Oil Spill
President Obama and the American people are very angry. They are watching more or less helpless as one of the most important and interesting Eco systems is damaged and part destroyed by events unfolding under the sea which should not be taking place and should never have happened. There are rumours of corners being cut and regulations ignored, even bribes.
At the centre of the storm is a flagship British company which offers as an excuse for this calamity the unique and untried nature of the strategies in action to cap the oil leak. Nobody has ever had to do this is such deep water. The Americans do not think this is good enough. If BP drills this deep, it should know what to do. Clearly it does not and is learning on the job. Meanwhile there unfolds an oil Chernobyl.
Looming on the horizon is the matter of dividend payments to shareholders. Pension funds are getting jumpy. They should not. If they ran their funds properly, they would have no more than 5% of assets in any one share. Moreover if they valued those assets on a yield, not market basis, they would have enough cushion to cope.
The plain fact of the matter is this. In a modern world various issues vie with each other for primacy of treatment, but among them the environment stands proud above all others. Companies engaged in activities which contain inherent environmental risk are vulnerable to unforeseen consequences and both their directors and their shareholders know this. In a market which could value by measure rather than greed, the price would allow for this.
There is no way B.P can pay dividends whilst this crisis unfolds. When it has shown that it is able to bring the disaster under control and is willing to pay the vast costs and compensation without haggling and quickly, it can resume the dividend stream. Not before. This will be another salutary lesson for the City, which has shown in the last two years that it has much to learn. It is also a lesson for the American people. If they used less energy, it would not be necessary to drill this deep in the first place.