the dollar to 7.35 cents at 4:34 p.m. in New York, the highest since May 18.
Inverted Yield Curve
BP’s shorter-term borrowing costs are rising in a signal lenders are increasingly concerned they may face losses. BP notes due in 2011 yield 154 basis points more than the company’s 4.75 percent bonds due in 2019, Trace data show. The shorter- maturity debt yielded 326 basis points less as of April 29.
Investors typically demand additional yield on shorter- maturity debt when risk is concentrated in the nearer term, causing the so-called yield curve to invert.
BP’s cost to clean up the spill may escalate enough to threaten the oil company’s future, said former Shell Oil Co. President John Hofmeister, who now runs the advocacy group Citizens for Affordable Energy.
“The current political movement by the U.S. government is basically an unlimited liability,” Hofmeister, who ran the U.S. operations of Royal Dutch Shell Plc, Europe’s largest oil company by market value, from early 2005 through mid-2008, said yesterday at a Bloomberg Link Boards & Risk Conference in Washington. “At some point the entity will have to defend itself.”
60,000 Barrels Daily
The BP well is gushing as much as 60,000 barrels of oil a day, the government said, raising for the fifth time an official estimate that had begun at 1,000 barrels a day in April.
BP had $6.84 billion in cash and near-cash as of the end of the first quarter, according to a regulatory filing. It has spent $1.6 billion to stop the leak, clean it up and compensate local businesses and residents, according to figures posted on the company’s website. Liabilities may reach $37 billion, according to a June 2 report from Credit Suisse Group AG.
Sewage, Disposal Facilities
Interest rates on some floating-rate municipal bonds guaranteed by BP have surged to as much as 10 percent on concern the costs of the cleanup and litigation are spiraling higher.
Yields on short-term bonds backed by BP to build sewage and solid-waste disposal facilities at a chemical plant in Will County, Illinois, and a refinery in Texas City, Texas, were as low as 0.5 percent at the beginning of the month. BP backs more than $3.5 billion of U.S. municipal obligations, according to Bloomberg data.
BP bonds have lost 14.6 percent this month, after declining 2.62 percent in May, according to Bank of America Merrill Lynch index data. The overall U.S. energy company index has fallen 1.3 percent in June.
The fall in BP’s bond prices has to be seen in the “context of the asset values and the earnings capability of this company,” said Joel Levington, managing director of corporate credit at Brookfield Investment Management Inc. in New York. “When you’re talking about a company that can earn $20 billion in 2011, before its dividend, that’s significant flexibility.”
Transocean, Anadarko
Bonds of some companies associated with drilling and the spill may be attractive because their liabilities are more easily understood than BP’s, according to Chen. The leak began after an April 20 explosion on the Deepwater Horizon rig owned by Transocean Ltd. Anadarko Petroleum Corp. owns 25 percent of the well.
Anadarko’s $750 million of 6.2 percent bonds due in 2040 climbed 1.75 cents to 83 cents on the dollar, the fourth straight daily rise, Trace data show. The debt traded as low as 75 cents on June 9. Transocean’s $1 billion of 6 percent debt due in 2018 increased 1.56 cents to 88.1 on the dollar, the third consecutive daily increase.
“There is definitely a case to be made for going long select bonds of the peripheral Gulf spill names, like Transocean or other drillers,” Chen said. “Going long BP is a more difficult case to make because there’s no sense as to the ultimate liability amount.”
--With assistance from Jim Snyder in Washington, Abigail Moses and Sonja Cheung in London, Jody Shenn, Martin Z. Braun, Jim Polson, Janet Guyon and Bryan Keogh in New York, Aaron Kirchfeld and Angela Cullen in Frankfurt, Drew Benson in Buenos Aires, Ed Johnson in Sydney and Katrina Nicholas in Singapore. Editors: Alan Goldstein, Michael Weiss
To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net
To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net
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BEST POST! ""When your company is contemplating using a nuclear weapon in order to "fix" a problem it caused, it's time to sell the stock.
Just a handy tip for you all."
Found on yahoo BP board :)
>>17 Countries offer help: Fla. Republicans ask Obama to waive Jones Act
PENSACOLA, Fla. -- U.S. Sen. George LeMieux and U.S. Rep. Jeff Miller want President Barack Obama to waive a law they say is keeping foreign oil skimmers out of the Gulf of Mexico.
The Florida Republicans sent a letter to Obama on Monday and plan to discuss the issue with him Tuesday during the president's visit to Pensacola to assess the BP oil spill in the gulf.
The federal maritime administrator in emergencies can waive the Jones Act that bars foreign ships from carrying cargo and passengers between U.S. ports.
U.S. Sen. Bill Nelson, a Florida Democrat, who also was in Pensacola on Monday, said Homeland Security Secretary Janet Napolitano has assured him skimmers from the Netherlands and other European counties are on their way.
http://www.miamiherald.com/2010/06/14/1680503/fla-republicans-ask-obama-to-waive.html#ixzz0qvMYpB2k
ZANE, ty...will check to see if there are options :)
Re BP: Very much so, imo. Downgrade to junk means investment grade funds MUST divest....
..never mind the pending dividend cut, which they are postponing announcing. Even though they will call it a 'deferred' dividend, I still would be concerned that quite a few funds who ONLY invest in dividend stocks, would see the writing on the wall, and began divesting of the stock.
The news yesterday, from the UK Telegraph, that large funds have already begun divesting, confirms what we see on the tape...although shorts should be aware that someone IS buying
BP oil spill: Largest shareholders cut stake as price falls
BP's largest shareholders have cut their holdings in the troubled oil giant – with five of the group's top 10 shareholders selling shares in recent weeks.
Analysis by The Daily Telegraph of data compiled by Citywatch shows that major UK institutions including Legal & General, M&G, Scottish Widows, Threadneedle and Axa have all trimmed their holdings since the Deepwater Horizon rig sank with the loss of 11 lives in April.
A number of so-called "FTSE tracker funds" will have been forced to sell as BP's share price fell – reducing its relative size in the FTSE 100.
Scottish Widows has been one of the heaviest sellers. BP's ninth largest shareholder has cut its stake from 1.86pc before the disaster to 1.27pc at the start of the month.
Traders believe that much of the stock has been bought by UK hedge funds.
According to the Citywatch data US pension funds – including Calpers, the Teacher Retirement System of Texas and Ohio Public Employees Retirement System – have held their stakes in the company despite the dramatic fall in the share price.
Traders believe that Britian's top hedge funds have used BP's share price weakness to build stakes in the group.
GLG and Blackrock are said to be amongst UK based hedge funds to have bet on a recovery in BP's fortunes – with some funds buying stakes in excess of 1pc costing more than £600m.
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7825131/BP-oil-spill-Largest-shareholders-cut-stake-as-price-falls.html
Re BP: Very much so, imo. Downgrade to junk means investment grade funds MUST divest....
never mind the pending dividend cut, which they are postponing announcing. Even though they will call it a 'deferred' dividend, I still would be concerned that quite a few funds who ONLY invest in dividend stocks, would see the writing on the wall, and began divesting of the stock.
The news yesterday, from the UK Telegraph, that large funds have already begun divesting, confirms what we see on the tape
BP oil spill: Largest shareholders cut stake as price falls
BP's largest shareholders have cut their holdings in the troubled oil giant – with five of the group's top 10 shareholders selling shares in recent weeks.
Analysis by The Daily Telegraph of data compiled by Citywatch shows that major UK institutions including Legal & General, M&G, Scottish Widows, Threadneedle and Axa have all trimmed their holdings since the Deepwater Horizon rig sank with the loss of 11 lives in April.
A number of so-called "FTSE tracker funds" will have been forced to sell as BP's share price fell – reducing its relative size in the FTSE 100.
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7825131/BP-oil-spill-Largest-shareholders-cut-stake-as-price-falls.html
Re BP: Very much so, imo. Downgrade to junk means investment grade funds MUST divest....
never mind the pending dividend cut, which they are postponing announcing. Even though they will call it a 'deferred' dividend, I still would be concerned that quite a few funds who ONLY invest in dividend stocks, would see the writing on the wall, and began divesting of the stock.
The news yesterday, from the UK Telegraph, that large funds have already begun divesting, confirms what we see on the tape
BP oil spill: Largest shareholders cut stake as price falls
BP's largest shareholders have cut their holdings in the troubled oil giant – with five of the group's top 10 shareholders selling shares in recent weeks.
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7825131/BP-oil-spill-Largest-shareholders-cut-stake-as-price-falls.html
GM BT...I really don't think so. As I mentioned yesterday, the Greek and Spain crisis are brewing, no way Europe can really pretend that is getting better
BP's spills' impact on local economies is really beginning to be felt
My personal benchmark, copper, is still below the $3.08 breakout point...until I see that taken out, I'm gonna say this is in "dead cat bounce" category, and more expiration week sideways trading
You're welcome to join us in chat for ongoing discussion on this topic
:)
>>Stock Market today: Lukewarm Open Ahead
Stock Market Today, Dow Jones Today
June 15, 2010 07:17 AM EDT (Updated: June 15, 2010 07:28 AM EDT)
views: 222
Stock Market Today, Dow Jones Today is poised to make a lukewarm small gain at the opening bell. The latest futures report at CNBC points to the modest gains that are going to be expected at the start of the trading session.
Yesterday, the DJIA lost 20 points to finish up at 10,190. The loss was fueled by Moody's downgrading Greece's credit rating to junk status.
There are a few economic reports that will be released today at 8:30 AM EST before the opening on Wall Street. The government will release import/export prices for May and the New York Federal Reserve Bank is out with the June Empire State survey, which is a measure of manufacturing activity in New York State.
At 9 AM EST, the Treasury releases the Treasury international capital data, which measures the movement of overseas investment dollars in and out of the United States. Last at 1 PM EST, the National Association of Home Builders releases its monthly sentiment index, expected to remain steady for June at a reading of 22.
It's going to be interesting to see what will happen with BP shares here in the next several days and weeks. The company is under heavy scrutiny by the public and is under intense political pressure to find a solution to stop the flow of oil into the Gulf of Mexico. Today the company BP Chief Lamar McKay will face congress to address questions surrounding why the company made choices that appeared to favor cost savings over safety before its rig blew up in the Gulf of Mexico.
On top of that, President Barack Obama will be doing a televised address later on this evening at 8 PM to defend his handling of the disaster.
GM! BP down in London, up in US...ha
RIG: Transocean, U.S. Settle Liability Limit Disagreement
June 15, 2010
Transocean Ltd has resolved its spat with the Obama administration over the oil drilling company's attempt to limit its liability in the Gulf of Mexico spill, according to court papers filed Friday.
The company and the Justice Department have been arguing for weeks over Transocean's petition in federal court to limit its liability to just under $27 million over the sinking of its rig that was drilling the oil well for BP Plc.
Transocean seized on a 159-year-old law -- the Limitation of Liability Act of 1851 -- to make its case. After complaints by the Justice Department, the company told the court in Houston it did not mean to restrict claims by the U.S. government under a 1990 law on oil spills.
After haggling over legal language, Transocean filed a letter Friday and proposed a six-page order that excluded any claims or penalties that may be sought by the Obama administration and states under federal pollution and environmental laws.
"The Department of Justice has indicated to the company that it has no opposition to the proposed order,'' Transocean said in a statement.
The proposed order must be signed by the judge presiding over the case.
"The order accomplishes what the government sought,'' a Justice Department official said.
(Reporting by Jeremy Pelofsky; Editing by Peter Cooney)
Copyright 2010 Reuters. Click for Restrictions.
http://www.claimsjournal.com/news/national/2010/06/15/110731.htm
BL: BP Bankruptcy Would Offer No Protection From Costs (Update1)
By Linda Sandler
June 15 (Bloomberg) --BP Plc, whose potential liability for the Gulf of Mexico oil spill has lawmakers and analysts raising the specter of bankruptcy, would be unlikely to avoid paying claims by seeking court protection, restructuring experts said.
The spill, the worst in U.S. history, threatens wetlands, wildlife, fishing and tourism in five states. BP has spent more than $1.43 billion to stop the leak and clean it up, and to compensate local businesses and residents since the April 20 explosion of the Deepwater Horizon oil rig.
The U.K. energy company faces more than 200 lawsuits, and the U.S. is assessing the cost of restoring natural resources destroyed or fouled by the spill. BP’s liabilities include $37 billion in cleanup and potential litigation expenses, according to a June 2 Credit Suisse report. While a U.S. bankruptcy may halt many claims, it wouldn’t allow BP to avoid paying for most of the cleanup and damages, said New York bankruptcy lawyer Martin Bienenstock of Dewey & LeBoeuf LLP.
“It’s highly unlikely the claims would be so large that BP would pay any valid claims less than in full,” said Bienenstock, who advised General Motors Co. and Chrysler Financial Corp. in their bankruptcies. “The environmental claims and other claims would all ride through bankruptcy and be paid in the normal course.”
BP said it won’t seek court protection. “We categorically deny those rumors,” said David Nicholas, a company spokesman.
Lowest Price
BP fell yesterday to its lowest price in more than seven years, down 46 percent from the day the oil rig blew up, killing 11 workers. The cost to protect $10 million of BP debt for a year reached $695,000, according to CMA DataVision. It was $29,000 on April 30. The shares were little changed at 355.15 pence as of 8:44 a.m. in London.
“The bankruptcy option is clearly there,” said John Olson, managing partner of Houston Energy Partners, a hedge fund unit of Sanders Morris Harris Group Inc. “BP’s board and CEO can say they’ve ruled it out, but you can’t rule it out, realistically.” Olson doesn’t hold any BP shares.
On June 13, White House Adviser David Axelrod called on BP to establish an escrow account for claims tied to the spill. U.S. Senate Majority Leader Harry Reid requested that the London-based company set up a $20 billion fund administered by an independent trustee, according to a letter from his office.
The Obama administration should consider placing the company in receivership to preserve its assets because BP is likely to end up in bankruptcy, said Representative Steve Cohen, a Tennessee Democrat. Louisiana State Treasurer John Kennedy agreed, saying bankruptcy is a possibility and state and federal governments need to plan for it. The spill has sullied or threatened the coastlines of Louisiana, Alabama, Mississippi, Florida and Texas.
‘Ability to Pay’
The plan by state and federal governments to stop the gusher, clean it up and compensate victims “is all predicated on BP’s ability to pay for these objectives. And I say we need a plan in the event that it cannot pay for these objectives,” Kennedy said. “I don’t want us to miss a beat in the event that BP decides to seek protection of the U.S. bankruptcy laws.”
Such a U.S. bankruptcy filing, restructuring experts said, wouldn’t protect BP from liability for damage and cleanup costs stemming from the disaster. It may simply provide the company with a single venue from which to pay claims quickly.
Environmental Bankruptcy
In last year’s settlement of the largest-ever U.S. environmental bankruptcy, all claims were paid in full by the debtor, mining company Asarco LLC, said Gregory Evans, a lawyer at Milbank Tweed Hadley & McCloy LLP in Los Angeles.
Asarco paid $1.8 billion in restoration and cleanup costs for water, land and air pollution at 100 sites across the U.S. under the auspices of the U.S. Bankruptcy Court in Corpus Christi, Texas.
The Asarco court employed a process called estimation, which lets injured parties and the company present evidence of claims directly to the judge on an expedited basis.
Estimation removed trial lawyers from the process and skirted years of potential delays, said Evans, who helped lead Tucson, Arizona-based Asarco through the bankruptcy.
“The perception is that a company runs to bankruptcy to avoid its environmental liabilities,” said Evans. “But if the assets are there to pay a claim, and the judge decides the amount is fair, then that is what is owed.”
Every Dollar Asked
After a federal judge discharged Asarco from bankruptcy in December, Associate U.S. Attorney General Tom Perrelli said taxpayers got more than a dollar back for every dollar asked.
BP, the largest oil and gas producer in the Gulf of Mexico, may put all or part of the company into Chapter 11 bankruptcy, said Lynn Lopucki, a law professor at the University of California, Los Angeles. That would immediately halt spill litigation against it and place all claims under the control of the bankruptcy judge, he said.
“All claims could be liquidated expeditiously using the bankruptcy code’s magical estimation power, and the company could set aside an amount of stock or cash flow to pay off the estimated claims over a period of years,” Bienenstock, the New York bankruptcy lawyer, said.
The alternative to seeking court protection might be a “nightmare” lasting five or 10 years as BP dealt with claims while its stock remained under a cloud, he said.
Houston Energy Partners’ Olson said that while bankruptcy is “a plausible tactic” to protect BP’s North American assets, “any whisper of bankruptcy is something the short sellers would be likely to encourage.”
Public Sentiment
BP fell 36.45 pence to 355.45 pence in London trading yesterday. The company closed at 655.40 the day of the spill.
While providing an organized, single venue for addressing spill-related claims, a Chapter 11 filing might also inflame public sentiment. President Barack Obama said in an interview with NBC News broadcast June 8 that he’s looking for “whose ass to kick” and that BP Chief Executive Officer Tony Hayward “wouldn’t be working for me.”
“Political pressure can change what judges do. It would be very difficult for any judge to make a ruling in favor of BP right now,” said Lopucki. “It’s better right now for BP to avoid any court decisions.”
A bankruptcy filing would carry risks for BP management, including Hayward and the board, Lopucki said.
“The people in charge are generally forced out,” he said. “Bankruptcy seems to accelerate the process.”
BP wouldn’t succeed in assigning liability to a subsidiary that is subsequently placed into bankruptcy because creditors may seek to reverse the move, said John Penn, an attorney at Haynes & Boone LLP in Fort Worth, Texas, and a former president of the American Bankruptcy Institute.
Evans, the Asarco lawyer, cited the example of Exxon Mobil Corp. and the two decades of litigation it faced over the 1989 Exxon Valdez oil spill as a justification for letting judges, not juries, resolve the claims.
“Everyone deserves representation, but not to the point of the company spending 10 years circling the drain,” Evans said. “Justice delayed is justice denied, even for the company.”
To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net and; Linda Sandler in New York at lsandler@bloomberg.net.
Last Updated: June 15, 2010 03:48 EDT
Gm BT! Sorry, I was up so late waching London, I got up to buy BP puts,and took a nap LOL
Anyway, yes, after a green open in Asia and in Europe, we were going to rally
I am specifically going to track copper through this
It is possible we are going to see an early, oil-fueled rally, which will bring along industrial metals like copper and nickel
BP, however, has the potential to truly disrupt this happy scenario (although it is definitely creating the potential for much higer oil and NG prices ahead shortly)
Should BP seriously crash, consider the counterparty risk. Keep your eye on JP Morgan, who is the largest BP shareholder. BAC is #3, I believe. BP is a major component of the British FTSE, and as a market leader, has the potential to be a rally squelcher
So be optimistic, but keep the keys in the ignition, and be ready to GTF out fast should the bottom start to fall out.
Oh yes, this IS options expiration week, the end of a very bearish month. I would expect a counter-intuitive market for much of this week, so that put holders expire out of the money at 0.0.
GLTU!
>>BP Gaps Down 2.4% in London: PM $33.62:
A red open at all for BP bodes badly, from my analysis. This turd has been bouncing at the open, and then selling off into the day
If BP's rescuers in the UK can't even start her off in the positive, with the FTSE having a green open...watch out below
I'll give it 30 mins to see if this is a bear trap, but -2.2% is pretty weak.
BL: BP Options Show 63% Collapse as Hayward Heads to Washington
By Brian Swint and Jeff Kearns
June 14 (Bloomberg) -- The fastest-growing bet on BP Plc in the U.S. stock-options market shows traders expect a 63 percent plunge in about a month as costs surge for its uncontrolled well spewing oil into the Gulf of Mexico.
Options to sell BP’s American depository receipts in July at $12.50 recorded the largest jump in open interest of any contract during the last two weeks, soaring to 33,445 outstanding from zero as the month began, according to data compiled by Trade Alert LLC. Investors buying the put options are wagering the shares will extend their drop from $33.97 and wipe out $140 billion from BP’s market value since April 20, when the Deepwater Horizon rig exploded.
BP Chief Executive Officer Tony Hayward is set to testify before Congress this week and Chairman Carl-Henric Svanberg will answer a summons to the White House as politicians demand BP stops its dividend and pays laid off oil-rig workers. The spill’s cost may reach $40 billion, bank Standard Chartered Plc estimated last week, triple the $12.5 billion price tag Sanford C. Bernstein & Co. projected on April 30.
“The government has a lynch mob mentality,” said Fadel Gheit at Oppenheimer & Co. in New York, rated by StarMine as the most accurate active analyst on BP. “It’s in nobody’s interest to bankrupt BP, but that’s what Obama is doing right now. Crippling BP is not going to make them clean the spill better.”
Obama wants BP to set up an escrow account to pay claims, an aide said yesterday, and the Coast Guard gave BP an ultimatum until today to find more capacity to contain the leak. The company is currently collecting about 15,000 barrels a day through a cap on the damaged well. Government scientists raised their estimates for the pace of the spill to between 20,000 and 40,000 barrels a day last week, double earlier figures.
Cameron Call
In a phone call this weekend, Obama told British Prime Minister David Cameron he wasn’t trying to undermine BP’s value, U.K. Foreign Secretary William Hague said in an interview with the British Broadcasting Corp.
BP shares touched a 13-year low last week in London as the administration stepped up the rhetoric on BP, the largest U.S. oil producer. President Barack Obama said he would have fired Hayward, 53, if he were working for him. In the U.S., where the majority of options trading in the company’s shares occurs, the volume of put contracts changing hands last week was 100 times the level before the accident.
“People are still concerned that BP could go bankrupt,” said Chris Rich, head options strategist at JonesTrading Institutional Services LLC in Chicago. “The puts are saying that people have such a high level of fear. There’s just a huge amount of put buying right now.”
Hurt Investors
BP’s ADRs closed at $33.97 in New York last week, down 44 percent from April 20. Sheila Williams, a spokesman for the company in London, declined to comment on trading in the shares.
Cameron’s phone call to Obama took place as concern mounted that the crisis at the U.K.’s largest non-financial company will hurt investors. BP paid 14 percent of the total dividends from the London stock market’s largest companies last year, according to Morgan Stanley.
BP has so far spent more than $1.4 billion trying to stop the spill and cleaning up crude that’s reached the coastline in northwest Florida. A cost of $40 billion would be more than double BP’s expected profit this year. A permanent solution to capping the Macondo well a mile below the Gulf of Mexico must wait for the completion of relief wells, expected in August at the earliest.
Credit default swaps for BP, contracts linked to the likelihood of the company failing to make debt repayments, soared to a record last week. The cost to protect $10 million of BP debt for a year reached $695,000, according to CMA DataVision. It was $29,000 on April 30.
‘Cashflow Long’
“Market speculation can hurt the company because it sends a signal that it’s in trouble,” Alastair Syme, an analyst at Nomura Holdings Inc. in London. “BP might find it difficult to access cheap credit today. But they don’t rely on credit for their day-to-day business. They are cashflow long and have great assets.”
More likely than default is BP will cut or defer its $10 billion-a-year dividend payments to appease politicians demanding it sets money aside to pay spill costs. Hayward said last week the company was “considering all options” for the second-quarter dividend. BP’s board will meet today to discuss the dividend, a spokesman said during the weekend.
Dividend swaps trading in the over-the-counter market imply a cut of about 50 percent over the next year, according to Bhavin Patel, an equity derivatives strategist at Royal Bank of Scotland Group Plc in London. BP’s December 2011 dividend swaps traded at 18 pence on June 11, he said, compared with a total payout of 36.42 pence in 2009.
Oil Fields
Most equity analysts in London and New York remain positive on BP, pointing to the company’s ability to generate cash from oil and gas fields worldwide. BP has 27 buy recommendations, 12 holds and one sell, according to analysts surveyed by Bloomberg.
BP’s leaders will have to last through their week in Washington. Svanberg, 58, is scheduled to meet Obama on June 16, and Hayward testifies to Congress the following day.
“The political rhetoric is certainly heating up,” said Jason Gammel, an analyst at Macquarie Securities USA Inc. “We need a discussion of how this is going to be fixed and not all the finger pointing. I hope that’s the endgame.”
To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net.
Last Updated: June 13, 2010 19:01 EDT
BL: Stocks, U.S. Futures, Commodities Advance on Economic Outlook; Yen Weakens
By Will McSheehy
June 14 (Bloomberg) -- Asian stocks climbed for a third day and commodities gained after a report showed U.S. consumer sentiment rose to its highest since January 2008. The yen weakened on signs the global recovery is gaining momentum.
The MSCI Asia Pacific Index rose 1.4 percent to 113.97 as of 4:10 p.m. in Tokyo, with seven times as many shares advancing as declining. The Stoxx Europe 600 increased 0.9 percent to 251.76 at 8:10 a.m. in London. Futures on the Standard & Poor’s 500 Index rose 0.6 percent. Copper gained for a fifth day. Markets in China and Australia are closed today for holidays.
“Investors have been concerned about a double-dip recession in the U.S. later this year,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. in Tokyo. “The report on consumer sentiment showed it is less likely to be the case as the economy continues to recover.”
Americans are gaining confidence in the economy even as Europe’s debt crisis roils investors, according to the Thomson Reuters/University of Michigan index of consumer sentiment. The benchmark increased to 75.5, beating the median forecast of 65 economists polled by Bloomberg News, from 73.6 in May. Euro zone industrial output expanded 0.5 percent in April from March, according to a separate economist survey before the European Union publishes data today.
Japan’s Nikkei 225 Stock Average climbed 1.7 percent, the biggest increase among equity benchmarks in Asia-Pacific, followed by Taiwan’s Taiex Index, with a gain of 1.2 percent.
U.S. Sales
Sony Corp., the electronics maker that gets 21 percent of revenue from the U.S., climbed 1.6 percent in Tokyo. Posco, Asia’s third-biggest steelmaker, advanced 2.6 percent after the Seoul Economic Daily said the company plans to boost steel- product prices next month. Daewoo Shipbuilding & Marine Engineering Co., the world’s second-largest shipyard, advanced 2.1 percent after it received a $568 million order.
Taiwan Semiconductor Manufacturing Co., the world’s largest custom-chip maker, advanced 1 percent on expectations a trade agreement with China will boost earnings.
Three-month copper on the London Metal Exchange added 1.7 percent to $6,589 a metric ton. Copper in London capped its best week since April last week after government reports showed China’s exports jumped 48.5 percent in May from a year ago, surpassing all 32 estimates in a Bloomberg News survey of economists.
Currency Forwards
The South Korean won strengthened the most in a week after policy makers said they will give banks time to meet a new ceiling on forward contracts, holding off from imposing controls on capital flows.
The won climbed 1.9 percent to 1,223.05 per dollar, while the Malaysian ringgit strengthened 0.6 percent to 3.2655. Singapore may report higher retail sales and exports this week, according to a Bloomberg News survey.
“The data out of Asia is quite strong, including Singapore this week, and that encourages some fund inflows to the region,” said Akira Banno, a treasury adviser at Bank of Tokyo- Mitsubishi UFJ Bhd. in Kuala Lumpur.
Japan’s currency weakened to as low as 111.90 per euro in Tokyo from 111 in New York on June 11 as demand for the currency as a safe haven diminished. The yen was at 91.88 per dollar from 91.65. The euro climbed to as much as $1.2208, the highest level since June 4.
Energy Demand
Crude oil advanced in New York for the fourth time in five days, rising 1.2 percent to $74.67 a barrel, on speculation sustained growth in the U.S. will boost fuel demand from the world’s biggest energy consumer.
“Fundamentals are getting better and the euro is also driving the crude market,” said Ken Hasegawa, a commodity derivative sales manager at Newedge Group in Tokyo.
Treasuries extended last week’s decline on diminished demand for the relative safety of government debt. The yield on the benchmark 10-year note rose 3 basis points to 3.26 percent in Tokyo, according to BGCantor Market Data.
The cost of insuring Asian bonds with credit-default swaps declined, according to Royal Bank of Scotland Group Plc. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 6.5 basis points to 139 basis points in Singapore, RBS prices show.
To contact the reporter on this story: Will McSheehy in Singapore at wmcsheehy@bloomberg.net
Last Updated: June 14, 2010 03:10 EDT
BL: Soros Says ‘We Have Just Entered Act II’ of Crisis (Update2)
By Zoe Schneeweiss and Andrew MacAskill
June 10 (Bloomberg) -- Billionaire investor George Soros said “we have just entered Act II” of the crisis as Europe’s fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession.
“The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.”
Soros, 79, said the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak.
Concern that Europe’s sovereign-debt crisis may spread sent the euro to a four-year low against the dollar on June 7 and has wiped out more than $4 trillion from global stock markets this year. Europe’s debt-ridden nations have to raise almost 2 trillion euros ($2.4 trillion) within the next three years to refinance, according to Bank of America Corp.
“When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide,” Soros said.
Soros gained fame in the 1990s when he reportedly made $1 billion correctly betting against the British pound. He also wagered that Germany’s mark would appreciate after the collapse of the Berlin Wall in 1989 and that Japanese stocks would start to fall in the same year. His firm, Soros Fund Management LLC, manages about $25 billion.
Credit default swaps, which aim to protect bondholders against the risk of a default, are dangerous and a “license to kill,” Soros said today. CDSs should only be allowed if there is an insurable interest, he said.
To contact the reporters responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net; Andrew MacAskill in London at amacaskill@bloomberg.net
Last Updated: June 10, 2010 12:03 EDT
>>Europe's Banks May Face Second Funding Squeeze Amid Sovereign-Debt Crisis
By Gavin Finch and John Glover
June 14 (Bloomberg) -- European banks at risk of writedowns from the sovereign debt crisis face a funding squeeze that may depress earnings, curb lending and imperil economic recovery in the region.
Investors are shunning bank securities on concern Greek, Portuguese and Spanish bonds held by the lenders will plunge in value. Bank bond sales slowed in May to the lowest since Lehman Brothers Holdings Inc.’s failure in 2008 as the extra yield buyers demand to hold the securities over government debt soared to the highest this year. Firms are wary of lending to each other, depositing record funds with the European Central Bank.
“There is a lot of mistrust,” said Christoph Rieger, co- head of fixed-income strategy at Commerzbank AG in Frankfurt. “Banks are trading with the ECB rather than with each other.”
The central bank is preventing a crisis by providing banks with unprecedented funding. In substituting long-term money with shorter-maturity ECB cash, policymakers are making it harder to wean banks off life support as well as the short-term financing that regulators blame for the credit crisis.
The cost of insuring bank debt from default rose close to a record last week. The Markit iTraxx Financial Index of swaps on 25 European banks and insurers climbed to 208 basis points on June 8, approaching the all-time high of 210 basis points set in March 2009, JPMorgan Chase & Co. prices show.
Italy’s Intesa Sanpaolo SpA, SEB AB, the second-biggest bank in the Baltic states, DnB NOR ASA and ING Groep NV have isolated themselves from the freeze by already selling all the debt they needed this year, according to estimates by Morgan Stanley analyst Huw van Steenis. Germany’s Commerzbank AG, France’s Natixis SA and Spain’s Banco Espanol de Credito SA have raised less than 35 percent of the senior funding they require, he wrote in a note to clients on June 9.
“If you’re not a quality borrower, you’re not going to get funding from the market until you reduce your loan-to-deposit ratio and shrink your balance sheet,” said Simon Maughan, an analyst at MF Global Ltd. in London. “The credit and bond markets are doing their job. Unless you reform, you’ll be stuck on government support for the foreseeable future.”
An official at Natixis declined to comment. Officials at Banesto in Madrid didn’t return calls for comment. “We are comfortably funded,” Commerzbank spokesman Reiner Rossman said by telephone.
Risk aversion is helping to spur sales of covered bonds, securities that are guaranteed by the issuer and backed by mortgages and other loans, reducing risk for investors and interest payments for the issuer. Financial firms have sold 11.5 billion euros ($13.9 billion) of the bonds this month, three times the total for May, according to van Steenis. Frankfurt- based Commerzbank raised 1 billion euros in a June 9 offering.
‘Rare And Expensive’
Banks are still struggling to borrow even from one another and loans with a maturity of more than one month are “rare and expensive,” making them depend more on ECB funding, Brice Vandamme, a London-based analyst at Deutsche Bank AG, wrote in a note to clients on June 9.
Shut out of the interbank market, lenders tapped the ECB for 122 billion euros of seven-day cash at the central bank’s last weekly tender on June 8. The 96 bidders paid an interest rate of 1 percent on those loans, almost three times the one- week euro interbank offered rate of 0.37 percent. The ECB didn’t identify the banks involved.
Europe’s lenders deposited a record 369 billion euros in the ECB’s overnight deposit facility on June 9, more than in the aftermath of Lehman’s collapse. Deposits have surpassed 360 billion euros for the past week. In the eight years leading up to Lehman’s collapse, euro-region banks deposited an average of about 277 million euros with the ECB.
‘Dangerous Games’
Firms are leaving cash with the central bank instead of lending it to other banks amid concern that counterparties may collapse. Deposits have also climbed to a record as the ECB flooded money markets with cash since 2008.
“Central banks are helping with funding and liquidity and, if push came to shove, further accommodation would be provided,” said Nigel Sillis, director of fixed-income and currency research at Baring Asset Management in London, which has 35 billion euros of assets under management. “The ECB’s role isn’t to play dangerous games by withdrawing funding early: it’s to prevent a sovereign issue becoming a banking issue.”
Increased reliance on short-term ECB loans and interbank funding runs counter to the rules being proposed by the Basel Committee on Banking Supervision. The committee, which sets minimum standards for banks in 27 countries, plans to require banks to maintain a “net stable funding ratio” of 100 percent, meaning they would need an amount of longer-term loans or deposits equal to their financing needs for 12 months.
Basel Delayed?
The Basel Committee’s proposals will have to be modified and phased in over a long period of time, according to Morgan Stanley’s van Steenis. Basel will require 1.5 trillion euros of incremental bank deposits and bond funding alone, he estimated.
WestLB AG, the German state-owned lender bailed out during the financial crisis, is among banks paying the most to borrow for three months in euros, dollars and pounds, according to data from the British Bankers’ Association.
“Funding costs for any bank are a reflection of an institution’s credit ratings,” WestLB spokesman Richard Bassett said, referring to the bank’s BBB+ credit rating from Standard & Poor’s. “WestLB has benefited from recent restructuring and is now a profitable bank with a stable earnings base.”
European banks are on average paying 4 basis points more than U.S. lenders to access three-month dollar cash, close to the widest since November, the BBA data show.
Bonds ‘Crowded Out’
The ECB said on May 31 that Europe’s banks will have to write down 195 billion euros of bad debt by 2011, on top of the 444 billion euros of writedowns they have already logged, bringing the total to the equivalent of $762 billion. U.S. banks will have written down $885 billion by the end of 2010, the International Monetary Fund said in April.
The ECB said European banks’ ability to sell bonds may be hampered as governments seek to finance fiscal deficits amassed in part to finance a bailout of the banking industry.
With governments facing “heavy financing requirements over the coming years” there’s a “risk of bank bond issuance being crowded out,” the Frankfurt-based ECB said in its biannual Financial Stability Report.
The ECB is going to have to continue supporting banks in the region for at least the time being, said Danny Gabay, director of Fathom Financial Consulting in London and a former Bank of England economist.
“The banks are entering increasingly turbulent waters now,” Gabay said. “For too long policy makers in Europe were looking the other way, hoping we could sail through the financial crisis. Now their chickens have come home to roost.”
To contact the reporters on this story: Gavin Finch in London at gfinch@bloomberg.net; John Glover in London at johnglover@bloomberg.net
Last Updated: June 13, 2010 19:01 EDT
BL: China’s Nickel Pig Iron Makers Curb Output, Antaike’s Xu Says
By Glenys Sim
June 14 (Bloomberg) -- Nickel pig iron producers in China, the world’s largest consumer of nickel, have started to idle capacity as prices slump and demand weakens, according to Beijing Antaike Information Development Co.
Production of the low-cost substitute for the refined metal dropped to between 14,000 and 15,000 metric tons in April from an all-time high of 17,000 tons in March, said Xu Aidong, Antaike’s senior nickel analyst. There would be further declines in output in May and this month, Xu said.
Refined-nickel futures in London have tumbled into a bear market since April on concern that Europe’s fiscal crisis will slow the global recovery and China’s curbs on property speculation will cut demand. About two-thirds of global nickel production is used to make stainless steel.
“Output of nickel pig iron will fall further in May and June as demand from the stainless-steel industry weakens,” Xu said on June 11. “We often schedule visits to plants and have been told by some producers not to go because they have either suspended output or are carrying out their annual maintenance.”
Nickel futures on the London Metal Exchange slumped 29 percent from a 23-month high of $27,595 a ton on April 16 to the close on June 11. The contract traded today at $19,550 a ton at 8:21 a.m. in Singapore. A bear market is typically defined as a fall of at least 20 percent in an asset or market.
‘All in Agreement’
Some stainless-steel mills in China have already started cutting production after a slump in prices, according to Wang Chongfeng, a Shanghai Metals Market analyst. “We’re all in agreement that output in May and June will be lower,” said Wang, referring to the nation’s production of nickel pig iron. Output was a record 20,000 tons in April, Wang estimated.
The analysts’ comments add to signs that the government’s drive to prevent a property bubble is helping to hurt demand for commodities used in construction. Zinc smelters in China have also idled as much as 8.8 percent of capacity amid the property curbs, Shanghai Metals Market said earlier this month.
Baoshan Iron & Steel Co. is “not very optimistic” that stainless-steel consumption growth in China will match last year, China’s second-biggest stainless steelmaker said May 26.
China’s stainless-steel output was 2.8 million tons in the first quarter, according to Antaike, 27 percent more than in the same period in 2009 and 36 percent more than in 2008.
“Stainless-steel production will moderate in the second half, following very high output in the first, which was matched by record nickel pig iron production,” said Wang Xiaoli, an analyst at Citic Futures Co. “The slow-demand season in June and July for stainless steel and nickel will continue to put downward pressure on prices of both materials.”
The price of the widely-used type 304 stainless-steel sheet in Shanghai dropped 10 percent in May, according to data from Metal Bulletin, an industry publication. It reached $3,282.50 a ton at the end of April, a level not seen since 2008.
Refined-nickel output in China grew 26 percent to 17,300 tons in May from a year ago, the National Bureau of Statistics said on June 11. That’s 58 percent higher than in May 2008.
“Refined producers are unlikely to cut production as they tend to be big enterprises that have the ability to withstand the price decline,” Antaike’s Xu said.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
Last Updated: June 13, 2010 21:13 EDT
GOM: Layoffs to begin? Obama pleads for $50 billion in state, local aid
By Lori Montgomery
Washington Post Staff Writer
Sunday, June 13, 2010
President Obama urged reluctant lawmakers Saturday to quickly approve nearly $50 billion in emergency aid to state and local governments, saying the money is needed to avoid "massive layoffs of teachers, police and firefighters" and to support the still-fragile economic recovery.
In a letter to congressional leaders, Obama defended last year's huge economic stimulus package, saying it helped break the economy's free fall, but argued that more spending is urgent and unavoidable. "We must take these emergency measures," he wrote in an appeal aimed primarily at members of his own party.
The letter comes as rising concern about the national debt is undermining congressional support for additional spending to bolster the economy. Many economists say more spending could help bring down persistently high unemployment, but with Republicans making an issue of the record deficits run up during the recession, many Democratic lawmakers are eager to turn off the stimulus tap.
"I think there is spending fatigue," House Majority Leader Steny H. Hoyer (D-Md.) said recently. "It's tough in both houses to get votes."
Democrats, particularly in the House, have voted for politically costly initiatives at Obama's insistence, most notably health-care and climate change legislation. But faced with an electorate widely viewed as angry and hostile to incumbents, many are increasingly reluctant to take politically unpopular positions.
The House last month stripped Obama's request for $24 billion in state aid from a bill that would extend emergency benefits for jobless workers. Senate Majority Leader Harry M. Reid (D-Nev.) hopes to restore that funding but with debate in that chamber set to resume this week, he acknowledges that he has yet to assemble the votes for final passage. Obama's request for $23 billion to avert the layoffs of as many as 300,000 public school teachers has not won support in either chamber.
Mixed signals
Senior Democratic congressional aides said those initiatives have not gained traction in part because the White House has not made additional spending on the economy a clear priority.
(Photos: A look at key policy proposals during Obama's first year in office.)
In recent weeks, for instance, the White House has appeared more intent on cutting spending -- threatening to veto a defense bill over a jet engine project that the Pentagon views as unnecessary and urging every agency to come up with a list of low-priority programs for elimination. Obama has also proposed a three-year freeze in discretionary spending unrelated to national security, an idea endorsed by leaders of both parties at a meeting at the White House last week, according to Obama's letter.
With the letter, however, Obama makes a direct and unequivocal case for additional "targeted investments," including state aid and several less-expensive initiatives aimed at assisting small businesses. He specifically calls for passage of the measure that is before the Senate, which would extend unemployment benefits and offer states additional aid, increasing deficits by nearly $80 billion over the next decade.
Obama asks lawmakers to be patient on the deficit, noting that a special commission is at work on a comprehensive deficit-reduction plan.
"It is essential that we continue to explore additional measures to spur job creation and build momentum toward recovery, even as we establish a path to long-term fiscal discipline," Obama wrote. "At this critical moment, we cannot afford to slide backwards just as our recovery is taking hold."
In an interview, White House Chief of Staff Rahm Emanuel said the letter is intended to settle the growing debate over the opposing priorities of job creation and deficit reduction and "where you put your thumb on the scale."
"While some people say you have to spend and some people say you have to cut, the president wants to talk about both cuts and investing," Emanuel said.
GOP alternative
Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), called the letter full of "contradictions."
"He's calling on Congress to pass a [jobless] bill that will add about $80 billion to the deficit, but then calls for fiscal discipline; he says these measures need to be targeted and temporary, but then calls for extending programs passed in the stimulus more than a year ago," Stewart said in an e-mail.
Republicans have offered an alternative package that proposes to cover the cost of additional jobless benefits -- but not aid to state governments -- by cutting federal spending elsewhere. In contrast to the Democratic bill, the GOP measure would reduce deficits by nearly $55 billion over the next decade, according to the nonpartisan Congressional Budget Office.
The politics of the Democratic bill before the Senate are further complicated because it has become a grab bag of must-pass provisions. In addition to state aid and more money for jobless benefits, it includes a plan to extend $32 billion in expired tax breaks for individuals and businesses and a separate provision, known as the "doc fix," that would postpone until 2012 a scheduled pay cut for doctors who see Medicare patients.
When it was first unveiled last month, the total cost of the package approached $200 billion, with only about $50 billion paid for through higher taxes on multinational corporations, hedge fund managers and certain small businesses. Conservative Democrats in the House balked, forcing House leaders to scale back the doc fix and strip out the state aid, as well as $6 billion in health insurance subsidies for jobless workers. In the letter, Obama asks Congress to reconsider that decision. The House narrowly approved the trimmed-down bill.
Now the Senate is struggling to assemble a 60-vote coalition for the measure. Reid moved last week to restore the state aid, but the CBO said the resulting measure would add nearly $80 billion to budget deficits over the next decade. Moderates objected, saying they could not support such a big increase in borrowing at a time when the total national debt has topped $13 trillion, nearly 90 percent of the gross domestic product.
On Saturday, as Obama called for urgent action, senior Senate aides said the scramble for votes would delay final action on the bill for at least another week.
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/12/AR2010061204152.html
BL: BP May Lose U.S. Oil Leases, Contracts as Gulf Spill Punishment
By Jim Efstathiou Jr. and Jeff Plungis
June 14 (Bloomberg) -- BP Plc may lose control of its U.S. oil and natural gas wells and be barred from doing business with the federal government as punishment for the worst oil spill in U.S. history, industry and regulatory analysts said.
President Barack Obama and lawmakers are debating penalties that would cripple the company’s ability to do business in the U.S. as public outrage intensifies. In addition to BP’s culpability in the Gulf of Mexico spill, a 2005 explosion at BP’s Texas City refinery that killed 15 workers and a 2006 pipeline leak that dumped 200,000 gallons of crude at Prudhoe Bay, Alaska, will figure in the debate, said Michael Wara, associate professor of environmental law at Stanford University in Palo Alto, California.
“The government weighs whether there is a pattern and practice,” Wara said. “They’ll consider whether BP runs these incredibly complicated systems, where accidents can and sometimes do happen, or whether the company has a culture that disfavors safety and environmental compliance.”
The U.S. may revoke BP’s status as operator of producing wells in the Gulf of Mexico, such as Thunder Horse, or of leases at Prudhoe Bay, said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC, a Houston investment bank. Separately, Congress is considering measures to bar BP from contracts with the Department of Defense and Environmental Protection Agency.
Escrow Demand
Lawmakers including House Speaker Nancy Pelosi are demanding that BP defer the payment of any dividends until fishermen and others are compensated for losses from the spill. BP should set up an escrow account to cover claims, Obama aide David Axelrod said on NBC’s “Meet the Press” yesterday. The spill’s cost may reach $40 billion, Standard Chartered Bank estimated last week.
BP’s board is meeting today. It’s unlikely to make any announcements until Chairman Carl-Henric Svanberg meets with Obama on June 16 in response to a request from the administration, according to two people familiar with the matter. Chief Executive Officer Tony Hayward is scheduled to appear before the House Energy and Commerce oversight panel the following day.
The administration has the power to force BP out as operator of existing leases on federal lands and offshore tracts. The operator, typically the partner with a majority interest, is designated before drilling begins. The Interior Department tracks each operator’s performance and may “disapprove or revoke your designation as operator” based on accidents, pollution events or other cases of noncompliance, according to federal regulations.
‘Good Chance’
“We think there’s a good chance the government not only doesn’t allow BP to operate going forward, but could rescind operating control,” Pursell, an oil specialist, said in an interview. “It’s a way to keep BP alive and a way for the government to say we’ve really done something to penalize BP.”
Such a move would force BP to sell part or all of its interest in some of its most profitable oil and gas fields, said Michael McKenna, president of MWR Strategies, a consulting firm in Washington. Other partners in a lease are unlikely to take on the risk of being the operator without also taking the lion’s share of profits, McKenna said. Even if BP breaks even on the sale of its stake, it would lose the profits from future oil production.
“It’s exceedingly possible and exceedingly unwise,” McKenna said. “You engage in the economic deterioration of a company that’s already under stress.”
Oil Pollution Act
“The BP Deepwater Horizon oil spill raises several fundamental questions about safety and about industry’s ability to respond to spills,” Kendra Barkoff, a spokeswoman for the Interior Department, said in an e-mail. She declined to say if the administration may revoke BP’s operator status.
BP also faces a fine of as much as $4,300 for each barrel of oil leaked under the 1990 Oil Pollution Act, said David Pettit, a senior attorney for the Natural Resources Defense Council in Los Angeles. That may mean a bill of as much as $8.6 billion based on more than 50 days of oil spilling at a rate of up to 40,000 barrels per day.
David Nicholas, a BP spokesman, declined to comment on possible U.S. sanctions. “It’s not the sort of thing that we would react to,” Nicholas said in an interview. “Clearly throughout the response to this event we have been working extremely closely with the administration and we continue to do so.”
Shares Plunge
BP shares have fallen 44 percent since the explosion, wiping out about $73 billion in market value. Investors buying the so-called put options are wagering that the shares will extend their drop from $33.97 and slash $140 billion from BP’s market value, according to U.S. stock-options trading.
In addition to the Deepwater Horizon rig that exploded and sank in April, BP operates the Gulf platforms Thunder Horse, the second-largest producing well in the U.S. at about 300,000 barrels per day, and Atlantis, which produces 200,000 barrels of oil a day. BP also operates the Prudhoe Bay oil field on Alaska’s North Slope.
Representative Luis Gutierrez, an Illinois Democrat, will write Interior Secretary Ken Salazar urging him to ban BP from future lease sales because of the company’s “abhorrent environmental and safety record,” said Gutierrez spokesman Douglas Rivlin.
“Oil leases are a license to print money, said Rivlin. “Why should we be giving them to these guys?”
EPA Sanctions
The EPA can disqualify companies convicted of Clean Water Act or Clean Air Act violations from receiving federal contracts or financial assistance, according to an agency e-mail responding to questions. Those penalties apply to individual facilities, not an entire company, it said.
BP’s facility in Prudhoe Bay and its Texas City refinery are already under EPA sanctions. Negotiations to lift them were suspended after the Deepwater Horizon explosion and leak, the agency said.
The EPA declined to discuss details of the current investigation into the Deepwater Horizon spill.
“We are taking all the steps necessary to enforce our laws and to ensure that the responsible parties pay for the cost of cleaning up the spill,” the agency said.
Last month, Gutierrez successfully pushed through an amendment to a broader Defense Department bill requiring the secretary of defense to review whether BP is a “responsible” contractor.
Debarment Option
If BP doesn’t meet that standard, which includes having a “satisfactory record of integrity and business ethics,” the legislation would require Secretary Robert Gates to bar the oil giant from defense contracts, according to Gutierrez’s office.
BP has six contracts with the Pentagon worth a combined $2.1 billion, mostly for fuel.
In a letter last week, the consumer group Public Citizen called on Obama and Gates to “debar” BP from all government contracts and terminate the six Pentagon agreements.
“It’s a pretty disturbing pattern in the company,” Tyson Slocum, director of Public Citizen’s energy program, said in an interview. “There has to be a point when a financial slap on the wrist is no longer adequate.”
Debarment is “definitely not an extreme option,” said Robert Meunier, former EPA debarment officer who is now head of Debarment Solutions in Arlington, Virginia. “It’s been used against 70,000 individuals and businesses. It’s fairly routine,” even if the public never hears about it, he said.
“While debarment makes for good politics, it makes terrible public policy,” Meunier said. “But you’d have to be a fool not to consider it when the president is saying he’s looking for somebody’s ass to kick.”
To contact the reporters on this story: Jim Efstathiou Jr. in Washington at jefstathiou@bloomberg.net; Jeff Plungis in Washington at jplungis@bloomberg.net.
Last Updated: June 13, 2010 19:00 EDT
CSM: International sensitivities: What if BP oil spill heads for Cuba?
The BP oil spill has begun to have international repercussions. Cuba is the country most likely to be the first non-US victim if the oil slick advances beyond Florida into the Caribbean.
By Howard LaFranchi, Staff writer / June 11, 2010
Washington
When Secretary of State Hillary Rodham Clinton met with officials from numerous Caribbean countries on a stop in Barbados earlier this week, she was confronted with plenty of hand-wringing over the Gulf oil leak.
The questions and concerns – based on conjectures that the slick from the gushing Deepwater Horizon well could eventually foul Caribbean waters and coastlines – signaled another front in the gradual internationalization of the unfolding disaster.
Until now the oil leak has been largely viewed as an American problem with environmental and economic impacts on US coastlines and being addressed by US officials. But that is now changing.
Already this week the normally smooth waters of US-British relations were roiled by growing signs of strain over objections to US treatment of the officers and stockholders of BP, a big-oil company listed on the London stock exchange.
Some British officials and the London press bellowed the view that US officials – President Obama topping the list – were increasingly mixing anti-British vitriol into their growing frustration with the formerly “British Petroleum” named, formerly British-owned BP.
On Friday, the European Union announced it was responding to a request by US authorities for various types of booms to help contain the spilled oil.
Other countries pitching in
Sweden, Germany, Norway, the UK, and the European Maritime Safety Agency all responded with offers and are working “flat out” to deliver the equipment as soon as possible, the EU Delegation to the US reported Friday. The Netherlands responded to an earlier request by providing three sweeping arms which are already operating in the Gulf.
But the oil leak is also having unanticipated international repercussions, with the US already quietly discussing the Gulf disaster and its potential extended impact with Cuba, the country most likely to be the first non-US victim if the oil slick advances beyond Florida into the Caribbean.
The US, which has modestly expanded contacts with the Cuban government under the Obama administration, has had some low-level discussions with the Cubans about the Gulf oil leak and is keeping channels of communication open in light of the oil’s potential trajectory, State Department officials say.
But some oil experts say the US needs to look beyond the current catastrophe to consider a potential future oil disaster. With Cuba set to commence oil exploration in its northern territorial waters sometime in the next six to nine months, they see a stark scenario under which the US embargo on Cuba would prevent American oilfield and petroleum-technology companies from taking part in any disaster response.
“The oil spill has really moved up-front the whole US-Cuba energy issue,” says Jorge Piñón, a visiting fellow at Florida International University’s Cuban Research Center.
The Gulf leak has reanimated discussion of the economic and political impact oil production will eventually have on Cuba, he says. But he adds that even more important are the worries the situation has raised about a similar disaster in Cuban waters – given longstanding US-Cuban hostilities.
“If an accident like Deepwater Horizon occurred in Mexican or Bahamian or any other territorial waters, all they’d have to do is pick up the phone and contact petroleum-equipment suppliers in Houston, and in a matter of hours they’d be on site,” he says. “That’s not the case with Cuba given the embargo, so days would go by as the bureaucratic paperwork was shifted from agency to department – and in the meantime the oil would be moving towards Key West and South Beach.”
Exempt Cuba embargo on oil equipment?
Mr. Piñón, a former Conoco and BP oil executive, says the Obama administration should do for petroleum equipment and services trade with Cuba what the Clinton administration did for agricultural trade – exempt it from the embargo.
An executive order paving the way for US companies to intervene in a Cuban oil disaster was one of the recommendations of a Cuba Task Force organized by the Brookings Institution in Washington. Piñón serves on the task force and co-authored a recent paper analyzing Cuban oil issues in light of the Gulf disaster.
Before the Gulf spill, much of the focus of analysis of Cuba’s move into oil exploration and production was on the impact it will have on the current regime, Cuba’s relations with current oil-supplier Venezuela, and an eventual transition government in Havana.
“Some of the folks in Washington remain focused on making sure we do nothing to strengthen the current regime,” Piñón says. “I’m telling them that if Repsol [the Spanish firm with the contract for the first round of exploration] does find oil it will take 3-7 years before Cuba is a major producer. But a disaster could happen in the meantime, and we should want to be ready.”
IN PICTURES: The Gulf oil spill's impact on nature
http://www.csmonitor.com/USA/Foreign-Policy/2010/0611/International-sensitivities-What-if-BP-oil-spill-heads-for-Cuba
BP/GOM: BAD & Getting WORSE - Via OILdrum:
_________________________________
Referencing poster:
>>Health Concerns Heighten as Oil Spill Spreads
The sobering images of the Gulf of Mexico oil spill are widely known: oil covered birds and sludge-choked coastal grasses. But ecosystems may not be the only ones to see negative effects -- what about the spill's possible health impact on humans?
BY TALEA MILLER
Posted: June 11, 2010, 12:00 a.m. ET
The full human impact of the Gulf oil spill remains an unknown, but a number of public health officials and experts are voicing concerns about possible human health consequences.
Louisiana Department of Health and Hospitals said this week it has had 71 reported cases of oil spill-related illness, 50 of which were workers on oil rigs or those involved in cleanup efforts. Eight of those workers have been hospitalized.
"We are increasingly concerned about the provisions being made to protect the health and safety of those who are exposed to the oil and other elements associated with the spill," said Alan Levine, secretary of the Louisiana DHH and Peggy Hatch, secretary of the state's Department of Environmental Quality in an open letter to federal officials.
Thus far, federal agencies haven’t seen a spike in health problems from local residents. In a statement, a spokesman for the Centers for Disease Control said Friday: “Our surveillance reveals few complaints of respiratory symptoms, nausea, and headaches. Thus far, we have not discovered any public health concerns related to the oil spill.”
Workers have been instructed to wear protective gloves, clothing and goggles when working around the oil, and a filter mask if dealing with dispersants. Those workers that fell ill reported flu-like symptoms, throat irritation, shortness of breath, eye irritation, nausea, chest pain and headaches.
LuAnn White, director of the Tulane Center for Applied Environmental Health, said most of the symptoms being reported are readily reversible. Nausea, headache and even rash caused by direct contact from the oil should go away relatively quickly.
But, White warned, the risk is greater for workers if they come into contact with oil near the spill site, before it has "weathered" in the sun and elements and some of the volatile compounds evaporate off.
"Workers who are out there where there still may be some volatiles in the crude, that is different exposure than people on the coast or even workers on the coast," White said. "The risk is minimal to residents on the shore"
The 21 cases reported by the general public in Louisiana were mostly due to odors from the oil, and many were people with existing respiratory disorders. Louisiana Health Officer Dr. Jimmy Guidry said in an e-mail that the oil odor is not dangerous to residents, but that if symptoms do not subside after going indoors, they should seek medical care.
Gulf state health departments have also advised residents to stay out of the water if they see oil, but White says by the time the oil reaches the shore its composition has changed and it poses little risk, especially tar balls, which she compared to coming in contact with asphalt.
Health and Human Services Secretary Kathleen Sebelius has said the agency will continue to monitor the health impact closely and has dispatched a mobile medical unit to Venice, La., to provide care for residents or responders.
Some experts on the issue are striking a concerned tone. Monitoring will be crucial in the coming months and years said Edward Trapido, the Wendell Gauthier Chair of Cancer Epidemiology at the Louisiana State University School of Public Health, because the long-term health effects of a spill like this remain an unknown.
No one has ever done a longitudinal study of health impacts on workers or residents after previous oil spills, he said.
More than 6,700 workers involved in the Exxon Valdez clean up in 1989 suffered respiratory problems, but the company attributed the illness to a virus, not chemical poisoning, according to the Associated Press.
Only one worker successfully settled with Exxon on health issues, but the company did not admit fault.
Trapido, who testified Thursday for a House Subcommittee on Energy and Environment hearing on the spill, is heading a research group at LSU that will look at a range of health effects, including psychiatric and behavioral effects, chronic diseases and cancers.
"Oil contains benzene … arsenic and other heavy metals, all of which are classified as class one carcinogens to humans by the International Agency for Research on Cancer," said Trapido.
With inherited susceptibility and under certain conditions, Trapido said "these exposures could hasten the onset of cancer," but that further long-term research is needed. The dispersants being used do not contain known carcinogens, Trapido said.
Miriam Rotkin-Ellman, a scientist with the health and environment program at the National Resource Defense Council, also warns that the chemicals can be incorporated into the food chain and be a long term threat in fish.
"They have the potential to accumulate in the food chain, so as you go higher and higher in the food chain, the amount of contanigen magnifies," Rotkin-Ellman said.
"It's almost two months from the spill, [and] we don’t have a solution in place that’s removed oil from the Gulf. So these are exposures that may occur over a long period of time."
The Environmental Protection Agency is monitoring soil and air along the coast for pollutant levels, but White says so far none of the levels have increased to a point where evacuation would need to be considered.
CDC spokesperson Bernadette Burden said citizens concerned about health risks should monitor information from their state’s health department.
"If a person has concerns related to any of these symptoms … we encourage them to seek the help of their local health care provider," Burden said.
http://www.pbs.org/newshour/updates/health/jan-june10/healthoil_06-11.html
>>PBS: On the Gulf Coast, Media Access Can Be Hard to Come
By: Spencer Michels
Updated 5:20pm ET
BP Chief Operating Officer Doug Suttles issued this letter on media access Wednesday. In the statement, Suttles says "BP fully supports and defends all individuals rights to share their personal thoughts and experiences with journalists if they so choose."
Posted 1:30pm ET
I recently returned to my home base of San Francisco from Louisiana after a week covering the oil spill for the NewsHour. It was a fascinating and frustrating week. But trying to find out what was going on was sometimes impossible. The best example occurred on the first day.
Producer Joanne Elgart Jennings, cameraman Brian Gill and I were in Venice, La., that tiny outpost on the Gulf, more than two hours' drive south of New Orleans. We had heard BP was setting up a health center after several workers had become ill, possibly from oil fumes. We thought that might make a good story. Someone pointed us to a building, where we were told we couldn't get in without a pass. Well, where could we get a pass? Someone pointed to another building. When we got there, they kicked us out -- politely -- and gave me a BP pen. It was more than 90 degrees outside, and one of the folks who had denied us access did give us some cold bottled water, but no access. I still don't know what was going on in that building.
And nobody would talk to us either -- and not just at the supposed medical site. Wherever we went, the "word" seemed to be out: don't talk to the media. On a dock at Venice, where workers who had been hired by BP were coming back from cleanup duties, we couldn't get a comment from anyone. We saw them sitting around after their boat trip back, but we were told by coordinators on the dock not to talk with any of them.
Then, a couple of days later, we managed to get a helicopter ride out to an oil production platform. The oil executive who arranged our trip and went with us was happy to talk -- about how important the oil and gas industry was for Louisiana, and why the government shouldn't prohibit new drilling. But the owner of the platform -- not BP -- was uncomfortable with us talking with the six workers on the platform, since they didn't have any management people there.
When I traveled to Porte Lafourche -- also on the Gulf -- I interviewed a Coast Guard officer who was pleasant and somewhat helpful. The Coast Guard's job, he said, was to oversee what BP was doing to clean up the spill. But when I asked how it was working out, whether BP was doing its job, what grade he would give the company, he couldn't venture an opinion.
My experiences were admittedly limited, and I wasn't dealing with high-level people. We found others to talk with, and the NewsHour did get some access. But dozens of journalists experienced the same frustrations. The Society of Professional Journalists wrote to President Obama the other day, as did several individual reporters, complaining about lack of access to sites and to people.
Coast Guard Adm. Thad Allen told ABC's Jack Tapper that he has ordered that oil spill operations be open to the media, except when it's a security or a safety problem. Allen said the government wants BP to have a similar policy -- and that he will "have a call with Tony Hayward," BP's CEO.
In response to the SPJ, the government has said it will move the primary location for news conferences to a more convenient site, and provide daily situation briefings. The Coast Guard has asked BP to do twice daily updates.
For its part, BP says it is not trying to restrict access. I talked with John Pack, who -- until two years ago --worked as a public relations officer in England with BP. He was called back and sent to Houston to help in the oil spill crisis. He said there is no dictate to employees not to talk to the media, although there are some clauses in contracts that require that press inquiries be referred to the press office.
"We're trying to give people as much information as they want," Pack said. He was unaware of the SPJ list of complaints, but he said the main reason for the appearance of restricted access is that the company is trying to fix a complicated problem, and it's not always practical to have camera crews around. Some journalists have been taken around BP's command center, but "it's difficult to do at the drop of a hat."
Whether the company is trying to improve its relations with the press -- or whether there's a corporate culture to keep the lid on -- remains to be seen. On the ground, it's hard to tell if things have improved. But since officials are saying the cleanup will last into the fall and beyond, there's plenty of time to evaluate whether the public is getting the full story.
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http://www.pbs.org/newshour/rundown/2010/06/on-the-gulf-coast-media-access.html
Not with BP prohibiting Americans from even approaching the damaged areas...
...with protection from our own Govt agencies.
WTF??
We are NO LONGER in Kansas...hell, we're not even in Louisiana any more
http://www.energyboom.com/policy/bp-and-coast-gaurd-blocking-media-public-beaches
>>BP Official Admits to Damage BENEATH THE SEA FLOOR
WASHINGTON’S BLOG
As I noted Tuesday, there is growing evidence that BP’s oil well – technically called the “well casing” or “well bore” – has suffered damage beneath the level of the sea floor.
The evidence is growing stronger and stronger that there is substantial damage beneath the sea floor. Indeed, it appears that BP officials themselves have admitted to such damage. This has enormous impacts on both the amount of oil leaking into the Gulf, and the prospects for quickly stopping the leak this summer.
On May 31st, the Washington Post noted:
Sources at two companies involved with the well said that BP also discovered new damage inside the well below the seafloor and that, as a result, some of the drilling mud that was successfully forced into the well was going off to the side into rock formations.
“We discovered things that were broken in the sub-surface,” said a BP official who spoke on the condition of anonymity. He said that mud was making it “out to the side, into the formation.”
On June 2nd, Bloomberg pointed out:
Plugging the well is another challenge even after BP successfully intersects it, Robert Bea, a University of California Berkeley engineering professor, said.BP has said it believes the well bore to be damaged, which could hamper efforts to fill it with mud and set a concrete plug, Bea said.
Bea is an expert in offshore drilling and a high-level governmental adviserconcerning disasters.
On the same day, the Wall Street Journal noted that there might be a leak in BP’s well casing 1,000 feet beneath the sea floor:
BP PLC has concluded that its “top-kill” attempt last week to seal its broken well in the Gulf of Mexico may have failed due to a malfunctioning disk inside the well about 1,000 feet below the ocean floor.
***
The broken disk may have prevented the heavy drilling mud injected into the well last week from getting far enough down the well to overcome the pressure from the escaping oil and gas, people familiar with BP’s findings said. They said much of the drilling mud may also have escaped from the well into the rock formation outside the wellbore.
On June 7th, Senator Bill Nelson told MSNBC that he’s investigating reports of oil seeping up from additional leak points on the seafloor:
Senator Bill Nelson (D-FL): Andrea we’re looking into something new right now, that there’s reports of oil that’s seeping up from the seabed… which would indicate, if that’s true, that the well casing itself is actually pierced…underneath the seabed. So, you know, the problems could be just enormous with what we’re facing.
Andrea Mitchell, MSNBC: Now let me understand better what you’re saying. If that is true that it is coming up form that seabed, even the relief well won’t be the final solution to cap this thing. That means that we’ve got oil gushing up at disparate places along the ocean floor.
Sen. Nelson: That is possible, unless you get the plug down low enough, below where the pipe would be breached.
WSJ: Several legal experts said they couldn't think of any law or precedent that would allow the U.S. to try to recover damages from BP on behalf of rig workers thrown out of work by a government moratorium on deep offshore drilling.
"I'm not aware of anything out there that would allow (President Obama) to latch onto a legal remedy on behalf of the out-of-work workers," said Benjamin A. Escobar Jr., a Houston-based labor and employment attorney for Beirne Maynard & Parsons. "I think he's in for a real court fight on these issues."
The White House has a different view. "The moratorium is a result of the accident that BP caused. It is an economic loss for those workers," Press Secretary Robert Gibbs said. "Those are claims that BP should pay."
http://online.wsj.com/article/SB10001424052748704575304575296263469609340.html?ru=yahoo&mod=yahoo_hs
Who knows how much of this is pure political posturing to help incumbents? Bashing BP now is more popular than bashing AIG and Goldman Sachs
How much power does the US government have over a foreign company with assets flung across the globe, and carefully protected through a web of local corporations?
This is all about to get much murkier....imho
Agree...looks like everyone getting screwed...and in the middle of today's takeover pump, people forgetting about those who have been screwed the most: the wildlife in the gulf, and those people who depend on the gulf for their livelihood
:(
Dunno, LH...BP buying seems pretty strong here, and there could be a powerful short squeeze brewing
Takeover rumor is the best trump to BK talk, at least for now
Remember, next week is expiration, games will be played. Several times in chat yesterday I said I would be out of June puts YESTERDAY...too many risks
I am only in July options now, fwiw
GLTA!
>>BP Shareholders File Lawsuit Over Gulf Oil Spill?
PR Newswire (press release) - 19 minutes ago
Safety lapses, accidents and disasters not new to company, complaint says
NEW YORK, June 10 /PRNewswire/ -- Citing the company's history of safety lapses, cost cutting, and workplace disasters, shareholders who purchased stock in BP have filed a class-action lawsuit based on claims that the company mislead investors prior to the Deepwater Horizon oil spill in the Gulf of Mexico. The suit, filed in the U.S. District Court for the Eastern District of Louisiana, seeks to represent not only American investors, but also people around the world who bought shares in United Kingdom-based BP.
Zwerling, Schachter & Zwerling, LLP filed the class-action lawsuit on behalf of individuals or entities that purchased ordinary shares and/or American Depository Receipts in BP p.l.c. during a period beginning February 27, 2008, through May 12, 2010, (the "Class Period"). BP's ADRs and ordinary shares are actively traded on the New York Stock Exchange (NYSE: BP) and the London Stock Exchange (London Stock Exchange: BP.L), respectively.
The lawsuit notes BP's prior statements about its Gulf operations being a primary economic driver, and the company's assertions that it had the technology to safely conduct the operations. But nearly a month after the catastrophic explosion at the Deepwater Horizon, BP's Chief Executive Officer Anthony B. Hayward admitted that BP did not have the technology available to stop the Gulf leak.
The lawsuit chronicles BP's long history of spills, fires and explosions at its facilities, including a 2005 explosion in Texas City, Texas, that killed 15 people, and a 2006 oil leak in its Prudhoe Bay, Alaska, operations pipeline. In the Alaska case, Zwerling, Schachter & Zwerling served as lead counsel for securities plaintiffs who brought suit against BP, and secured a multimillion-dollar settlement on their behalf.
In the current case, shareholders claim BP violated the Securities Exchange Act of 1934 by issuing false and misleading statements about safety, technology, inspections and precautions at its offshore oil facilities. At the time of the latest disaster, BP shares were trading at nearly $60, but since have lost nearly half their value.
If you purchased or otherwise acquired the ordinary shares and/or ADRs of BP during the Class Period, you may apply to serve as lead plaintiff. The lead plaintiff is responsible for overseeing the prosecution of the action and ensuring that the interests of the class are protected. Should you desire to be lead plaintiff, you may apply to be appointed through Zwerling, Schachter & Zwerling, as counsel. The deadline for seeking to become a lead plaintiff is July 20, 2010.
Zwerling, Schachter & Zwerling, LLP represents clients nationwide in financial-related class action lawsuits. With offices in New York City, Garden City, N.Y. and Seattle, the firm currently plays a leading role in numerous major securities and complex commercial litigations pending in federal and state courts. To learn more, please visit the firm's website at http://www.zsz.com.
For more information, please contact Mark Annick at 800-559-4534, 214-213-1754 or mark@androvett.com.
SOURCE Zwerling, Schachter & Zwerling, LLP
??? Cost of BP Credit-Default Swaps Soars 44% (This AM)
Wall Street Journal (blog) - Neil Shah - 6 minutes ago
By Neil Shah
The biggest wreck on Europe’s financial roads Thursday isn’t a debt-laden euro zone country -– it’s British oil giant BP PLC.
Traders in the market for insurance-like contracts called credit-default swaps have worried about BP all week, but today they smell blood.
Earlier this morning, it cost about $557,000 a year to insure $10 million of BP’s bonds against default for five years compared with $386,000 Wednesday evening in New York -– a massive 44% jump, according to data provider CMA DataVision.This cost has since fallen to around $465,000, but traders remain nervous.
Gavan Nolan, a researcher at data firm Markit, said earlier today that BP’s credit-default swaps were trading like “a junk credit,” meaning bond investors were viewing BP the same way they might see a firm with a “junk”-level credit rating.
The immediate problem: BP’s shares sank a hefty 11% earlier Thursday before recovering; they’re now down 3.9%.
The company has said the cost of the Gulf of Mexico oil spill has now surpassed $1.4 billion but that there’s no justification for such massive price falls. But stock investors are clearly worried that one of the casualties of BP’s oil disaster will be its dividend -– one of the most prominent in London’s market.
http://blogs.wsj.com/marketbeat/2010/06/10/cost-of-bp-credit-default-swaps-soars/
Warren Buffet buying, PetroChina buying, BP reversal ahead!
UK BP shares are rising steadily, US will gap to $33...someone buying big...UK govt?
Very interesting morning ahead
BL: European Stocks, U.S. Futures Rise on Economic Growth; Asian Shares Rally
By Sarah Jones
June 10 (Bloomberg) -- European stocks declined amid lingering concern about the region’s debt crisis and as BP Plc tumbled to the lowest level in 13 years. Asian shares and U.S. index futures rallied.
BP led a selloff in energy stocks, tumbling as much as 12 percent, as an estimate suggested its damaged well is seeping more oil than previously calculated into the Gulf of Mexico. UBS AG declined 1.7 percent as Societe Generale SA lowered its earnings forecast for the Swiss bank.
The benchmark Stoxx Europe 600 Index dropped 0.8 percent to 242.61 at 8:22 a.m. in London, extending the gauge’s selloff from this year’s high on April 15 to 10 percent amid continue concern European nations will struggle to fund their deficits. The measure is trading at about 14 times the reported earnings of its companies, near the lowest valuation for 17 months.
European Central Bank President Jean-Claude Trichet holds a press conference at 2:30 p.m. in Frankfurt today after a policy meeting at which economists predict will leave the benchmark rate at a record low of 1 percent. Trichet is under pressure to explain how far he’s prepared to wade into government bond markets as the ECB’s purchases split policy makers and borrowing costs in some countries continue to climb.
“There’s no escaping the eurozone debt woes,” said Ben Potter, a Melbourne-based research analyst at IG Markets. “Any optimism that had been accrued by equities has seemed to edge away.”
U.S Growth
U.S. stocks declined yesterday, led by a retreat in energy and banking shares after BP plunged and as the Federal Reserve’s Beige Book survey said economic growth was “modest” in most districts. Futures on the Standard & Poor’s 500 Index rallied 0.5 percent today.
In Asia, the MSCI Asia Pacific Index also advanced, rising 1 percent, after Australian jobs and Japan’s economic growth beat estimates, easing concern that Europe’s debt crisis will curb growth around the world. A separate report showed China’s exports jumped 48.5 percent in May from a year earlier, the biggest gain in more than six years.
Fed Chairman Ben S. Bernanke said the U.S. recovery, while being sustained by private demand, isn’t as strong as he prefers and faces risks from Europe’s debt crisis that may require further central bank action.
‘Not as Fast’
U.S. growth is “not as fast as we would like,” Bernanke told the House Budget Committee in testimony yesterday, hours before the Beige Book regional business survey said the economy expanded in all 12 Federal Reserve districts for the first time in more than two years, with a “modest” pace in many regions.
BP tumbled as much as 12 percent to 345.15 pence, its lowest level since 1997 before adjusting for dividends, following a 16 percent selloff in the company’s American depositary receipts yesterday. The cost to protect against a default on the energy company soared to a record and bond prices plummeted after an estimate its damaged well is leaking more oil than previously calculated.
Ian MacDonald, an oceanographer at Florida State University in Tallahassee estimated the well is leaking 26,500 barrels to 30,000 barrels a day into the Gulf of Mexico, six times more than the figure used by BP and the government from April 28 to May 27.
‘Strong Company’
BP today said in a statement that it was not aware of any reason for recent share price movements and added that it is facing the Gulf of Mexico oil spill as a “strong company” with generating cashflow.
UBS retreated 1.7 percent to 14.2 Swiss francs as Societe Generale lowered its estimate on earnings and share price, citing comments from Chief Financial Officer John Cryan at a meeting who said that an environment of risk aversion since May will affect the business.
In a report today, Societe Generale lowered its 2010 and 2011 per-share profit estimate for UBS by 10 percent and 8 percent respectively. The analysts lowered a share-price forecast on the Swiss bank to 15.6 francs from 16.8 francs.
Separately, Societe Generale lost 2 percent to 31.12 euros. France’s second-largest bank by market value said it isn’t expecting any “bad surprises” in the second quarter and called speculation about derivatives losses “totally unfounded.”
“We have been very cautious in managing our risk and exposure very tightly, so therefore there will be no bad surprises for us,” Michel Peretie, head of the corporate and investment banking unit, told reporters at a conference in Vienna yesterday.
Home Retail Group Plc declined 5.5 percent to 225 pence after the company said like-for-like sales at the Argos chain fell 8.1 percent in the first quarter. Revenue at the Homebase chain declined 1.4 percent on the same basis.
UK Coal Plc lost 1.2 percent to 41 pence after Hargreaves Services Plc said it no longer intends to pursue a merger with the U.K.’s biggest producer of the fuel.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
Last Updated: June 10, 2010 03:27 EDT
BL: BP Falls to 13-Year Low on Growing U.S. Anger Over Oil Spill
By Brian Swint
June 10 (Bloomberg) -- BP Plc plunged to the lowest price in 13 years in London trading on growing U.S. anger over its failure to halt the Gulf of Mexico oil spill.
BP fell as much as 12 percent to 345.15 pence, the lowest since April 1997, before paring losses to trade at 363.45 pence at 8:30 a.m. local time. That’s 45 percent lower than on April 20, the day of the Deepwater Horizon rig explosion that killed 11 workers and triggered the worst oil leak in U.S. history.
President Barack Obama and U.S. lawmakers are stepping up their rhetoric against BP as it battles to stop the spill. Representatives led by Peter Welch yesterday called on BP to suspend dividend payments, and Obama has said he would fire Chief Executive Officer Tony Hayward if he were working for him. BP said today it “faces this situation as a strong company.”
“The share price is political and in no way fundamental,” said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh. “The U.S. needs to realize it needs BP to survive to clean up the mess. Scapegoating has gone too far.”
BP’s market capitalization is now lower than Total SA, the company’s Paris-based rival. BP’s American depository receipts closed at the equivalent of 334 pence in the U.S. yesterday.
“BP notes the fall in its share price in U.S. trading last night,” the company said in today’s statement. “The company is not aware of any reason which justifies this share price movement.”
Bonds, Swaps
BP bonds and credit-default swaps are trading as if the energy company has lost its investment-grade rating as costs mount from the spill. The cost to protect $10 million of BP debt for a year with credit-default swaps almost doubled to $512,000, according to CMA DataVision. It was $29,000 on April 30.
Standard Chartered Bank said BP’s liability for the spill could be as high as $40 billion.
Higher than expected cash flows, low levels of borrowing and the company’s assets give it “significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims,” BP said today.
The market is discounting more than $106 billion of value in the company in today’s share price, ING’s Kenney said. That makes the selloff look like an “all out panic.”
In a separate statement, BP said the containment cap on the leaking oil well collected 7,920 barrels of crude between midnight and noon yesterday. The response to the spill has cost BP $1.43 billion so far, according to the statement.
To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.
Last Updated: June 10, 2010 03:46 EDT