Go to the Globe and Mail homepage

Jump to main navigationJump to main content

U.S. President Barack Obama speaks as he delivers the commencement speech for Kalamazoo Central High School at Western Michigan University arena in Kalamazoo, Michigan. (MANDEL NGAN/MANDEL NGAN/AFP/Getty Image)
U.S. President Barack Obama speaks as he delivers the commencement speech for Kalamazoo Central High School at Western Michigan University arena in Kalamazoo, Michigan. (MANDEL NGAN/MANDEL NGAN/AFP/Getty Image)

Obama turns up heat on BP's Hayward Add to ...

U.S. President Barack Obama is escalating his attack on the chief executive officer of BP rattling investors already battered by the oil giant's trouble containing a massive underwater oil leak.

Mr. Obama made an unusually direct attack on BP chief Tony Hayward during a television interview Tuesday, a move that investors took as a sign the company is likely to face more severe punishment from the U.S. government.

More Related to this Story

BP has suffered a series of setbacks in its efforts to halt the Gulf of Mexico oil spill, including new concerns that the leak is far larger than current estimates suggest and confirmation yesterday from U.S. authorities that underwater clouds of oil have expanded over a huge area.

The company has seen some success, however, in its crude capture efforts, which are now siphoning away nearly 15,000 barrels per day from a leak estimated at anywhere from 12,000 to 25,000 barrels per day.

But Mr. Hayward has faced criticism for several statements that appeared to minimize the environmental seriousness and human tragedy of the disaster.

Asked about those statements, Mr. Obama told NBC News' Today show on Tuesday that Mr. Hayward "wouldn't be working for me after any of those statements."

The President said he has been engaged in a quest for information from experts "so I know whose ass to kick," and reiterated his insistence that BP stop paying its massive $10.5-billion (U.S.) in annual dividend payments.

The comments helped to send BP shares tumbling nearly 6 per cent yesterday, wiping out $6.5-billion in shareholder value. The stock is down $25.80, or 43 per cent, since the Deepwater Horizon oil rig exploded on April 20, erasing $81-billion in shareholder value.

BP, however, recently indicated it is prepared to continue paying its dividend - it is scheduled to pay $2.63-billion in dividends to shareholders on June 21.

Mr. Hayward has in the past rebuffed calls for his resignation, saying he intends to see the spill through to its completion. But his leadership - and the company's performance - came under more intense investor scrutiny yesterday following Mr. Obama's comments, which stirred worries that BP's operations in the U.S. might be targeted.

BP is the largest oil and gas operator in the United States and the Gulf of Mexico. The worry is that "at some point the government forces them to reduce their stake, or puts some type of limitations on their ability to do business," said Phil Weiss, an analyst with Argus Research Corp.

Given that BP "has a history of not being the safest company," it risks being treated as "a repeat offender," Mr. Weiss said.

BP's continued inability to arrest the spill has also led to instability for the company, with investors uncertain what to expect. Estimates on cleanup costs range from $35-billion at Credit Suisse to $8.5-billion at Raymond James, which has not attempted to calculate the potential impact of class-action lawsuits.

"We still don't know what the liability is going to be and probably will not know for a long time. All of those uncertainties represent risk factors," Raymond James analyst Pavel Molchanov said.

And every barrel that escapes creates "that much more of a liability in terms of fines and also in terms of civil lawsuits and settlements down the road," Mr. Molchanov added.

Mr. Obama also signalled that the cost of doing business could rise in the gulf with new safeguards designed to avoid a repeat of the disaster. U.S. authorities will "have to make sure any deep well drilling process out there is in fact fail safe, and oil companies know what they're doing," he told NBC.

Spill estimates







Follow on Twitter: @nvanderklippe

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories