DAY 63 In The Gulf: CBS News Reports “GAPING HOLES” In Obama Speech – BP Declines Payment Of Moratorium Costs

Fact Check: Gaping Holes In Obama’s BP Speech

President Vows To Make BP Pay, But There Are No Guarantees

In assuring Americans that BP won’t control the compensation fund for Gulf oil spill recovery, President Barack Obama failed to mention that the government won’t control it, either.

That means it’s anyone’s guess whether the government can, in fact, make BP pay all costs related to the spill.

Obama aimed high in his prime-time Oval Office address Tuesday night — perhaps higher than the facts support and history teaches — as he vowed to restore livelihoods and nature from the still-unfolding calamity in the Gulf of Mexico.

A look at some of his statements and how they compare with those facts:

Can The Government Actually Make BP Pay?

OBAMA: “We will make BP pay for the damage their company has caused and we will do whatever’s necessary to help the Gulf Coast and its people recover from this tragedy. … Tomorrow, I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company’s recklessness. And this fund will not be controlled by BP. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party.”

THE FACTS: An independent arbiter is no more bound to the government’s wishes than an oil company’s. In that sense, there is no certainty BP will be forced to make the Gulf economy whole again or that taxpayers are off the hook for the myriad costs associated with the spill or cleanup. The government can certainly press for that, using legislative and legal tools. But there are no guarantees and the past is not reassuring.

It took 20 years to sort through liability after the Exxon Valdez oil spill in Alaska, and in the end, punitive damages were slashed by the courts to about $500 million from $2.5 billion. Many people who had lost their livelihoods in the spill died without ever seeing a check.

Will BP Be Able To Contain Most Of The Spill Soon?

OBAMA: “In the coming days and weeks, these efforts should capture up to 90 percent of the oil leaking out of the well.”

THE FACTS: BP and the administration contend that if all goes as planned, they should be able to contain nearly 90 percent of the worst-case oil flow. But that’s a big “if.” So far, little has gone as planned in the various remedies attempted to shut off or contain the flow. Possibly as much as 60,000 barrels a day is escaping. BP would need to nearly triple its recovery rate to reach the target.

CHECKING THE FACT CHECKERS: Will they contain most of the oil soon? Will they have an accurate estimate of how much oil is flowing into the gulf? 

Will Drilling A Relief Well Make Things Better Or Worse?

OBAMA: Temporary measures will capture leaking oil “until the company finishes drilling a relief well later in the summer that is expected to stop the leak completely.”

THE FACTS: That’s the hope, but experts say the relief well runs the same risks that caused the original well to blow out. It potentially could create a worse spill if engineers were to accidentally damage the existing well or tear a hole in the undersea oil reservoir.

CHECKING THE FACT CHECKERS: The Government is reporting that the relief well is “within 200 yards of the existing well, and while those reports are “accurate” , there is in fact, over 2000 yards left to drill before the “relief well” will intersect the original well.  At present the relief well is 200 yards away, 200 yards horizontally, from the original well. Unfortunately, the relief well is not being drilled “horizontally”. When the relief well was first started on the floor of the Gulf, the well was just over 200 meters away from the original “well head”.


Has The Federal Government Really Been Charge?

OBAMA: “From the very beginning of this crisis, the federal government has been in charge of the largest environmental cleanup effort in our nation’s history.”

THE FACTS: Early on, the government established a command center and put Coast Guard Adm. Thad Allen in charge of coordinating the overall spill response. But officials also repeatedly have emphasized that BP was “responsible” and they have relied heavily on BP in making decisions from hiring cleanup workers to what oil dispersing chemicals to use. Local officials in the Gulf region have complained that often they don’t know who’s in charge — the government or BP.

What Took So Long To Implement Preventative Measures?

OBAMA: “We have approved the construction of new barrier islands in Louisiana to try and stop the oil before it reaches the shore.”

THE FACTS: Louisiana Gov. Bobby Jindal and local officials pleaded for weeks with the Army Corps of Engineers and the spill response command for permission to build about 40 miles of sand berms along the barrier islands.

State officials applied for an emergency permit to build the berms May 11, but as days went by Jindal became increasingly angry at federal inaction. The White House finally agreed to a portion of the berm plan on June 2. BP then agreed to pay for the project.

The corps was worried that in some cases such a move would alter tides and drive oil into new areas and produce more harm than good.

Will Deepwater Drilling Continue?

OBAMA: “Already, I have issued a six-month moratorium on deepwater drilling. I know this creates difficulty for the people who work on these rigs, but for the sake of their safety and for the sake of the entire region, we need to know the facts before we allow deepwater drilling to continue.” 

Oil Spill - Note Proximity Of Relief Wells - Click To Enlarge

THE FACTS: Obama issued a six-month moratorium on new permits for deepwater drilling but production continues from existing deepwater wells.

CHECKING THE FACT CHECKERS:  BP will not pay for all of the costs  associated with Obama’s moratorium, costs estimated at $300 billion dollars by the industry. $300 billion dollars. BP is working to make a $5 billion dollar down payment on a $20 billion dollar claim fund while Obama is making “executive decisions that will cost America $300 billion dollars. During the negotiations BP agreed to contribute $100 million dollars towards the costs associated with the moratorium.  Industry experts have stated that the cost to rig workers in “lost wages” alone will total $330 million doallrs a month for the duration of the moratorium. currently scheduled to last 6 months.

The Wall Street Journal is Reporting: 

“Ms. Gorelick (BP ‘s Attorney) told White House negotiators their legal position mandating BP’s assistance to displaced workers was weak. White House officials conceded such workers may not be able to qualify for direct assistance under the $20 billion fund, a White House official in the room said.

A BP negotiator said the White House position was “half-hearted” and its negotiators quickly gave up. “You won’t find many lawyers who will say when the government imposes a moratorium, it’s the company’s obligation to help the workers impacted,” the BP adviser said.

The BP side was so confident that Ms. Gorelick suggested the two sides allow idled workers submit claims to Mr. Feinberg and let a court to decide whether the company was liable. 

BP’s negotiators agreed to voluntarily add $100 million as “a goodwill gesture,” one adviser said. The two sides didn’t agree how that money would be distributed.

BP used the word “fund” to describe the separate pot of money. The White House called it a foundation. As of Friday afternoon, they still had a long way to go to structure the fund, said a member of the team working on final details.

Surface View: Relief Wells Proximity to Discoverer Enterprise Oil Recovery Ship


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