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Triple Crunch Log                                                                                                            

operations were one of its main economic drivers and that it had asserted that it had the technology to safely conduct the operations. This means BP violated the Securities Exchange Act by issuing false and misleading statements about safety, technology, inspections and precautions at its offshore oil facilities, the action states.” The share price is 40% down, meaning $73bn (£50bn) less market capitalisation since the accident.459

Investors are beginning to fear the claims against BP could have no limit, constrained only by the US government. FT: “As estimates of the cost to BP escalate, however, the financial strain it could impose on the company begins to look significant. Analysts at Citigroup forecast that BP will have free cash flow after its dividend of only about $1.2bn (€1bn, £827m) this year, after paying the same dividend as last year, at a cost of $10.5bn. The cost of tackling the spill has already exceeded that figure, BP has said, which means that the cost of the clean-up will have to be funded by higher borrowings.”460

UK Funds sweat on BP dividend news. The company is still undecided. FT: “UK shareholders were anxiously awaiting a statement on the oil company’s plans for its dividend on Thursday. The oil major is a big income generator for UK fund managers, accounting for 12 per cent of dividend Income fund managers have bought into the company as a result. BP is the top holding in just under half of the UK’s 86 equity income funds. Some hold as much as a 10th of their funds in the oil stock. Fund managers admitted that if BP were to suspend its dividend, they would struggle to maintain their own dividend payments to investors. One said that if the dividend were suspended for a year, it would cause a 10 per cent hit on the yields paid by his funds.”

UK industry alarmed over White House attack on BP. FT: “The references to "British Petroleum" - which has not been the company's name since 1998 - by senior US politicians have fuelled fears of a backlash against UK groups in the US.” Richard Lambert, director-general of the CBI: the presidential attack is "obviously a matter of concern - politicians getting heavily involved in business in this way always is."461

Oil spill “probably not a supply side changer”, FT Energy Source concludes. The IEA estimates only 300k bd will be locked in by 2015 as a result of regulatory changes. Over 100 new maintenance and safety procedures were implemented after the Piper Alpha disaster in 1988, and the regulation of field licensing and operational safety were separated (as the US is now belatedly copying). Scores of new oilfields were developed after that though. 462

Tom Bower, author of Oil: Money, Politics, and Power in the 21st Century calls peakists “charlatans” in Newsweek. “In slashing costs, (John Browne) disregarded safety and maintenance. He fired hundreds of engineers, instead opting for cheaper subcontractors. That led to three major incidents: the il spill in Alaska, the explosion at Texas City, and the tilting of the Thunder Horse oil platform in the Gulf of Mexico. All three were the results of bad engineering, which went directly to John Browne’s leadership.” On Beyond Petroleum: “In the end, Exxon was right; oil corporations should stick with the business they know, which is finding oil. Browne eventually had to retreat, because he just couldn’t make money off it without government subsidies.” “There’s no such thing as the end of oil. This idea that we’re reaching “peak oil” is nonsense. They’re charlatans, the people who talk about peak oil. There’s ample oil.”463

Right wing blogger James Delingpole on the peak oil “scare story” as featured by gullible Newsnight.

“Peak Oil is a scare story  talked up by greenie catastrophists on every possible occasion to justify higher taxation, greater government intervention, global rule by people like the Hon Sir Jonathon Porritt and Al Gore and massive bonanzas for anyone involved in the wind farming or solar power industry. Somehow, Newsnight had managed to twist the arm of Jeremy Leggett – who runs Britain’s largest solar power company – to come on the programme and crossly, passionately declare that Peak Oil represents a real threat. (Wot? Even bigger a threat than the one we’d suffer if we all relied for our energy on solar power in a country like Britain not known for its sun? Pull the other one, Jezza!)” … “PO Theorists fail — or more precisely refuse — to grasp that the best method of dealing with any form of commercial scarcity is market-based ingenuity.”464

11.6.10. Lend Lease bans its subsidiary Bovis from nuclear work because it is “unethical”. Bovis Lend Lease has had to pull out of a nuclear deal with EDF energy at the eleventh-hour after parent company Lend Lease objected to working in the sector.465

13.6.10.

Spill may not be over before Christmas, says ex-Aramco drilling expert. Nansen Saleri, chief executive of the consultancy group Quantum Reservoir Impact, dealt personally with four blowouts. “I know it is a frightening assessment but everyone should be prepared for a worst-case scenario, and that could mean a Christmas timeframe.” The technological challenges “are enormous.” Other experts have also said that no one can rule out another blowout. BP warned in a regulatory filing that a blowout on one of the relief wells could release a further 240,000 barrels of oil a day, but Tony Hayward subsequently discounted the chances of this, saying “The relief wells ultimately will be successful.”466

Britain should back down over BP, writes Clive Crook in the FT. “The question of whether even this company’s mighty resources are adequate to meet these demands cannot be dismissed. In such circumstances, I cannot see why BP has hesitated to suspend its dividend. The idea that it can take this calamity in its stride and proceed on the basis of business as usual is absurd, and politically foolish too, since it is a provocation to critics intent on vengeance.”467

We must end oil dependency “before it is too late”, says David King, former UK chief scientific advisor. The bottom line is that demand for liquid fuels is virtually certain to outstrip production by a considerable margin over the next two decades, regardless of how much oil remains in the ground.” … “Today, the rest of the world pours more than $2 trillion a year into the Gulf states, which is $6m per day. This money would surely be better spent developing energy resources that are much closer to home?468

While the spotlight is on on oil, “the banks have won.” Ruth Sutherland in the Observer: “Tomorrow Channel 4 airs a Dispatches programme, narrated by my colleague Will Hutton, entitled How The Banks Won. It is a timely reminder of how the banks are quietly going back to business as usual, while customers and taxpayers suffer. Despite their disgrace, the banks' well-oiled propaganda machines continue to spin their lines that the finance sector services the productive economy, is the major contributor of tax revenues to the Treasury, and that it is a significant engine of job creation. But the Centre for Research on Socio-Cultural Change (Cresc) at the University of Manchester, which contributed to the programme, challenges each of these assertions. Between 1997 and 2009, almost a third of lending was between banks. Half went to individuals, mainly on mortgages that fuelled the housing bubble; manufacturing received just 3% of the pie; other

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