The BP Gulf Disaster

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I don't know, at least around here the coverage has been minimal the last few weeks. The attention span of the public is very short and I am afraid that except for the people struck directly by the disaster it will just fade away.

 

I think the US as a whole will be paying attention to it for a while. The entire gulf coast is a major region for us. Internationally, I can understand the story fading, though.

 

...And I thought I was only kidding with Barmy:

http://www.msnbc.msn.com/id/3036789/vp/38242148#38242148

 

I suspect this is more conspiracy-theory than fact, but we'll see.

 

Everybody has a price.

 

What a surprise:

Does BP understand how to manage public relations at all?

http://www.msnbc.msn.com/id/38256677/ns/world_news-africa/

I "suspect" it pretty much sucks to be a conservative supporter of BP (and big oil) on this issue - caught between "Scylla and Charybdis."

 

Chandos, please, get over your conservative-hate. It's insulting to you as well as all the conservatives on this board. I'm no fan of BP, I'm not beholden to big oil, and I'm not comprimising my values on this.

I said it sounded more like conspiracy theory than fact because, well, it did. A multinational corporation lobbies for the release of a not-so-ill terrorist so it can curry favor with his home government and start raping their environment?

Of course, now more info's come out, and I guess even conspiracy theories have some basis in fact. BP is saying they petitioned for a 'transfer', not a release, and the UK is saying the decision for a compassionate release was based on reports from several doctors, and only that. Suddenly, conspiracy theory is looking more and more like conspiracy, and the UK government may be involved up to their hips.

 

I don't "hate" anyone.

I didn't say YOU were, I only responded to your post. And it wasn't all "conservatives" - only those conservatives who were "apologetic." I used the adjective "supporter." I didn't know if you were one of those or not, but you seem highly sensitive on the remark.

Really?

I wouldn't know what your values are, but the point is meaningless, since you claim you are not an apologist for BP, or big oil. Btw, there are many conservatives who despise the big oil companies, you just don't find them much in the oil patch (which includes my area, which is loaded with BP apologists).

But just a conspiracy theory?

Reagrdless, there will be a Senate investigation starting this month over this "conspiracy theory."

http://www.telegraph.co.uk/finance/...transfer-scheme-but-not-Lockerbie-bomber.html

 

Maybe it's because you made it in direct response (and mimicry) of one of my own comments. Sorry, but that really made it seem like it was aimed at me in particular.

Umm, yes. Are you kidding? I've seen Hollywood movies with more believable plots that that.

You'll also notice I retracted that statement when the evidence came out. With nothing but a coincidental timeline, it really does sound like a conspiracy theory. With lobbying funds and a denialist confession from BP, it sounds like a lot more than that now. Again, you may notice I already said that.

 

I understand, yes, it was my error for not pointing that out. Btw, the doctor, as I understand it, was paid by the Lybian government. If you have better info than me on the doctor's background, please post it - I would like to see more about this doctor/Lybian connection, if it really exists.

 

The Wall Street Journal is reporting it as fact:

So I suspect it is. The more I hear about this, though, the less I see BP's involvement in it. Now it's being said that the extent of their involvement was pressing for 'an agreement' without concern for the form the agreement takes.

Still, I'd like to hear more.

 

I can tell I haven't visited the Alleys for a few weeks.
I opposed Gulf drilling even before I could vote. Weather patterns in the Gulf of Mexico are unpredictable on a good day, and hurricane history there is quite colorful. That alone makes a recipe for disaster, and there have been previous disasters, both weather generated and human in the Gulf rigs before this mess.
And yes, I am fully willing to blame BP, as they are the company ultimately responsible for the rig.
I also blame Congress for stripping the rights of regulators to shut down unsafe rigs. The rules are already in place, but unable to be enforced since no-one has been given the authority to do so.

 

I just found out abot this today, so please excuse me for posting old news, but I find this quite annoying. Apparently, BP wants to make sure that for all the work it did on the spill, it gets a 10 billion USD tax credit. Hey, why not bill the state (read: taxpayer) for some of that fine-quality work BP did to make sure the situation was adequately and timely handled!

Spoiler

BP eyes $10B tax credit over Gulf oil spill response

As BP announced a $17 billion second-quarter loss, it said it would incur a charge of $32 billion from the Gulf oil spill response -- and thus claim a nearly $10 billion tax credit.
By RUSS BRITT
MarketWatch

LOS ANGELES -- Oil giant BP PLC will reduce its contribution to U.S. coffers by roughly $10 billion due to a tax credit the company is claiming it incurred from the Gulf of Mexico oil spill.

BP said Tuesday that it is incurring a charge of $32.2 billion from the Gulf response, and as such, it is claiming a $9.9 billion taxation credit.

Asked in a conference call Tuesday about whether the company had discussed the tax credit with President Barack Obama's administration, outgoing BP Chief Executive Tony Hayward said, ``We have followed the IRS regulations as they're currently written.''

White House officials weren't immediately available for comment. The Internal Revenue Service said it's not allowed under federal law to discuss individual taxpayer issues.

But the issue may raise red flags among federal officials, particularly in light of recent efforts by various other entities that have settled with the U.S.

One notable example is Goldman Sachs Group Inc., which agreed last month not to seek deductions for $535 million in penalties as part of its settlement with the Securities and Exchange Commission. The SEC had sued Goldman Sachs, alleging that it hid critical information from investors in mortgage securities.

SEC officials had come under fire from Congress for previously allowing tax deductions from penalties in other cases.

Another wrinkle, though, is that it appears no other entity in hot water with the U.S. has incurred costs on the scale that BP has. The company has agreed to put $20 billion in an escrow account to pay claims for oil-spill damages.

STICKY SITUATION

But half of that may now come out of government coffers, and it could prove to be embarrassing for the Obama administration, presuming the president and Hayward did not discuss the issue at a recent meeting, said David Desser, managing director of Juris Capital, which invests in corporate litigation. It was after that meeting that Hayward announced the $20 billion escrow fund.

``You would have thought in advance of that meeting, they would have thought of all of those issues,'' Desser said. ``How do you un-ring that bell?''

``It looks to me like maybe the administration goofed here,'' he added.

Robert Yetman, associate professor at the University of California-Davis, graduate school of management, said the critical question is whether the discussion between Obama and Hayward constitutes a ``settlement.'' In the Goldman Sachs case, the company was sued by the SEC, but no formal legal action has yet been taken by the federal government against BP.

BP UNDER PRESSURE

Another key difference is that Goldman Sachs didn't really need the tax break, whereas BP's bottom line is under severe pressure. BP plans to shed a number of assets and reported a $17 billion second-quarter loss on Tuesday.

``BP is a little bit under the gun here,'' Yetman said, later adding: ``I don't know how they're going to play it, and I don't know how the public is going to respond. But there are certainly differences.''

BP's rogue well sent oil rushing into Gulf waters from a mile below the ocean's surface for three months before the company was able to cap it. BP is in the process of drilling a relief well to seal the leak for good.

While the spill has taken a toll on local economies throughout the Gulf region, it also has cost the company.

BP confirmed that Hayward would step down as CEO and be nominated as a nonexecutive director at BP's Russian joint venture, and American Robert Dudley would take over. Dudley now heads the cleanup operation.

COMMITMENT

Dudley, BP PLC's first ever non-British chief executive, pledged to remain committed to the Gulf of Mexico region even after the blown-out well is sealed, The Associated Press reported. ``There's no question we are going to learn things from this investigation of the incident,'' Dudley said.

BP Chairman Carl-Henric Svanberg echoed that during a webcast presentation on the company's earnings, The AP reported. He told investors that BP will change as a result of the April 20 oil rig explosion that killed 11. ``We are taking a hard look at ourselves, what we do and how we do it,'' he said.

But he added that BP was determined to restore value to shareholders, after a 35 percent, or $60 billion, drop in market value to around $116 billion since the explosion.

Svanberg said BP's priority was to stop the leak permanently, then clean up spoiled waters and beaches and compensate people whose livelihoods have been lost.

Hayward expressed his condolences over the workers killed, The AP reported.

``The Gulf of Mexico explosion was a terrible tragedy for which -- as the man in charge of BP when it happened -- I will always feel a deep responsibility, regardless of where blame is ultimately found to lie,'' he said.

Read more: http://www.miamiherald.com/2010/07/28/1749344/bp-eyes-10b-tax-credit-over-gulf.html#ixzz0wl7w38EJ

 

This guy sheds some more light on the subject. They aren't actually getting a 'tax credit' as I understand it, they're just writing off their losses as lost profit (i.e. they're reducing the amount of profit they're claiming by the amount they spent on this). That's not only perfectly legitimate, it's flat out logical.

 

If they are putting it as expenses that bring down the overall profit line, cool. If they are going to deduct it out of their taxes on a more preferential rate, however - for all I know there may be a loophole like that for environmental cleanup or a similar article - that's not right imo. I'm not too familiar with the tax credit mechanic - is this something in addition to the simply lower tax you pay due to having lower profits?

Assuming your guy is right and it's not some accounting trick (sorry ) accept my apologies. However, I can't help but wonder if BP shouldn't start putting a "before taxes" disclaimer every time they talk about the 20 billion USD compensation fund .

 

My guess (as a tax accountant) is that they are just deducting the expenses. I am not aware of any type of tax credit that would apply in this situation. However, all corporations figure their income the same way and all are entitled to deduct their deductible expenses. Without some sort of legislation making the expenses non-deductible they are doing the correct thing (and I'm sure that the legislation would be found unconstitutional)

 

And it's a rule for all corporations - this is not special treatment for BP.

 

Hey, it's not a matter of BP doing anything illegal. However, isn't there a tax credit where a company has its taxes to be lowered due to losses sustained in other years, or due to participating in environmental, charity or other socially-friendly initiatives? I checked a few sites and if I understand it right, you can get a tax credit for oil cleanup.

Also, afaik the 32 billion figure also includes projected future expenses, which may be reduced or increased as things go. I suppose that's also standard procedure - applying it as a loss now despite not all of those funds having actually been spent? Anyway, TGS, you appear to be in the right with your assessment as per http://op.bna.com/dt.nsf/id/egrr-889r36/$File/crs.pb.report.pdf . The only comment I have is that as far as I understand, you can't claim fines from the government as a tax-deductible expense, and I'm not sure if the 32 Billion total doesn't include some of them.

 

You're right about the fines - those aren't business expenses, but they will reduce the company's profit for the year, and typically, you're taxed on your profits.

 

I'm not sure about the US, but in Canada, fines levied by any body with statutory authority aren't tax deductible.

Again, in Canada, it's not really a tax credit, but losses from other years, and charitable donations, are deductible to the extent of current year profits, subject to certain restictions. I believe the rules in the US are similar.