BP's checkmate move is a doozy

Is there anyone who didn’t see the headline in this morning’s New York Times coming? Clifford Krauss’ and John M. Broder’s story “BP Says Curb on Drilling Would Imperil Oil Spill Payouts” is just another one of those “I told you so moments” in BP’s tragedy of errors. Public Citizen warned early on that the Obama administration’s proposal that would allow BP to use its Gulf of Mexico drilling operations as collateral for its $20 billion victims compensation fund was a terrible idea. For one, it sets up an inherent conflict in interest because it makes the administration a defacto partner in BP’s gulf operations. Public Citizen President Robert Weissman and Tyson Slocum, director of our Energy Program, laid it out in Politico:

BP’s scheme enlists the government as a virtual partner in its Gulf oil and gas production, and the company uses that partnership to shield itself from punishment. It is likely to give the government a financial incentive to become an even bigger booster of offshore oil drilling in the Gulf — the Minerals Management Service’s fatal flaw at the time of the BP disaster. BP seems to have structured the fund largely to limit its liability in civil cases and escape accountability.

And now, BP provides us case in point by saying in the NYT article that any move by federal regulators to limit new drilling permits in the gulf could have an impact on its ability to pay all the damages caused by its recklessness and negligence.

“If we are unable to keep those fields going, that is going to have a substantial impact on our cash flow,” said David Nagel, BP’s executive vice president for BP America, in an interview. That, he added, “makes it harder for us to fund things, fund these programs.”

BP, of course, had $239 billion in sales last year and is worth, even after this summer’s disaster, $100 billion. Someone please pass us a tissue.

Joe Newman is deputy director of communications for Public Citizen. Follow him on twitter @cosmicsmudge.