That probably will not be the end of the bad news for BP; rather, this seems like the midpoint
Try this thought experiment: there is a massive oil spill off the Louisiana coastline. Almost 5m barrels of oil are spewed into the Gulf of Mexico ? causing the deaths of 11 workers and natural devastation. It also leads to a fishing ban in a region reliant on its fishing industries, and to a slump in tourism to what was once a popular holiday destination. After all this, the US government decides to do ... nothing. What do you think is the public response?
As you will have spotted, the disaster outlined above is a nutshell description of the Deepwater Horizon spill ? up to the bit about Washington doing nothing. In the aftermath of the crisis, Barack Obama launched a presidential commission to aid all the other attempts to ascertain exactly how it happened and why the clean-up operation had so many false starts. And this week, the department of justice launched a civil lawsuit against BP and eight of its partner companies ? and announced it was "making progress" on a criminal investigation, too. Yet the civil claim is already pretty serious for BP. The oil giant has already put aside nearly $40bn to cover costs incurred by Deepwater Horizon; the government lawsuit could add another $20bn to that sum. No wonder BP shares took a dive on the news.
That probably will not be the end of the bad news for BP; rather, this seems like the midpoint, with plenty more grim stuff to come as prosecutors try and build a case. And while Transocean and others also have their names on the suit, be in no doubt that the contractors will try their hardest to pin this one on BP. This may not, in the end, lead to a criminal suit, but it is quite possible that the oil giant will have to put aside more money for a legal rainy day ? which means selling more of its assets and bits of its business. We have not seen the end of the humbling of BP. But perhaps the most interesting aspect of this case is the point it illustrates about the differences between American regulators and their counterparts in Britain.
The US has the reputation for free-market zealotry, but when a BP or a Lehman Brothers screws up at public expense repercussions are quick ? and dramatic. There are congressional hearings, big legal investigations. Compare that to the treatment by the financial services authority of the disgraced high-street bank RBS. Here we have one of the most spectacular corporate collapses in history, one that requires a lot of money from the taxpayer ? yet Adair Turner has yet to publish his inquiry into the debacle for confidentiality reasons. This is as similar to the US regulatory approach as a warm handshake is to a mauling by a dog. Our regulators should not be on such cosy terms with their subjects.
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