Why the US Government should bail out BP

Let me start by saying I was opposed to the bailouts. In particular I think the rescues of both General Motors and several financial institutions were completely unnecessary to the stabilization of the economy. They were purely political maneuvers, and the repercussions have yet to fully materialize.

Nevertheless, the nation is now dealing with a debacle that could very well eclipse the financial crisis. Oil spews from the Gulf of Mexico in incalculable amounts. Neither BP, their supporters, nor independent scientific study can put a precise figure on it. Plumes of crude meander at depths the public will only ever see via National Geographic specials, and samples are now being found hundreds of miles away from the well. How far will the oil be spread another month from now? And where will it land? Nobody knows, and that uncertainty cannot be hedged against.

Aquatic life, gone. Bird life, gone. Beaches ruined. Property values plummet (further). Nobody has even thought about untold brackish and freshwater interiors, many of which support life that migrates from sea to river and back. Mixing and churning. Eventually pouring through faucets.

Matt Simmons of energy investment bank Simmons & Co surmises BP doesn’t have enough cash to clean up the mess, and will soon file for bankruptcy. It’s not an unlikely scenario, and if it comes to fruition I believe the US Government should be ready to step in. The reasoning is simple.

If BP files and creditors scoop up what’s left, they won’t be taking BP’s cleanup obligations with them. In other words, a cleanup might not happen. Assuming that, the government would then take over the effort. Disregarding how well that might go, it means taxpayer dollars and/or additional debt, and there is zero hope of recovering the cost. But if the government were to step in, either providing new equity after Chapter 11 proceedings begin or buying BP debt as it tanks (which it is already doing) and converting thereafter, the new owner stands a chance of recovering their investment somewhere down the road.

Further, the US owning an oil company might not be such a bad thing. The government could use BP (aptly renamed “USP”) to develop model policies and procedures for future operation of all such companies doing business in America. Strategic petroleum reserves could be managed from within, accounting and bureaucracy whittled away. I’m not a foreign policy expert, but I suspect having a hand in BP may have some additional advantages when dealing with entities such as OPEC too.

It’s just a thought, but I am curious how others feel about the concept. In other words, if you’ve got an idea, let’s hear it.

MG signing off (to quit looking at pictures of dying pelicans)


Rob says:

Interesting theory!

Whatever happens, we’re screwed. There isn’t enough money in the world to fix what BP did. And if you trust the US Gov to do better, you have higher expectations than me. Maybe it’s time that we figured out that miles of gas guzzling vehicles with one passenger in each vehicle in every city every day is not a good idea. Tax gasoline $3 a gallon so that we are paying the same as everyone else in the world (Saudis and Venezuelans excluded). There might be a sudden interest in efficient and alternative vehicles and deep well drilling might not be so important.
BP is not the only one to blame. All of us who waste finite resources are also culpable.

Bjorn says:

It would be worth it just to see Glen Beck’s head explode.

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