Obama Seeks BP Escrow Account to Cover Oil Claims

June 14, 2010

President Barack Obama will press BP executives this week to set up an escrow account to pay damage claims by individuals and businesses hurt by the Gulf of Mexico oil spill disaster.

The move comes as Obama, who will address the nation about the spill Tuesday night, faces questions on his handling of the disaster, which was in its 55th day. Millions of gallons of oil have poured into the Gulf since an April 20 offshore rig blast killed 11 workers and blew out the well.

Obama also will call for an independent panel to administer the payments when he meets Chairman Carl-Henric Svanberg and other BP officials Wednesday at the White House.

“We want to make sure that money is escrowed for the legitimate claims,” White House adviser David Axelrod told NBC’s “Meet the Press,” adding that the money would be independently administered to ensure it is disbursed in a timely fashion.

Fifty-four Democratic Senators want BP to put an initial $20 billion payment into an independently-managed account to cover compensation for victims and for clean up.

“Establishment of this account would serve as an act of good faith and as a first step toward ensuring that there will be no delay or attempt to evade responsibility for damages,” the senators wrote in a letter to BP Chief Executive Tony Hayward. They demanded a response by June 18.

On Monday, Obama will make his fourth trip to the Gulf, visiting Alabama, Florida and Mississippi, and will be briefed by U.S. Coast Guard Admiral Thad Allen, his point person on relief efforts. He will stay overnight there for the first time since then and return to Washington Tuesday and address the nation at 8 p.m.

Robert Coast from Mobile, Alabama, said, “This is Obama’s Katrina,” referring to Hurricane Katrina, where President George W. Bush was criticized for his slow response to the storm that devastated New Orleans.

“He’s way too late,” he said. “He should have been here weeks ago if he wants to show his support.”

The New York Times was strongly critical of Obama’s leadership on the oil spill in an editorial on Sunday.

“Americans need to know that Mr. Obama, whose coolness can seem like detachment, is engaged,” the Times wrote, noting the spill raised questions about his “competence and leadership.”

Some Republican opponents questioned the logic of the president making a televised prime-time speech to the country before meeting with top BP executives on Wednesday.

“That’s a little surprising to me,” Republican Governor Haley Barbour of Mississippi told CBS’s “Face the Nation” program about the timing of Obama’s speech. “If I were, as governor, trying to make sure somebody does something, I would meet with them before I went on television.”

The Obama administration has delayed plans to permit new offshore drilling as a result of the spill. The crisis has put Obama on the defensive and distracted his team from the domestic agenda — a new energy policy, reform of Wall Street and bolstering a struggling American economy.

Mark Tayamen, a Louisiana shrimper idled by the spill, said there is little Obama can say to make him feel better.

“This is our livelihood. It’s where we have fun and teach our kids and grandchildren. There ain’t nothing out there now,” he said in Venice, preparing to take his boat out to rescue oiled birds and animals, thanks to a contract from the U.S. Fish and Wildlife Service.

“There ain’t nothing (Obama) can say. The damage is done.”

People in southern Louisiana are frustrated with BP for the spill but also at Obama’s drilling moratorium because many families have members who work in the oil industry.

The focus on America’s biggest environmental disaster comes ahead of November’s congressional elections in which the Democrats are expected to struggle to keep their majorities in the House and Senate.

U.S. public anger is high as the crisis nears two months and news is marked by images of polluted beaches, oil-covered birds and fishermen anxious about their precarious situation. Democrats want Obama to tap that mood to press for development of alternative energies such as solar and wind power.


The United States and Britain played down diplomatic tensions over the crisis. British Foreign Secretary William Hague said it was up to the British energy giant, under pressure in the United States to suspend its stock dividend to help pay for the damage, to make that decision alone.

A source told Reuters Sunday the company was unlikely to cancel the dividend, currently valued at about $10.5 billion annually.

The source told Reuters on Sunday that options being considered were deferring the dividend, paying it in shares or paying into a ring-fenced account until liabilities are known and that the issue probably would not be decided this week.

BP placed a containment cap on its blown out seabed well this month after a series of failures to stem the flow but oil continues to gush from it, polluting beaches and wildlife habitats, killing marine life and damaging tourism and fishing.

The partly contained leak is estimated to flow at up to 40,000 barrels (1.68 million gallons) a day.

U.S. Coast Guard Rear Admiral James Watson told BP in a June 11 letter made public Saturday that its containment plan did not go far enough or include enough back-up measures in the event of equipment failure or other problems. He gave the company two days to come up with a fix.

Thad Allen, the U.S. Coast Guard admiral heading the federal relief effort, told CBS he expects BP to present a plan to increase oil capture later on Sunday.

U.S. lawmakers have called on Obama to take a harder line with BP, which has lost tens of billions of dollars in market value so far. But senior British officials have warned about the economic impact of destabilizing a company that is a staple holding of British pension funds.

In a phone call on Saturday, Obama told British Prime Minister David Cameron he had no interest in undermining the value of BP and the two leaders played down tensions over the oil spill and reaffirmed close ties.

Cameron, who took office last month, is under pressure in Britain to do more to protect a company that accounts for 12 percent of all dividends paid by British companies.

On Tuesday, lawmakers hold a hearing in Washington with all the big oil companies including the head of BP’s U.S. operation. On Thursday BP’s Hayward, who is expected to attend Wednesday’s White House meeting, will testify to the U.S. House Energy and Commerce subcommittee.

BP expects its cost for the Gulf oil clean-up to be $3 billion to $6 billion. Many analysts expect a higher cost.

States along the Gulf coast are increasingly demanding financial compensation from BP as the spill spreads along their shorelines, slamming tourism and fishing industries.

(Additional reporting by Adrian Croft and Julie Crust in London and Jeffrey Jones in Buras, Louisiana; Writing by Mark Egan; Editing by Bill Trott and Philip Barbara)

Was this article valuable?

Here are more articles you may enjoy.