cancel2 2022
Canceled
Vince Cable makes far too much sense to be a politician, he is a rarity in that he actually knows what he is taking about, he won't last long.
By Vince Cable
Last updated at 8:27 PM on 12th June 2010
Vince Cable, Business Secretary (and former MoS columnist), injects some much-needed wisdom into the BP row
BP has experienced the oil industry’s worst nightmare: a marine environmental disaster, with loss of life and widespread, long-lasting damage.
I recall that after I joined Shell, 20 years ago, the chief executive, Loew van Wachem, gave us an insight into what ‘kept him awake at night’.
It was the danger of an environmental disaster like Exxon Valdez that had done serious damage to the world’s largest oil company Exxon (Esso to British motorists) a few years earlier. We now have another.
The growing focus on the politics and economics of the crisis is detracting from what is, in the first instance, an engineering problem.
Nightmare: It is the petroleum engineers, not the politicians and market analysts, who will stop the leak. Pictured, oil-covered pelicans rescued from the Gulf of Mexico spill
Deepwater drilling, in water a mile deep, is a remarkable technological feat and it is the petroleum engineers, not the politicians and market analysts, who will stop the leak and end this disaster.
BP engineers are among the best in the world and other companies are contributing specialists.
Emergency work to stop the leak of up to 40,000 barrels of oil a day has led to 15,000 barrels being collected and there is a good prospect of another major step forward this week.
But the damage already caused is massive, and we need to remember that 11 people died in the original explosion.
All of this is causing greater anger in the United States. Some of that anger has been expressed in strong language. But some is justified.
If a big American oil company had perpetrated the country’s biggest environmental disaster, polluting the beaches from Cornwall to Brighton, you can be sure that the British Parliament and Press would be giving them a seriously hard time.
There would be a fair bit of anti-American rhetoric. And if American politicians then waded in on the side of ‘their’ company, it would make matters worse.That is why the British Government is approaching the issue with tact and care.
The Prime Minister has spoken to President Obama about the disaster and to BP, offered help where we can give it, and will have tried to reduce the political temperature. That is exactly the right approach and it is an approach that is fully supported by BP.
Some of the flag-waving interventions on the British side, like that of former Labour Trade Minister Lord Jones – who should know better – seem calculated to make matters worse.
BP is not in public ownership. It is a genuine multinational company, albeit with headquarters in the UK. It has more American than UK employees. Over half its refining capacity and petrol stations are in the US.
Concern: Crude oil from the Deepwater Horizon oil spill line Orange Beach, Alabama. This disaster will hopefully concentrate minds on long-term oil supply, and alternatives
It has as many US shareholders as British and a substantial chunk of its shares owned by Asian and Arab sovereign wealth funds.
It is still in many ways ‘British’ but it could just as accurately be called an American company.
It is, of course, important to the British economy. It makes a substantial contribution to tax revenue through corporation tax on its group operations as well as from its North Sea activities.
BP is important too for institutional investors, currently accounting for 12 to 13 per cent of dividend payments accruing to UK pension funds.
So I appreciate the concern of British investors that they could take a big hit at a time when the UK economy is struggling to recover.
A more serious, long-term concern is that claims on BP for damages could escalate to unreasonable levels under political pressure.
BP is, however, very strong, with expected cash flow after investment and before dividends expected in 2010 of around $12 billion (£8.24bn) and $20 billion (£13.7bn) expected next year.
The short-term clean-up costs are around $1 billion and most analysts expect future payouts will be around $25billion spread over quite a number of years – providing compensation relates to the costs for which BP is genuinely responsible.
The company also has a healthy balance sheet and can borrow to support its long-term investment if necessary.
Investors should not be panicked by over-excited commentaries which have no regard to the strength of the underlying financial position.
Oil companies are also producing a product which, in Britain and the US, is used by almost everyone and is regarded as one of the essentials of modern living.
Americans, in particular, expect a plentiful supply of affordable oil for their cars and aeroplanes. It makes little sense to turn these who produce it into enemies of society.
What this disaster will – hopefully – do is to concentrate minds on long-term oil supply, and alternatives.
It was only a few months ago that climate change and the need to move to a low-carbon economy was at the centre of political concerns. These issues have not gone away.
BP were once leaders among oil companies in pointing the way to an era Beyond Petroleum.
They will do us all a favour if they start to turn that slogan into reality.
As for the politicians, on both sides of the Atlantic, we should save the flag-waving for the World Cup.
Read more: http://www.dailymail.co.uk/debate/a...roduce-oil-enemies-society.html#ixzz0qlc6M4Qs
By Vince Cable
Last updated at 8:27 PM on 12th June 2010
Vince Cable, Business Secretary (and former MoS columnist), injects some much-needed wisdom into the BP row
BP has experienced the oil industry’s worst nightmare: a marine environmental disaster, with loss of life and widespread, long-lasting damage.
I recall that after I joined Shell, 20 years ago, the chief executive, Loew van Wachem, gave us an insight into what ‘kept him awake at night’.
It was the danger of an environmental disaster like Exxon Valdez that had done serious damage to the world’s largest oil company Exxon (Esso to British motorists) a few years earlier. We now have another.
The growing focus on the politics and economics of the crisis is detracting from what is, in the first instance, an engineering problem.
Nightmare: It is the petroleum engineers, not the politicians and market analysts, who will stop the leak. Pictured, oil-covered pelicans rescued from the Gulf of Mexico spill
Deepwater drilling, in water a mile deep, is a remarkable technological feat and it is the petroleum engineers, not the politicians and market analysts, who will stop the leak and end this disaster.
BP engineers are among the best in the world and other companies are contributing specialists.
Emergency work to stop the leak of up to 40,000 barrels of oil a day has led to 15,000 barrels being collected and there is a good prospect of another major step forward this week.
But the damage already caused is massive, and we need to remember that 11 people died in the original explosion.
All of this is causing greater anger in the United States. Some of that anger has been expressed in strong language. But some is justified.
If a big American oil company had perpetrated the country’s biggest environmental disaster, polluting the beaches from Cornwall to Brighton, you can be sure that the British Parliament and Press would be giving them a seriously hard time.
There would be a fair bit of anti-American rhetoric. And if American politicians then waded in on the side of ‘their’ company, it would make matters worse.That is why the British Government is approaching the issue with tact and care.
The Prime Minister has spoken to President Obama about the disaster and to BP, offered help where we can give it, and will have tried to reduce the political temperature. That is exactly the right approach and it is an approach that is fully supported by BP.
Some of the flag-waving interventions on the British side, like that of former Labour Trade Minister Lord Jones – who should know better – seem calculated to make matters worse.
BP is not in public ownership. It is a genuine multinational company, albeit with headquarters in the UK. It has more American than UK employees. Over half its refining capacity and petrol stations are in the US.
Concern: Crude oil from the Deepwater Horizon oil spill line Orange Beach, Alabama. This disaster will hopefully concentrate minds on long-term oil supply, and alternatives
It has as many US shareholders as British and a substantial chunk of its shares owned by Asian and Arab sovereign wealth funds.
It is still in many ways ‘British’ but it could just as accurately be called an American company.
It is, of course, important to the British economy. It makes a substantial contribution to tax revenue through corporation tax on its group operations as well as from its North Sea activities.
BP is important too for institutional investors, currently accounting for 12 to 13 per cent of dividend payments accruing to UK pension funds.
So I appreciate the concern of British investors that they could take a big hit at a time when the UK economy is struggling to recover.
A more serious, long-term concern is that claims on BP for damages could escalate to unreasonable levels under political pressure.
BP is, however, very strong, with expected cash flow after investment and before dividends expected in 2010 of around $12 billion (£8.24bn) and $20 billion (£13.7bn) expected next year.
The short-term clean-up costs are around $1 billion and most analysts expect future payouts will be around $25billion spread over quite a number of years – providing compensation relates to the costs for which BP is genuinely responsible.
The company also has a healthy balance sheet and can borrow to support its long-term investment if necessary.
Investors should not be panicked by over-excited commentaries which have no regard to the strength of the underlying financial position.
Oil companies are also producing a product which, in Britain and the US, is used by almost everyone and is regarded as one of the essentials of modern living.
Americans, in particular, expect a plentiful supply of affordable oil for their cars and aeroplanes. It makes little sense to turn these who produce it into enemies of society.
What this disaster will – hopefully – do is to concentrate minds on long-term oil supply, and alternatives.
It was only a few months ago that climate change and the need to move to a low-carbon economy was at the centre of political concerns. These issues have not gone away.
BP were once leaders among oil companies in pointing the way to an era Beyond Petroleum.
They will do us all a favour if they start to turn that slogan into reality.
As for the politicians, on both sides of the Atlantic, we should save the flag-waving for the World Cup.
Read more: http://www.dailymail.co.uk/debate/a...roduce-oil-enemies-society.html#ixzz0qlc6M4Qs
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