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BP shareholders are £40bn poorer

Robert Peston | 08:15 UK time, Tuesday, 1 February 2011

BP shareholders now have some idea of the long term cost for them of the Gulf of Mexico oil spill - because the British oil giant has today announced a halving in the dividend it pays compared with what it paid before the environmental disaster.

BP logo

Those investors will be pleased that they are receiving a dividend again, after its cancellation for nine months - which cost shareholders £4.9bn.

But the new dividend they will be receiving of 7 US cents a share means that in total they will be getting £3.2bn a year less than what they were receiving in 2009.

Although BP says it is resuming a "progressive" dividend policy (which means it hopes that dividends will rise in coming years), it's not unreasonable to estimate that over 10 years the Gulf debacle will cost BP shareholders some £40bn in lost income - which given the importance of BP shares in our pension funds represents a considerable loss to millions of people.

Against that backdrop, it was inevitable that BP's chief executive at the time of the Deepwater Horizon explosion and spill, Tony Hayward, had to resign, to be replaced by Bob Dudley.

As for BP's estimate of the costs of the Gulf debacle, that has risen slightly to $41bn or £26bn - which means that in 2010 BP lost $4.9bn (£3.1bn).

The other big news is that BP is halving its oil refining capacity in the US - with the planned sale of two huge refineries, in California and Texas. That will see BP disposing of the site of the disaster that preceded the Gulf leak, Texas City - where in 2005 an explosion killed 15 workers and injured 170 others.

The US refining disposals are of practical significance, because they make BP a less complex business to manage. And they are of psychological significance, because they represent a partial unwinding of the mega US takeovers - of Amoco and ARCO - made when John Browne was BP's "Sun King" chief executive.

Update 10:06: It is worth noting that there has been a strong recovery in BP's profits in the last three months of the year - thanks largely to the rising oil price.

In spite of the asset sales made by BP to strengthen its balance sheet, total revenues rose 14% to $84bn (£53bn) during the final quarter of 2010.

And net profit for that period was $5.6bn (£3.5bn), a rise of 30%.

Update 15:45: There has been a big blow to BP in the High Court just now.

AAR, BP's Russian partner in its TNK-BP joint venture, has won an injunction blocking BP's plan to explore the Arctic in collaboration with the Russian energy giant, Rosneft.

The share swap with Rosneft has also been blocked.

The deal will now go to arbitration in Sweden.

See my post earlier in January for more on this.

Comments

  • Comment number 1.

    For pension funds it is the dividend that matters....

    Providers of annuities (pensions) need income to pay pensions or they have to dip into the fund's capital to make up the deficiency. (In the end an invested pension is the paying down of an income to the pensioner such that at the end of the pension - death - there is nothing left in the fund.)

    BP's re-start of dividends is essential, but the use of the term 'progressive' is still worrying.

  • Comment number 2.

    Another interesting blog Mr P. But how come you've chosen this BP story over Mr King's pension pot ?

  • Comment number 3.

    And I don't mean the Sun King, either.

  • Comment number 4.

    Everything BP does is now framed in the context of the Gulf Oil Spill: today's results announcement on BBC Breakfast was accompanied by footage of the blazing oil rig. It underlines the importance of preventing crises, or at the very least, managing them in a professional and responsible manner. This incident will haunt BP for years to come, not just in terms of financial pain, but also reputational damage.

    Jonathan Hemus, Insignia Communications

  • Comment number 5.

    AND FROM YOUR PREVIOUS BLOG

    61. At 08:23am on 1st Feb 2011, Amused2Death wrote:


    44. At 21:43pm on 31st Jan 2011, CityITGeek wrote:

    "The crucial point is these
    virtual shares are totaly out of my hands for 3 years I cant sell them or pledge
    them and I may never own them. If I make any mistake in the next 3 years (eg scratch the boss's Lambo when wheeling my
    bike through to the bike rack) I would loose my job and the shares are forfit."

    Mr Peston...is CityITGeek saying something important here ?

    If such bonus shares cannot be pledged as collateral, the ad from Saxo becomes so much advertising spiel . It would then have been remiss to draw from this that all those working in banking receiving such bonus shares are about, indirectly, to 'gamble' with them - I would request you to find out more and tell us, please.

    PS And would it be possible to 'shadow' deposit such shares ?

  • Comment number 6.

    BP and its contractors were shown to be responsible and the compensation to the families of the deceased and those thousands affected by the 'collateral damage' will be enormous so what are the consequences? Will anyone be prosecuted for the death and destruction? BP as a British based company will bring financial losses to many shareholders and pensioners - any talk of failing in the fiduciary duty? Is it not about time the executives of these companies were made to feel that what they do has to be taken very seriously and that there are judicial consequences of negligence, carelessness and even simple incompetence. A duty of care for employees, shareholders and society (including the environment) should be explicit and underpinned by the full force of the law.

  • Comment number 7.

    So folks, we will lose out from less divi's ; We had better get used to this scenario, with Oil shortly going to be in decline and the price rising rapidly, the cost for the fuel that we buy will be much greater than the dividends paid back to a few pension funds.

    If you really want to be scared, Try reading ' Twilight in the desert' by Simmons. It is a short thesis about the future of Ghawar the biggest oilfield in the world..

  • Comment number 8.

    The Manufacturing PMI seems to have had quite an effect on Cable.

  • Comment number 9.

    And against such a backdrop, the new CEO jumps into bed with Rosneft. Now that would send a bigger chill down my spine. Something about frying pan and fire??

  • Comment number 10.

    If BP are a multi-mega-international company and are selling off some American interests, are they one of the first to recognise that the American market is in decline and are therefore shifting their focus? It would seem that they see Russia as less risky?

  • Comment number 11.



    There's no doubt that BP was a far better run company back in the 70s and early 80s. It was innovative and we all felt it was a genuinely British company which was on our side and supportive of UK contractors and suppliers in the same way that Statoil still is in Norway.

    Then the lunatics with the MBAs took over and destroyed its culture. It's gone downhill ever since. Now, few in the industry have any respect left for BP. It's a great shame.

  • Comment number 12.

    That headline is an irresponsible disgrace and the figure of £40bn in lost income is complete nonsense. I can understand why people with papers to sell would write something like that, but on the BBC? Very disappointing. Maybe it's time for a new business editor, or whatever your title is.

  • Comment number 13.

    Although BP says it is resuming a "progressive" dividend policy (which means it hopes that dividends will rise in coming years), it's not unreasonable to estimate that over 10 years the Gulf debacle will cost BP shareholders some £40bn in lost income - which given the importance of BP shares in our pension funds represents a considerable loss to millions of people.

    Not 'unreasonable to estimate'? Of course it is. By your own calculation, the shareholders will be receiving 3.2 billion a year less in dividends than in 2009. Assuming that the talk of a 'progressive dividend policy' is twaddle, that might get us to a lost dividend of maybe 32 billion over ten years. How do we get to 40 billion?

    Do we really assume that BP won't be increasing its dividend over this period (even though it says it will try to)? That those shareholding institutions won't be pushing for their income flow? I seem to recall a statistic, from last year that indicated that BP was responsible for one sixth of all dividend payments.

    My view is that BP has been prudent in its provisions for the Deepwater Horizon accident and will, at some point in the next 1-3 years release its over-provision where it will fall straight through to earnings. From what I have seen, the results of the various inquiries have failed to show BP as being solely responsible for the accident.

    To declare an interest.
    I am a UK taxpayer, work in the energy industry (but not for BP) and am a BP shareholder

  • Comment number 14.

    #6 Watriler

    Is it not about time the executives of these companies were made to feel that what they do has to be taken very seriously and that there are judicial consequences of negligence, carelessness and even simple incompetence. A duty of care for employees, shareholders and society (including the environment) should be explicit and underpinned by the full force of the law.

    There are judicial consequences and they are underpinned by the law.

  • Comment number 15.

    A small but important part of the UK's so-called 'biggest ever deficit' is that BP has been paying neither Corporation Taxes, nor the dividends that could be taxed for Higher Rate Taxpayers. So the further loss in the last year is another bitter blow.
    BP's prospects are much better now and contribute to the reality that most of the deficit is due to BP (and Banks, especially) not paying normal amounts of Corporation Taxes.
    Getting those huge taxpayers back into profit and paying Corporation Taxes ought to be a TOP Priority.

  • Comment number 16.

    As usual RP focuses on the negative. Virtually all the losses have been reported previously. What was reported today was a 4th quarter result considerably better than 4th quarter last year, deosnt mention that with one word. The 3 other quarters have already been reported and the amount allocated to cover the cost of the spill written off. Most commentators believe that the money allocated for teh spill is more than enough as it looks like BP wont be judged grossly negligent and tehrefore will not incur the maximum fine from the US government. Also tehguy running the compensations has stated that he will not beusing all which was allocated. Obviously BP can not yet write this money back into their accounts and they can aslo not yet restore dividends to where it was as it would look like gloating or over-confident, but it certainly looks like BP is on the way to record results over the next year. They deserve some praise for sorting out what was a bad situation, honoring their responsibilities for bad mistakes, but restructuring and recovering teh company to former glory. Their share price is today 60% above where it was at the lowest last year.

  • Comment number 17.

    If you really want to be scared, Try reading ' Twilight in the desert' by Simmons. It is a short thesis about the future of Ghawar the biggest oilfield in the world..
    -----------------------------------------------------------------------
    The biggest oilfield in the world has yet to be tapped - and it is in Venezuela. Peak oil is a myth in the foreseable future.

  • Comment number 18.

    Dear John, just watched your cartoon personna on how banks work. NO THAT IS NOT HOW BANKS WORK. Banks do not lend depositors money. They CREATE money using the fractional reserve system. If you want to know how banks work then I refer you to the educational series "Money as debt parts 1 & 2 which you can find on Utube.

  • Comment number 19.

    • 1. At 08:40am on 1st Feb 2011, John_from_Hendon wrote:
    For pension funds it is the dividend that matters....

    Providers of annuities (pensions) need income to pay pensions or they have to dip into the fund's capital to make up the deficiency. (In the end an invested pension is the paying down of an income to the pensioner such that at the end of the pension - death - there is nothing left in the fund.)

    BP's re-start of dividends is essential, but the use of the term 'progressive' is still worrying.

    - This isn't true. Annuities are paid by using the pension pot to buy gilts. Dividends are important to build up the pension pot.

  • Comment number 20.

    @ 18. At 11:02am on 1st Feb 2011, lordzookeeper wrote:

    > Banks do not lend depositors money.

    Yes they do.

  • Comment number 21.

    The BBC and The Daily Telegraph ran a story yesterday suggesting that Russian Oligarchs were planning to vote down BP's resolution to pay a dividend. Your blog does not mention that possibility. Has BP's new TNK-BP partnership got anything to do with today's dividend reduction?

  • Comment number 22.

    18. At 11:02am on 1st Feb 2011, lordzookeeper wrote: Dear John, just watched your cartoon personna on how banks work.

    ***

    Who is the Dear John you are referring to? Robert Peston?

  • Comment number 23.

    I am a pensioner and a BP shareholder and rely on its dividend. I was distraught, following the Gulf of Mexico disaster, not so much by the loss of dividend but the sheer gung-ho attitude of the American government and the American people. When a foreign company (BP) in association with American companies (Halliburton, Transocean etc) carries out an industrial operation (with the full approval of American regulator) and the operation somehow goes wrong, it is the total fault of the foreign company (BP). When an American company (Union Carbide) causes death of tens of thousands of people in a foreign land (India), the American company just walks away - with no liability, no compensation, no clean up! This is American justice!
    Now I am happy that BP is gradually withdrawing from the American business. I would advise all other foreign organisations involved in business in America to do the same, otherwise America will eat you alive. Be aware!!!

  • Comment number 24.

    As a comment on the blog, then like others I feel Mr Peston is misleading in the headline saying 40 million lost to shareholders, amazingly naive and illogical in coming to that deduction (as if any company will continue for 10 years after, to pay reduced dividends - lets wait and see if it more than 1 year) and bizarely negative in his tone over what has been achieved by this company since the disaster. The only point of note, is the reporting of the reduction in refining in the US, but after superficial comments, doesn't give any more implication of that aspect, which I would have expected.

    The headline should be dividends reintroduced or company turnaround, the content should be how the company has changed, the value of the author should be in giving insight that you and I would not otherwise deduce, such as how the new strategy will effect them, and if this is good, bad, or just inevitable

    I consistently find many of Mr Pestons articles to be missing the main relevant news and mostly dwelling on the negative or minor points. I'm sure Mr Peston has many fine qualities in order to hold down the job, but he sure hides them well when writing many of the blogs. I expect better.

    I only read them now, to see how good facts can be negatively interpreted.

  • Comment number 25.

    The value of shares can go up as well as down - I'm sure pensioners are fully aware of this when they invest in their futures.

    I mean it's not like the Government trying to ensure that the people feel their futures are dependent on big profits from the corporations now is it? - I mean that would be almost criminal - in a moral sense of course.

    ....and people wonder why the Government are so keen to push people onto private pensions - it's nothing to do with cost, it's all to do with Government working with corporations to engineer a system of corporate fascism.

    Some people are really dumb if they haven't worked this out already. I mean why would pensioners want to invest in oil companies who essentially pay back some of the wealth they extract from the people to begin with through their fixing of prices in the market - I mean oil production and drilling is an oligopoloy after all.

    ...and here again we have the BBC cheerleading on behalf of this particular corporation by telling us "BP's profits are good for your pension" - as they were on the Beeb this morning.

    What a shame the planet doesn't feel the same way about it - but I guess nobody will care about that until it's far too late and it stops functioning and then there will be 'astonishment' and 'surprise' no doubt.

  • Comment number 26.

    21. At 11:40am on 1st Feb 2011, Martin Newlan wrote:

    "The BBC and The Daily Telegraph ran a story yesterday suggesting that Russian Oligarchs were planning to vote down BP's resolution to pay a dividend. Your blog does not mention that possibility. Has BP's new TNK-BP partnership got anything to do with today's dividend reduction?"

    I'm sure this was on the BBC site yesterday too...and old Bob Dudley already fell out with the Russians before!

  • Comment number 27.

    The sale of BP refineries in America is the continuation of the BP strategy to focus on oil exploration rather than refining. Do readers realise that BP now has zero refineries in Britain with Grangemouth being sold to Ineos, Coryton sold to Petroplus and Llandarcy long since closed and this is BRITISH Petroleum. They used to say that BP couldn’t sell oil if it was a penny a barrel and that Shell couldn't find oil if it came out of taps. BP is continuing on their core strength: finding and extracting oil rather than refining and selling oil. Whether that is a good strategy is up for dabate after the Gulf of Mexico debacle.

  • Comment number 28.

    The cost to BP may be measureable, but the cost to the environment is likely to be significantly worse, and probably will never be paid.

  • Comment number 29.

    The culture of rising to the level of our incompetence must be addressed in both private and public sector management.

    The comment addressed by: watriler: (6) above speaks to "A duty of care" and he is quite pointed and fairly so. But fails to address that this so call "duty" is placed in the hands of people who do not have the least understanding of their responsibilities.
    They for the most part consider themselves the movers and the shakers. The privileged. When have you heard them address fiduciary responsibility.
    Social conscience takes a back seat to greed. Billions in profits are not sufficient. Tens of billions are not sufficient. For the most part the management of corporations on the scale of BP and regulatory agencies world wide are run by persons incompetent to the true tasks they are entrusted with.
    They do not live in "watriler's" or my world. As individuals they will never bear the brunt of their own ineptitude. There will be no penalty criminal or civil. Not for them personally. The structure is such that the buck always gets passed.
    So other may pay dearly. The pensioner. The share holder. The losses that will go uncounted for years to come.

    As some are aware we, in the US, just held remembrance of the 25Th anniversary of the Space Shuttle Challenger's disastrous destruction in flight. All crew aboard lost. One man stood his ground and denied his approval for launch that fateful day. That man was ostracized, blacklisted, and found compensation only in lecture circuits.

    To be right means nothing in the culture we so admire. To make as much as possible as quickly as possible, or to meet a schedule dictated by some inept 'empty suit'. This is admired and rewarded.
    On the other hand raise your voice to steer a clear and conscionable course and you will be set aside.
    When will we, as a society, demand a change in culture within the corporate and government agencies to raise social conscience at the risk of slowing profit. I doubt any of us will live to see it come to fruition. Not as long as we get our dividend checks on time and the Dole doesn't run out.
    We are all in some degree part of the same system.
    Do we truly want change? Will we ever demand it? I wonder?

  • Comment number 30.

    The most important thing we should all know is;

    How does John_From_Hendon get blog #1 nearly every time. Come on this is critical to all our wellbeing, the populace should be told - now!

  • Comment number 31.

    Dear Robert, re@26 WOTW

    Funny enough, as I was waiting to watch the Keiser report, I picked this up too. A search of the BBC website revealed nothing though.

    The High Court case today by is by AAR, Russian shareholders in TNK-BP. Apparently, they are objecting to the terms of the BP Rosneft deal. According to RT , "The board of directors of the AAR consortium, BP's Russian partner in TNK-BP, have blocked $1.8 billion dividend payment from TNK-BP", half of which would have gone to BP.

    http://rt.com/business/news/aar-bp-rosneft-davos/

    http://rt.com/business/news/aar-tnk-bp-dividends/

  • Comment number 32.

    Whilst there is money to be "made" we will continue to use oil. Inefficiently. Its too valuable to use it in the way that we do currently.

    Oil dependence is going to cause some serious problems in the future what with rising prices set to make so many industries inefficient.

    Further, dependence in the form of pension funds will emerge as another problem.

    The U.K. will approach this problem in the usual way. Wait for it all to go wrong then try and fix it afterwards.

    Similar disasters will happen again as our desperation increases.

    The real questions are what is going to replace oil dependency and what are we doing about it right now? In the midst of crisis comes opportunity.

  • Comment number 33.

    I wouldn't worry about the £40 billion BP are short of - with oil futures over $100 a barrel - it won't take much fleecing of the public to recoup that figure.

    Lets hope all BP investors aren't also oil users - otherwise it's like robbing yourself of £100 to pay yourself £50.

    ....and you wonder why it's nonsense to read GDP figures....

    One good thing the Capitalists are good at is recycling - unfortunately not the sort that might save the planet, but recycling wealth.
    One man's labour produces the wealth from nothing (apart from his hard days work) and that wealth is then recycled over and over again so bankers can buy masserati's and BP can pay dividends to shareholders.

    ....so what in the economy is actually productive? - maybe that's why we're such a debt fuelled economy - because the actual productive work is so small now the only way to keep this ship afloat is to constantly borrow more with the intention (but not the plan) to pay it back.

    ...and that's the same whether it be businesses, Governments or private individuals.

  • Comment number 34.

    So a big player in the pension institutions investment has failed ( we all knew this a long time ago ).
    These pension fundmanagers are supposed to spread the investments around so the investor gets a smaller return but is safe from risky investments in one big unit. Everyone is now saying because BP are in troble and many pension funds are invested, that there will be a big impact on pension growth.
    Bullshit. If 5% of a pension fund is invested in a company, and that company's value and dividend ( assuming the plan is for 10% return ) is halved, then it reduces the income from the pension fund by 0.55%. Most funds cannot give you much better than 6% then reduce this because of BP,etc.
    Better give me the money to gamble on horeracing ( which I make a steady 5% on tunover & 50% on staked capital ). I have shares which I use as income as I am now retired. Cannot even think of what my private pension will end up when I am 65.



  • Comment number 35.

    Another poor quality blog from RP, laced with implicit sarcasm and unintelligent opinion rather than facts. I only open this page to read the comments, where you CAN often find informed and thoughtful input.

  • Comment number 36.

    @ #24 Quiet Englishman - absolutely agree - well said!

  • Comment number 37.

    @#18 - no wonder you are in charge of the zoo!

  • Comment number 38.

    ronmet again.
    I got my sums wrong. Itshould have been, if company loses have value and dividends costs the pension fund 2.55%. But as they should be looking at 10% with an odd company not returning as planned, should still be more than 6%. These financial planners are useless but we have to tie our pension money with them as we cannot do it ourselves ( ie when company who goes bust, transfers your pension into a private pension fund - at least mine was better than Mirror pension fund under Maxwell )

  • Comment number 39.

    The UK equity sector received a boost from analysis by Capita Registrars that dividends are likely to rise by 11.5% in 2011 after two years of falling payouts. Dividends had been hit first by the economic crisis and then by the Gulf of Mexico crisis for BP, then the largest dividend payer in the FTSE 100 – now with the return – albeit smaller payout there may be a chance that this 11.5% may actually be a likely estimation??
    http://www.mindfulmoney.co.uk/3083/investing-strategy/brighter-future-for-uk-equity-income.html
    But then again with corporations readiness to cut dividends who knows?

  • Comment number 40.

    Incredible, the so called experts we trust in to provide sound advice for our retirements put a large portion of investments into non-risk free adventures aka BP! Are you also surprised to learn that it’s alleged that most of the big UK charities gambled people’s donations in a similar manner! As for the high price of oil why do I suspect some form of conspiracy that has worked in the favour of not just BP, I'm sure there's a cracker of a novel to be written but it would be larger than War'n Peace, and the movie would be 9 hours long with 6 sequels....hey-ho BP out-going CEO is certainly not standing on a UK dole queue more likely to be found in the Bahamas earning 7%.......

  • Comment number 41.

    Oh for goodness sake, LEAVE BP ALONE! I have money invested in it. Your trouble, Mr Peston, is that when you touch a company you're like an anti-Midas: the company turns to dust rather than gold.

    Please... if you can't say something positive, leave private companies alone!
    Thanks.

  • Comment number 42.

    33. At 14:32pm on 1st Feb 2011, writingsonthewall wrote:

    ....so what in the economy is actually productive? - maybe that's why we're such a debt fuelled economy - because the actual productive work is so small now the only way to keep this ship afloat is to constantly borrow more with the intention (but not the plan) to pay it back.
    ------------------------------

    So true it is actually quite scary. Immigration (of cheap labour) was designed to alleviate this problem, that of diminishing wealth creation, somewhat.

    Not quite sure you can blame that problem on Capitalism, though. As peoples' living standards (real or "imaginary") rise they naturally move, or want to move, towards easier and less menial jobs. You can notice that often in the second generation of immigrants where their parents push them hard towards academic achievement. Sadly, a lot of those jobs do not create any wealth (e.g..... banking...).

  • Comment number 43.

    17. At 10:41am on 1st Feb 2011, dunque wrote:

    'Peak oil is a myth in the foreseable future.'

    Either you don't understand what peak oil is or you are being very ambiguous with your timeframe.


    32. At 14:03pm on 1st Feb 2011, i wrote:

    'The real questions are what is going to replace oil dependency and what are we doing about it right now?'

    What makes you think there is a replacement?

    Mybe UKAEA or NIF will achieve Fusion before we reach peak oil - although I'm not too optimistic considering UKAEA have been at it for over 50 years and NIF are starting with a laser which is only about 1% efficient.

    As long as capitalists can squeeze more moeny out of oil all is well.....

  • Comment number 44.

    Something tells me that BP wants nothing more to do with the United States. They would rather deal with Russia.
    Don't forget that the US Government is still investigating whether a Transocean's handling of a key a piece of evidence affected the complete examination of the device.
    Michael Bromwich, Director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said that his investigators have questioned workers from various government agencies and a Norwegian firm the government hired to test the failed blowout preventer.
    Guess what?
    No conclusions reached yet...
    Bromwich said that firm, Det Norske Veritas or DNV, admitted it was at fault for not disclosing to certain BOEMRE officials Transocean's role in the legal investigation. He maintains that testing on the device was compromised; yet, the investigation continues: The 300-ton device that failed to stop the oil spill is still being tested.
    Bromwich said he is committed to ensuring the integrity of the testing and the broader investigation by a joint U.S. Coast Guard-BOEMRE panel looking into the circumstances of the April 20, 2010, rig explosion.
    The blast killed 11 workers and led to 200 million gallons of oil spewing from a well a mile beneath the Gulf of Mexico.
    Aong other things, Bromwich's team is providing the instructions on how to vet workers involved in testing the blowout preventer (Could these workers not have a conflict of interest?)
    Representatives for Cameron, which made the failed blowout preventer, and Transocean, which was responsible for maintaining it, are among interested parties that have been allowed to examine the device; the investigation began Nov. 16 at a NASA facility.
    BP, the Justice Department and various lawyers for plaintiffs in lawsuits over the disaster have also been allowed to monitor, but none of them have been allowed hands-on involvement. (What kind of real examination would that be without the capability to handle?)
    The US Chemical Safety Board is monitoring the blowout preventer testing and has raised concerns that certain persons were not allowed to touch.
    Transocean has denied that any of its employees acted improperly.
    Let me just say this: The American Government should have been on top of this dissaster from day one, including oversite for conflict-of-interest.
    In other words, there is still contention about who was to blame for what.
    Who are the real losers?
    a) the American people, the families in the Gulf of Mexico, some of whom are oil-related sick, even dying, and have yet to see their claims (or the bulk of their claims) processed, and worse have yet to receive proper, specialized treatment for their oil-related illnesses. These people appear to be throw-aways, like the dead fish, lobsters, and other marine animals that keep going belly-up. And then there's that green sludge at the bottom of the Gulf that sits there day after day, poisoning, corroding, devastating...even though the Government says go ahead and eat the produce, swim in the water, take a lung-full of that air!
    2. Perhaps BP too is a loser. BP is halving its oil refining capacity in the US - with the planned sale of two huge refineries, in California and Texas. That will see BP disposing of the site of the disaster that preceded the Gulf leak. As I said, it seems that they would rather deal with Russia.
    New Orleans Justice Department attorney Michael Underhill said DNV was on schedule to deliver its report on the blowout preventer by the end of March, 2011. What is taking so long? (Cover-ups can take a long time.)
    A report from the joint panel probing the disaster won't be done until the report is finished, meaning the panel likely won't meet its March 27 deadline. It has already sought one extension and could request another.
    Something peculiar here.
    Could it be that the wrong light has been shone on the wrong party?

  • Comment number 45.

    • 28. At 12:33pm on 1st Feb 2011, Averagejoe wrote:
    The cost to BP may be measureable, but the cost to the environment is likely to be significantly worse, and probably will never be paid.

    - Nah mate, it's all dispersed.

    It seems obvious to me that the government should pump billions into BP so it can pay its dividend at the same rate as before. BP is quite simply, too big to fail.

  • Comment number 46.

    I have no interest in equity investing. It's populated by the same operators that brought us the derivative nightmare.

    I'll pass.

  • Comment number 47.

    • 33. At 14:32pm on 1st Feb 2011, writingsonthewall wrote:
    One man's labour produces the wealth from nothing (apart from his hard days work) and that wealth is then recycled over and over again so bankers can buy masserati's and BP can pay dividends to shareholders.

    - Nice to see some Locke on a business blog. So a man uses his labour to create wealth, say by chopping down a tree to make firewood. But who owns the tree? If nobody then ok, but if everybody then he has stolen the whole tree to create wealth for himself. If we leave the state of nature behind we get further problems when we are manufacturing finished goods (does the labourer provide the parts?).

  • Comment number 48.

    38. At 15:04pm on 1st Feb 2011, ronald wrote:
    These financial planners are useless but we have to tie our pension money with them as we cannot do it ourselves

    - Never heard of a SIPP?

  • Comment number 49.

    People should have realised by now that BP is merely a collection of contractors working for a holding company.
    That company is now being sold off to the highest bidders.
    Asset stripped. It used to happen to small and medium sized companies.
    In reality BP is merely a collection of medium sized companies.
    Soon to be incorporated into bigger ones.

  • Comment number 50.

    47. At 16:22pm on 1st Feb 2011, Lindsay_from_Hendon wrote:

    "Nice to see some Locke on a business blog. So a man uses his labour to create wealth, say by chopping down a tree to make firewood. But who owns the tree? If nobody then ok, but if everybody then he has stolen the whole tree to create wealth for himself. If we leave the state of nature behind we get further problems when we are manufacturing finished goods (does the labourer provide the parts?). "

    The tree was not his (but that never stopped bankers hoarding capital which represents natural resources that they never actually owned) - however the labour was all his. You can keep the tree if you like, but it's not much use without the labour applied to it (gosh, do you think that might be "wealth creation"?)

    All parts that make manufactured good must have human endeavour applied to them (or did you think the ready-made parts fall out of the sky). Even if the parts are made by machine, then it's the labour (thinking) of the machines inventor and the toil of the maintenance man that has created it.

    Now we're getting somewhere - so go and apply this new found knowledge and tell me how banking creates wealth.

  • Comment number 51.

    47. At 16:22pm on 1st Feb 2011, Lindsay_from_Hendon wrote:
    If we leave the state of nature behind we get further problems when we are manufacturing finished goods (does the labourer provide the parts?).

    ==========================

    Unless the labour is applied to the parts - a pile of parts they remain irrespective of who owns them.
    The added value/price obtainable for the finished goods over and above the cost of the parts is brought about by the work carried out upon the parts to make the finished item.

    The ideological ground between capitalist models and the socialist models is a discussion of who should take out the lions share of the added value created by the work?

    The wealth provider who owns the parts (or tree) would be the capitalist model.
    The person who put the parts together irrespective of who owned them would be a more socialist model.

    The whole economy is a chain with each having its place within it - at least if it is to be a sustainable balanced economy.
    Taking in each others washing is not a sound economic model, but neither is only selling each other insurance, lending each other money , looking after each others kids or building each other furniture alone.

  • Comment number 52.

    Robert, during the 2009 recession I noticed, as many others have, a definite pessimistic thread in many of your articles. Many of the doomsday scenarios you depicted have been now proven as flawed. Similarly, in this article you say that BP shareholders could expect to be £40 billion worse off over the next ten years. Well given that it is likely that BP's partners will (have to) shoulder much of the blame (and cost), it is just as likely (and probably more so) that the figure is likely to be much smaller than £40 billion and a much more likely figure is probably half of that.

    I suggest your articles should become more realistic than pessimistic - which will probably be less 'headline grabbing' - but do your reputation as a serious economist (rather than a journalist) a lot of good.

    Take a look at Stephanie's articles - a whole lot more balanced

    By the way for this article you get a D minus I am afraid - could do better

  • Comment number 53.

    Today's BP revelations could leave some British investors in a dilemma. Before the oil spill, the firm had been a reliable payer of dividends which some investors, particularly pensioners, had used to secure an income either directly or more often indirectly through an income fund. Can the battle-scarred oil group can ever be the reliable income payer it once was?

    http://www.mindfulmoney.co.uk/3107/sector-watch-/bp-share-swap-with-rosneft-put-on-hold-leaving-british-investors-with-a-dilemma.html

  • Comment number 54.

    Sensationalist, simplistic, classic Peston.

  • Comment number 55.

    As Greenpeace would put it 'Go beyond oil'. What happened in the Gulf could potentially be the tip of a growing iceberg. Our addiction to oil is pushing in a wedge, as companies such as BP continue to take ever more reckless risks.

 

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