>> THE GULF OIL BLOWOUT IS
CROWDING PRESIDENT BARACK
OBAMA'S AGENDA THIS WEEK.
HE'S IN THE REGION FOR AN
OVERNIGHT VISIT TODAY AND
TOMORROW HE'LL USE HIS FIRST
OFAL OFFICE ADDRESS TO
TARGET B.P..
THE PRESIDENT PLANS TO FORCE
BRITISH PETROLEUM TO CREATE
A COMPENSATION FUND FOR
ECONOMIC VICTIMS OF THE
SPILL.
>> INCREASINGLY FRUSTRATED
BY THE SLOW PACE OF GULF OIL
SPILL COMPENSATION,
PRESIDENT OBAMA WANT B.P. TO
CREATE AN INDEPENDENTLY
OPERATED ESCROW ACCOUNT
HOLDING AS MUCH AS $0
BILLION.
SENIOR ADVISOR DAVID AXELROD
SAYS THE PRESIDENT IS
CONFIDENT B.P. WILL
COOPERATE ONE WAY OR
ANOTHER.
>> WE WILL USE ALL THE LEGAL
AUTHORITY THAT WE HAVE.
AND WE BELIEVE THAT IT IS
ULTIMATELY IN THEIR INTEREST
AS WELL.
GIVEN THE LEVEL OF PUBLIC
OUTRAGE.
>> PRESIDENT OBAMA ALSO
WANTS B.P. TO SUSPEND ITS
$10 BILLION ANNUAL DIVIDEND
SAYING THE COMPANY SHOULDN'T
BE PAYING STOCKHOLDERS
BEFORE COMPENSATES GULF
FISHERMAN AND BUSINESS
OWNERS ESPECIALLY BECAUSE
THE REGION'S ECONOMY IS
ENTERING A CRITICAL PERIOD
SAYS ALABAMA GOVERNOR BOB
RILEY.
>> WE ARE GOING TO HAVE TO
HAVE SOME LEVEL OF
COMPENSATION BECAUSE OUR
TOURIST SEASON HERE IS
ESSENTIALLY FROM MEMORIAL
DAY TO LABOR DAY.
>> WHILE SOME LEGAL EXPERTS
SAY CALLING FOR THE CREATION
OF AN ESCROW ACCOUNT IS
LEGALLY SOLID, FORCING B.P.
TO SUSPEND ITS SHAREHOLDER
DIVIDEND COULD BE MORE
DIFFICULT.
THE ISSUE COULD COME TO A
HEAD WHEN OBAMA
BEATS-- MEETS WITH TOP B.P.
OFFICIALS LATER IN THE WEEK.
WITH ME NOW ARE ZYGMUNT
PLATER WHO CHAIRED ATLAS
KHALIL TASK FORCE IN THE
AFTERMATH OF THE EXXON
VALDEZ PILL AND JOE
PETROWSKI.
THERE HAS BEEN THE QUESTION
OF WHETHER THE PRESIDENT HAS
THE LEGAL AUTHORITY TO DO
THIS DOES HE DEFINITIVELY
HAVE THAT POWER.
>> NOTHING IS DEFINITIVE BUT
YES THERE ARE TWO BASES THAT
I CAN FIGURE OUT.
ONE IS THAT IF THERE IS A
LAWSUIT OF ALMOST ANY KIND
FILED BY THE FEDERAL
GOVERNMENT WHERE THERE IS A
BIG FINANCIAL PROSPECT, THEY
ASK ASK FOR A LIEN TO BE PUT
ON BY A JUDGE AND THAT'S
JUST A MATTER OF COURSE.
THE SECOND WAS SUGGESTED BY
MY COLLEAGUE, HE SAID IF YOU
LOOK VERY CAREFULLY AT THE
LEASES THERE IS A SURETY
BOND PROVISION NORMALLY IT
JUST SORT TOFF SECURE THE
ROYALTY PAYMENT BUT IT SAYS
FOR OTHER CIRCUMSTANCES AND
ACTIONS THAT ARISE.
AND THEY COULD EASILY CHANGE
THE SURETY BOND REQUIREMENTS
UNDER THE LEASES SO AS TO
COVER THE POTENTIAL FOR THE
SPILL.
OR A BLOWOUT.
AND THAT WOULD BE VERY
SUBSTANTIAL.
>> JOE, LET ME BRING NEW
HERE.
AND OF COURSE YOU'RE NOT IN
THE DRILLING BUSINESS.
ARE YOU ESSENTIALLY IN THE
DELIVERY BUSINESS.
SO WOULD YOU LOOK AT THIS
AND YOU SEE WHAT B.P. IS
DOING AND THIS TALK OF
DIVIDENDS TODAY STORKTS OF
TAKES US BACK TO THE BANKING
BONUS US THAT WE WERE
HEARING ABOUT LAST YEAR WHEN
WE WERE BAILING OUT BANKS
AND PEOPLE ARE ALREADY
WONDERING WHY THERE IS
CONCERN ABOUT PAYING OUT
DIVIDENDS WHEN THERE A
FISHERMAN, THE COMMERCE,
EVERYTHING THAT IS HAPPENING
DOWN THERE ON THE COAST.
SO ARE THEY LEGALLY
OBLIGATED TO BE CONSIDERING
DIVIDENDS.
WHY IS THAT DISCUSSION EVEN
HAPPENING AND ON THE TABLE.
>> I DON'T THINK THEY ARE
LEGALLY OBLIGATED TO PAY
DIVIDENDS.
THAT IS ALWAYS AT THE
DISCRETION OF THE BOARD OF
DIRECTORS AND THE
MANAGEMENT.
I DO REALIZE THAT I
UNDERSTAND A LOT
OF-- PENSIONERS ESPECIALLY
IN BRITAN ARE DEPENDING ON
B.P. PAYMENTS FOR THEIR
PENSIONS BUT I WOULD THINK
WHERE I RUNNING B.P. A
HIGHER PRIORITY WOULD BE TO
START TO CREATE THAT FUND.
AND WHETHER IT'S 20 BILLION
OR MORE AS IT COULD BE, B.P.
HAS WHERE THE WITH ALL TO
FUND SOMETHING THAT SIZE.
I HAD HEARD TALK EARLIER
THAT PEOPLE ASKING FOR AS
MUCH AS A HUNDRED BILLION
PUTTING ASIDE WHETHER THAT
IS GOING TO BE THE ULTIMATE
COST, I THINK THEY WOULD
HAVE VERY DIFFICULTY WITH
THE UPPER LEVEL NUMBER AND I
DON'T THINK IT WHAT BE IN
ANYONE'S INTEREST TO FORCE
B.P. AT THIS TIME INTO
BANKRUPTCY.
I THINK IT'S IMPORTANT THEY
STICK AROUND AND PAY WHAT IS
THEIR OBLIGATION AND
RESPONSIBILITY.
>> HAVE THEY FINALLY BEEN
BACKED INTO A CORNER IN A
SENSE HERE.
BECAUSE WE KEEP HEARING FROM
REPORTERS.
WE KEEP HEARING FROM THE
GOVERNMENT OFFICIALS DOWN
THERE.
WE KEEP HEARING FROM
EVERYONE HOW THEY ARE IN
CONTROL.
THE PRESIDENT MAY BE DOWN
THERE TODAY, BUT THERE IS
THE FIRST TIME THAT HE HAS
REALLY SHOWN CONCRETE
LEADERSHIP BY STAYING
OVERNIGHT, BY REALLY
IMMERSING HIMSELF IN IT.
BY DOING THE FIRST OVAL
ADDRESS TOMORROW.
IS HE REALLY TAKING CONTROL
OR ARE THEY STILL GOING TO
BE DRIVING OVER THIS.
>> WE SAW THIS IN ALASKA
TOO.
THE COMPANY HAS A MONOPOLY
REALLY ON AVAILABLE
EQUIPMENT AND READY MONEY.
AND THE QUESTION IS TO WHAT
DEGREE THE GOVERNMENT IS
GOING TO BE ABLE TO TAKE
COMMAND-- COMMAND.
OBAMA REALLY INHERITED A
TICKING TIME BOMB BECAUSE
THE PRIOR ADMINISTRATION,
PLURAL, HAD NOT MADE SURE
THAT THE CONTINGENCY PLAN
HAD REAL CONTROL CAPABILITY
FOR THE FEDERAL AND STATE
GOVERNMENT.
THAT OBVIOUSLY IS GOING TO
CHANGE IN THE FUTURE.
BUT NOW THEY'RE TRYING TO
PLAY CATCH-UP.
AND HAVING THE PRESIDENT
THERE REALLY HELPS.
AND IT'S A JAWBONING.
AS JOE WAS SAYING, IT SEEMS
TO ME THAT THE COMPANY IS
GOING TO FEEL OBLIGED TO DO
SOMETHING EVEN THOUGH THE
PENSIONER WAS LIKE THOSE
DIVIDENDS, YOU CANNOT HIDE
THE FACT THAT SOMETHING
TERRIBLE HAS HAPPENED AND
THE COMPANY IS GOING TO BE
HIT.
I'M GUESSING THAT THE
PRESIDENT'S APPEARANCE THERE
WILL BE PART OF THE PR
ATMOSPHERE THAT MAKES B.P.
MAKE CONCESSIONS WITHOUT
HAVING TO BRING THE LAWSUITS
OR DO THE LEGAL MANEUVERS
THAT I TALKED ABOUT.
>> WHERE DO THEY GO FROM
HERE?
THERE IS TALK ABOUT
BANKRUPTCY FILINGS.
IF THIS KEEPS ESCALATING AND
IF A HURRICANE COMES IN AND
REALLY DISRUPTS THE EFFORTS
DOWN THERE, THE CLEANUP
EFFORTS AND CONTAINMENT
EFFORTS, THAT BEEF COSTS
WILL BALLOON OUT OF CONTROL
AND THERE IS A POSSIBILITY
OF BANKRUPTCY.
DO YOU HAVE ANY SENSE HOW
THEY MIGHT NAVIGATE THIS
FINANCIALLY GOING FORWARD?
>> WELL, I DONE THINK
THEY'LL GO BANKRUPT.
I DON'T THINK IT'S IN
ANYONE'S INTEREST FOR THEM
TO GO BANKRUPT.
PRIOR TO THIS BLOWOUT THERE
ARE THEIR FREE CASH FLOW WAS
WELL IN EXCESS OF $50
BILLION A YEAR AND INCOME
WAS $20 BILLION.
THE REAL QUESTION IS WHAT
WILL THEY BE ABLE TO DO
GOING FORWARD.
HOW MUCH IS THERE FRANCHISE
IMPAIRED.
REMEMBER, ASSUMING WE'RE
GOING TO DO DRILLING AGAIN,
AND I HOPE WE DO, I HOPE
THIS DOESN'T END DRILLING
OFFSHORE, I THINK THAT WOULD
MAKE OTHER PEOPLE PAY FOR
B.P.'S MISTAKE.
>> AREN'T THEY TOO POWERFUL
TO BE IMPAIRED AT ALL.
AND I COME AT THIS AT THE
PERSPECTIVE, I HAVE BEEN
COVERING NEWS FOR SO LONG
THAT THE PUBLIC REALLY HAS A
SHORT MEMORY.
LOOK AT EXXON VALDEZ, A
WHOLE GENERATION DOESN'T
KNOW WHAT HAPPENED THERE.
>> THIS WON'T FORGOT
EVERYONE.
AND I THINK THEY MAY GO
BANKRUPT.
THE WAY I ESTIMATE IT, EXXON
PAID OUT BETWEEN $4 AND 5
BILLION.
DO YOU KNOW HOW MANY PEOPLE
LIVE ALONG THE COAST OF
ALASKA?
>> I DON'T.
>> BETWEEN 30 AND 40,000
PEOPLE.
DO YOU KNOW HOW MANY PEOPLE
LIVE IN THE IMPACTED AREAS
OF THE GULF.
>> CONSIDERLY MORE.
>> BETWEEN 4 AND 6.5 MILLION
DEPENDING ON HOW FAR AROUND
FLORIDA IT GOES.
A HUNDRED TIMES LARGER.
THE ECONOMY IS A GREAT DEAL
BIGGER.
AND IT'S A HELL OF A LOT
HARDER TO CLEAN A MARSH THAN
A ROCKY LEDGE.
SO MY THOUGHT IS THAT $25
BILLION IS A BARE MINIMUM
THAT B.P. WILL FACE.
BUT THEY WILL TRY, REMEMBER,
TO TRY TO FOB OFF A LOT ON
TRANSOCEAN AND ON
HALLIBURTON.
THEIR CONTRIBUTION
PROVISIONS.
>> THERE GOING TO BE A FIGHT
ABOUT THE INDEMNIFICATION
CONTRACTS AND STUFF LIKE
THAT.
BUT IF B.P. ENDS UP BEING
HIT FROM ALL OF THE DAMAGES
FROM THIS BLOWOUT, I'M
GUESSING THAT $25 BILLION IS
A VERY SMALL NUMBER.
>> JOE WHAT IS THE LEGACY OF
EXXON VALDEZ IN TERMS OF HOW
INDUSTRY OPERATES NOW.
BECAUSE WE'RE ALSO HEARING
HOW MANY SHORTCUTS B.P. WAS
TAKING.
HOW WE GOT TO THIS POINT
NOW.
>> WELL, IF THERE IS ANY
SILVER LINING ON SOMETHING
AS TRAGIC AS THIS IS THAT IT,
I AS A CEO SIT THERE AND SAY
THAT CONTINGENCY PLANNING IS
OUR NUMBER ONE PRIORITY.
>> WAS IT NOT A NUMBER ONE
PRIORITY, DO YOU THINK FOR
BEP BOOEP GOING INTO THIS.
>> I THINK ALL BUSINESSES
THERE COMES SOME COMPLACENCY.
WHAT WE'VE SEEN WHETHER IT
IS IN THE FINANCIAL CRISIS
OR WHAT HAS JUST HAPPENED
HERE, WE'RE NOT VERY GOOD AS
ESTIMATES WHAT IS CALLED
TAIL RISK ON WALL STREET.
AND WE PRESCRIBE TOO MANY
THINGS AS ONCE IN A THOUSAND
YEAR EVENTS.
AND THEY REALLY AREN'T.
AND WE TRAIN EVERY DAY.
BECAUSE WE'RE HANDLING
250,000 BARRELS, BRINGING IN
TO OIL TERMINALS HERE IN
BOSTON.
WE HANDLE VESSEL LOADS OF
OIL.
I THINK WE TRAIN OUR PEOPLE
VERY WELL.
BUT HAVING ALL OUR PEOPLE
SEE SOMETHING LIKE THIS IS
BETTER THAN ANY TRAINING
MANUAL TO SAY PAY ATTENTION,
THESE THINGS ARE REAL AND
CROSS EVERY T, DOT EVERY I.
AND BE A GOOD STUART.
>> NEXT STEPS ARE COMMITTEE
HEARINGS LATER THIS WEEK AND
OF COURSE THE PRESIDENT'S
ADDRESS.
LIKE I SAID, THE FIRST
ADDRESS FROM THE OVAL OFFICE
WHICH IS PRETTY MAJOR COMING
TOMORROW NIGHT.
JOE PETROWSKI, ZYGMUNT
PLATER, THANK YOU VERY MUCH
FOR COMING.
>> THANK YOU.
>> ONCOMING UP NEXT.