Friday, May 7, 2010

Quotes Of Note: The Oil Spill

1. Amid calls to establish new regulatory, safety and technical requirements for off-shore drilling, Jack Gerard, President of the American Petroleum Institute said "What's most important is that we get the facts before we move. We should not legislate in a vacuum based on speculation."

Mr. Gerard, the last time I checked there were 5,000 barrels of oil a day spilling into your vacuum. The only speculation going on here is by oil companies, which bet that the economic risk of cutting corners on safety would be offset by the value of the oil found.

The point, Mr. Gerard, is that oil companies should get the facts before they drill, because they are not drilling in a vacuum.

2. BP PLC Chief Executive Tony Hayward has accepted full responsibility for cleaning up the oil spill in the Gulf of Texas and has said that BP will honor all legitimate claims for damages. Says BP spokesman Andrew Gowers, "When disasters like this occur, corporations can make things worse by appearing dilatory, obfuscatory or legalistic in their response."

Mr. Gowers, using words like "dilatory," "obfuscatory" and "legalistic" is the best way to make a company appear dilatory, obfuscatory and legalistic. But I have a question.

Mr. Hayward says BP will pay all "legitimate" claims. The lawyer in me senses some wiggle room.

Currently, BP's liability under law for damages from the spill are capped at $75 million. Efforts are being made to increase that cap to $10 billion. But why? If BP is going to pay all legitimate claims, why worry about the cap? Unless any damages claims in excess of $75 million in the aggregate will be deemed illegitimate by Mr. Hayward.

Or Maybe Mr. Hayward is just reserving his right to allow BPs corporate lawyers to force anyone seeking damages to engage on costly litigation in order to prove their claim is legitimate, forcing devastated business owners to weigh the cost of litigation against the damages sought.

From where I sit, neither Mr. Hayward or Mr. Gerard are doing a whole lot to improve the image of BP PLC. Why not just say "My bad, I'll clean it up, just send me the bill"? That's something everyone can understand.

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