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Anadarko Says BP Should Pay After Being Reckless

by on June 19, 2010

By Edward Klump June 19 (Bloomberg) — Anadarko Petroleum Corp. , the Texas oil company that owns 25 percent of the damaged well pouring crude into the Gulf of Mexico, said BP Plc , the project’s operator, should pay the costs from the spill because it acted recklessly and unsafely at the drilling site. BP didn’t monitor or react to warning signs as the Macondo well was drilled, Chief Executive Officer Jim Hackett said yesterday in a statement. BP is responsible for damages under such conditions, Anadarko said. “BP’s behavior and actions likely represent gross negligence or willful misconduct and thus affect the obligations of the parties under the operating agreement,” Hackett said in the statement. BP said in a statement that it “strongly disagrees” with Anadarko ’s position. Chief Executive Officer Tony Hayward said his company expects other parties that may have responsibility for costs and liabilities to meet their obligations. “These allegations will neither distract the company’s focus on stopping the leak nor alter our commitment to restore the Gulf Coast,” Hayward said in yesterday’s statement. Dudley Appointed The well is gushing as much as 60,000 barrels of oil a day, according to a government estimate. The leak was triggered by an April 20 explosion at a drilling rig leased to BP by Transocean Ltd. Costs of the spill may climb to as much as $50.8 billion if the well is capped at the end of August, according to a June 16 research note from ClearView Energy Partners LLC , a Washington- based policy analysis firm. BP appointed Robert Dudley , a U.S. citizen, to take charge of cleanup operations related to the spill in the Gulf of Mexico earlier this month. Hayward will remain in charge of the company. Hayward has shown strong leadership “from the very beginning” of the disaster, Dudley said in an interview yesterday at BP’s Washington office. BP Chairman Carl-Henric Svanberg told Sky News yesterday that Hayward was no longer controlling the day-to-day operations of the cleanup. Anadarko by yesterday’s market close had plunged 42 percent in New York trading since April 20. Partners’ Accountability BP’s partners should be held accountable and should set aside money to pay their share, U.S. Representative Edward Markey said yesterday in an interview for Bloomberg Television’s “Political Capital With Al Hunt.” BP has announced plans to eliminate its dividend for three quarters, raise $10 billion from asset sales and put $20 billion into a fund to pay claims related to the spill. Mitsui Oil Exploration Co., which is 70 percent-owned by Japan’s second-biggest trading house, Mitsui & Co. , has a 10 percent stake in the well. BP owns 65 percent. “With regard to the issue of the escrow account, drawing an immediate conclusion about the underlying matters at hand would be premature,” a Mitsui Oil Exploration subsidiary said in a statement. Co-owners of the project entered into a written agreement that BP would act as the operator and all parties would share the costs based on their ownership interests, including expenses to clean up any spill resulting from drilling, BP said in its statement. 1 Billion Barrels? The ruptured well may hold as much as 1 billion barrels, the Times reported, citing Rick Mueller , an analyst at Energy Security Analysis in Massachusetts. BP previously estimated the field contained 50 million to 100 million barrels of oil, the U.K. newspaper said. The Wall Street Journal reported BP used a well design that has been called “risky” by Congressional investigators in more than one out of three of its deepwater wells in the Gulf of Mexico, according to an analysis of federal data. The design was used in the well that exploded, the paper said. The co-owners also filed documents with the U.S. government certifying that each would be “jointly and severally liable” along with any other responsible parties for oil spill removal costs and damages in accordance with the Oil Pollution Act of 1990, according to BP’s statement. Anadarko will consider what its remedies may be, John Christiansen , an Anadarko spokesman, said yesterday in an interview. Those options may include not paying BP’s bills or litigation. Anadarko previously said it was reviewing an invoice from BP on spill costs. Hackett said that Anadarko recognizes it has “obligations under federal law related to the oil spill but will look to BP to continue to pay all legitimate claims as they have repeatedly stated that they will do.” Increased Risk? Also yesterday, Moody’s Investors Service said it downgraded Anadarko’s long-term debt rating to non-investment grade, dropping it to Ba1 from Baa3, with further reductions possible. Hackett, in a telephone interview yesterday, called the decision by Moody’s “premature and unwarranted.” He said Anadarko has a “strong financial position.” U.S. Representatives Henry Waxman of California and Bart Stupak of Michigan said in a June 14 letter to BP that “time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense.” If that happened, the lawmakers said, “BP’s carelessness and complacency have inflicted a heavy toll on the Gulf, its inhabitants, and the workers on the rig.” In a televised address June 15, President Barack Obama vowed he would make BP set aside however much is needed to “compensate the workers and business owners who have been harmed as a result of his company’s recklessness.” ‘Chief Villain’ The extent to which BP is seen as “the chief villain of the entire world helps Anadarko,” said Jeff Rensberger, a professor at the South Texas College of Law. A finding of negligence requires a determination that a party to a contract did something a reasonable person wouldn’t while gross negligence shows more recklessness, he said. Even if BP is at fault, Rensberger said, Anadarko might still be liable if it’s determined that abnormally hazardous activities occurred at a project in which the company has an interest. Anadarko also said yesterday that it will donate to Gulf Coast charities or civic agencies any revenue it is entitled to receive from oil recovered in cleanup efforts. To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net .

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Anadarko Says BP Should Pay After Being Reckless

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Thom Hartmann: Globalization Is Killing The Globe: Return to Local Economies

by on February 8, 2010

Globalization is killing Europe, just as it’s already wiped out much of the American middle class. Spain and Greece are facing immediate crises that many other European nations see on the near horizon: aging boomer workers are retiring with healthy benefit packages, but the younger workers who are paying for those benefits aren’t making anything close to the income (or, therefore, paying the taxes) that their parents did. Globalists/corporatists/conservative “free market” and “flat earth” advocates say this is a great opportunity to cut benefits for the old folks (and for the young folks in the future), thus bringing the countries budgets back into balance, and this story is the main corporate media storyline. But it overlooks the real issue (and the real solution): how globalization is killing these nations’ economies and what can be done about it. From the days of Adam Smith, classical economics pointed out that manufacturing and extraction are the only two ways to “create wealth.” “Wealth” is different from “income.” Wealth is value, which endures at least for some time. Income is simply compensation for work. If you wash my car for $10 and I mow your lawn for $10, we have a GDP of $20 and it looks like we both have income and economic activity. But no wealth has been created, just income. On the other hand, if I build your car, I’m creating something of value. And if you turn my lawn into a small farm that produces food we can all eat, you’re creating something of value. Not only do we have an “economy” with a “GDP,” we also have created wealth. A stick on the ground has no commercial value, but if you add labor to it by carving it into an axe handle — a thing of commercial value — you have “created wealth.” Similarly, metals in the ground have no commercial value, but when you add labor to them by extracting, refining, and forming them into products, you “create wealth.” Even turning seeds and dirt and cows into hamburgers is a form of manufacturing and creates wealth. This is the “Wealth of Nations” that titled Adam Smith’s famous 1776 book. On the other hand, when a trader at Goldman Sachs makes a “profit” trading stocks, bonds, or currencies, no wealth whatsoever is created. In fact, to the extent that that trader takes millions in commissions, pay, and bonuses, he’s actually depleting the wealth of the nation (particularly to the extent that he moves his money offshore to save or invest, as many do). To use the United States as an example, in the late 1940s and early 1950s manufacturing accounted for a high of 28 percent of our total gross domestic product (and much of the rest of the economy like agriculture that, in a classical sense is “manufacturing” wasn’t even included in those numbers), and when Reagan came into office it was at a strong 20 percent. Today it’s about ten percent of our GDP. What this means is that we’re creating less wealth here, because we’re not making much anymore. (And the biggest growth in American manufacturing has been in the military sector, where goods are made that are then destroyed when they explode over foreign cities, causing even more of our wealth to vanish.) The main effect of the globalism fad of the past 30 yearrs — lowering the protective barriers to trade that countries for centuries have used to make sure their own local economies are self-sufficient — has been to ship manufacturing (the creation of wealth) from developed nations to developing nations. Transnational corporations love this, because in countries with lower labor costs and few environmental and safety regulations, it’s more profitable to manufacture products. They then sell those products in the “mature” countries — the places that used to manufacture — and people burn through the wealth they’d accumulated in the earlier manufacturing days (home equity, principally, along with savings and lines of credit) to buy these foreign-manufactured goods. At first, it looks like a good deal to consumers in developed nations. Goods are cheaper! But over a decade or two or three, as the creation of real wealth is reduced and the residue of the old wealth is spent, the developed nations become progressively poorer and poorer. At the same time, the “developing” nations become wealthier — because those are the places that are producing real wealth. Which brings us to Spain and Greece — and the problem of all developed nations including the USA. So long as globalism continues apace, the transnational corporations and their CEOs will continue to become fabulously wealthy. But, more importantly, they also acquire the political power that comes with that control of economies. So they tell us that instead of putting back into place tariffs, domestic content laws, and other “protectionist” policies that built America from the time the were first proposed by Alexander Hamilton in 1791 (and largely adopted by Congress in 1793) until they were dismantled by Reagan/Bush/Clinton/Bush, we should instead simple “accept the reality” that we’re “living beyond our means” and we have to “cut back our wages and social programs.” In other words, they get richer, our nations become poorer, and national sovereignty is reduced. Nations — and in large countries like the USA, even states — must again rebuild their manufacturing base and become locally self-sufficient, so their own consumers are buying products manufactured by their own workers. “But won’t that make Wal-Mart’s stuff more expensive?” whine the flat-earthers. Yes, it will. But most Americans (and Greeks and Spaniards) would gladly pay 10 percent more for the goods in their stores if their paychecks were 20 percent higher. And manufacturing paychecks have always been higher, because manufacturing is where “true wealth” is generated (thus the basis for most union movements, which further guarantee healthy worker income and benefits). The transnational corporations benefiting from globalization are also, in most cases, the transnational corporations that own our media, so even the word globalization is rarely heard in reports on economic crises around the world. But globalization is the villain here, and one that needs to be taken in hand and brought under control quickly if we don’t want to see virtually the nations of the world end up subservient to corporate control, a new form of an ancient economic system known as feudalism.

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Thom Hartmann: Globalization Is Killing The Globe: Return to Local Economies

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Dr. Doom Might Have Saved Bear, `Clinton Tapes’ Reveals Necking: Top Books

October 3, 2009

By James Pressley Oct. 3 (Bloomberg) — Henry Kaufman’s “The Road to Financial Reformation,” a sobering look at exploding debt, deregulation and risk-taking, led the list of most-read Bloomberg book reviews in September. Next up was “The Clinton Tapes,” based on recordings that historian Taylor Branch secretly made with Bill Clinton . Other reviews featured a serial-killing sex bomb, football player Pat Tillman , and Dan Brown’s “The Lost Symbol.” The top 10 were: ‘Dr. Doom’ Might Have Saved Bear, Spared Us $34 Trillion in Debt Sept. 10 (Bloomberg) — If only we had heeded the other Dr. Doom, Henry Kaufman. Bear Stearns Cos. might still be standing. Americans wouldn’t have run up some $34 trillion in domestic nonfinancial debt. Ben Bernanke could have kept his helicopter in the hangar. The nickname Dr. Doom was hung on Kaufman long before it became synonymous with Nouriel Roubini . Kaufman, a former Salomon Brothers Inc. managing director, has spent decades discussing the dangers of debt, deregulation and the rise of financial conglomerates. He recapitulates his case in “ The Road to Financial Reformation .” ‘Clinton Tapes’ Reveals Presidential Necking, Blowup With Gore Sept. 28 (Bloomberg) — Every page of “ The Clinton Tapes ,” a book based on recordings historian Taylor Branch secretly made with Bill Clinton during his White House years, has a new plum. Examples: a report of the First Couple “smooching in a doorway”; the name of a body part we all share applied by the First Lady to House minority leader Richard Gephardt . (“‘Well, he is,’ she insisted.”) Whatever such ephemera lack in historical weight, they suggest the remarkable intimacy of this book. When This Blonde Draws Your Glance, Eyeball Soup’s on the Menu Sept. 2 (Bloomberg) — Eyeballs bob in a toilet tank. A severed head turns up at a mansion. And a dead man is found in a pool of blood in an abandoned house, where someone has drawn hundreds of red hearts on a white wall. Looks like Gretchen is back in town. Gretchen Lowell, for the uninitiated, is a serial killer with perfect skin and a penchant for dissecting her prey alive. She’s on the loose again in Chelsea Cain’s “ Evil at Heart .” Pat Tillman Killing Sparks Krakauer Condemnation of White House Sept. 16 (Bloomberg) — In “ Where Men Win Glory ,” Jon Krakauer examines the killing by friendly fire of professional football player Pat Tillman, combining empathy and extensive reporting in an affecting portrait of the victim and a bitter condemnation of the cover-up that followed his death while on duty in Afghanistan. Krakauer also ties the tragedy into a long line of U.S. misfires with the Taliban and al-Qaeda — a pointed exercise at a time when the Afghan campaign is losing public support. Dan Brown’s ‘Symbol’ Features Castrated Villain, Masonic Secret Sept. 15 (Bloomberg) — Robert Langdon is back. The hero of Dan Brown’s super-mega-selling novels “Angels & Demons” and “The Da Vinci Code” has again been called from his Harvard classroom to solve complex puzzles, rescue a brainy, beautiful maiden and save the world from the forces of darkness. Instead of Rome or Paris, “ The Lost Symbol” finds Langdon in Washington. He has been lured to the Capitol rotunda by a mysterious religious fanatic, Mal’akh, who has kidnapped the head of the Smithsonian Institution and a prominent Freemason. Credit ‘Neverland’ Vanishes, Leaving U.S. Dreaming of Real Jobs Sept. 29 (Bloomberg) — Peter S. Goodman is a reporter with a valuable thesis, reams of anecdotes and a habit of being in the right place at the right time. He puts these assets to work in a persuasive book on an all-too-familiar topic, “ Past Due : The End of Easy Money and the Renewal of the American Economy.” His argument: Americans became profligate borrowers partly because the economy hasn’t created enough jobs capable of financing a middle-class life. End the Fed? Ron Paul Is Wrong for All the Right Reasons Sept. 17 (Bloomberg) — “The bank is trying to kill me,” President Andrew Jackson declared. “But I will kill it!” And throttle it he did, thwarting a bid by the second Bank of the United States to extend its charter beyond 1836. The skirmishing over the place and power of a central bank in the U.S. has resurfaced, with book after book faulting the Federal Reserve for its role in our own credit crackup. Can the Fed be fixed? Don’t bother, writes U.S. Congressman Ron Paul in “ End the Fed ,” a blistering libertarian broadside from a firm believer in Austrian economics. Kennedy Reflects on Love, Tragedy, Betrayal in Emotional Memoir Sept. 14 (Bloomberg) — Even before Senator Edward M. Kennedy’s death, his memoir, “True Compass,” was one of the most eagerly awaited books of the season. Word went forth that this political memoir — perhaps the world’s most mind-numbing genre, apart from the collected philosophical tracts of minor Iron Curtain despots — actually contained revelations. “ True Compass” is finally available, and it really is a sensation. Brown Leads Fall Book Charge; Irving, Krakauer, Hornby Follow Sept. 11 (Bloomberg) — Dan Brown, author of “The Da Vinci Code,” the best-selling adult novel of all time, returns to bookstores this season with “The Lost Symbol.” The big question for publishers is whether it will kill the competition or inspire people to toss more books into their shopping carts. Liberty for Sale — Swap Your Freedom for Cash, Repression Sept. 4 (Bloomberg) — John Kampfner , a British foreign correspondent and former editor of the leftist New Statesman , is a man with a theory. The gist lies in the title of his new book, “Freedom for Sale: How We Made Money and Lost Our Liberty.” His contention: Peoples around the world, in the democratic as well as the authoritarian camp, have a pact with governments whereby they sacrifice their freedoms and submit to selective repression in return for a measure of prosperity and security. (The columns were written by Bloomberg critics. The opinions expressed are their own.) To contact the reporter on the story: James Pressley in Brussels at jpressley@bloomberg.net .

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