Judge Fred is the bloke to punish BP over the creation of an unwanted Black Sea

Alf won’t bother doing the maths – his mind is sharp but he does not want to blunt it by boggling over the profusion of zeros that is likely to come into the calculation.

Accordingly he will merely muse in a rhetorical way on what would happen if the penalty imposed by a court in Auckland was extended – on a per litre basis – to punish BP for lubricating the Gulf of Mexico.

And for creating another Black Sea (although the TV pix suggests maybe it is another Red Sea).

Alf’s musings were triggered by a report in the Herald saying:

Three companies found guilty of spilling 10,000 litres of petrol have been ordered to pay the heaviest fine imposed in a regional council case in Auckland.

Petrol Alley Services (GAS), URS New Zealand and Brown Bros (NZ) were found guilty in the Auckland District Court over a fuel leak from a petrol station in Line Rd, Glen Innes.

The companies have been ordered to pay a fine of $160,000, as well as court costs of $80,000.

The court has also demanded an investigation of the fuel which remained in the ground, and the companies could be forced to pay a further $200,000 for a clean-up.

But whereas this case involved thousands of litres, US Government estimates tell us more than five million barrels of oil have spilled into the Gulf of Mexico since BP’s undersea leak began in late April, and Alf reckons there are more than a few litres in each of those barrels.

Lawyer Janet Whiteside, prosecuting for the Auckland Regional Council, said the charges and fine sent a strong message to large companies to be tighter in their procedures.

The BP mob could have done with that advice.

Mind you, Alf gets the impression BP would pull the same argument as was pleaded by the three companies involved in the Auckland case and claim they were not really at fault and they had done everything reasonable to stop the petrol escaping. And so on.

Engineering consultancy URS hired contractors Brown Bros to test the site for contamination by former owner Caltex.

Brown Bros accidentally drilled a hole the size of a 50c piece in a fuel line used to carry 91 octane.

The spill occurred when new owners GAS reopened the petrol station with the help of another company, Fuelquip.

Fuelquip – which had already pleaded guilty – tested the fuel lines, unaware of the hole. The petrol leaked into the Ruapatoka Stream, 75m away, killing some wildlife.

GAS had argued that the chance of a company such as URS or Brown Bros drilling a hole in a fuel line and not repairing it was extraordinary, and the company could not have foreseen it.

URS and GAS each argued they could not have been expected to predict mistakes by the other.

Alf is pleased to report the case was heard by a bloke with a proper bloke’s name.

Fred.

And Judge Fred McElrea ruled that URS and Brown Bros did not take necessary precautions to prevent a fuel leak. Moreover, he ruled that GAS failed to order the testing of the fuel lines.

BP meanwhile is counting on easing the cost of its Gulf spillage by cutting back on its tax payments.

BP said Tuesday that it is incurring a charge of $32.2 billion from the Gulf response, and as such, it is claiming a $9.9 billion taxation credit.

Asked in a conference call Tuesday about whether the company has discussed the tax credit with President Barack Obama’s administration, outgoing BP Chief Executive Tony Hayward said, “We have followed the IRS regulations as they’re currently written.”

White House officials weren’t immediately available for comment. The Internal Revenue Service said it’s not allowed under federal law to discuss individual taxpayer issues.

This will dent BP’s image as a good corporate citizen, Alf suspects, just as it seemed they were trying to burnish it by sacking the chief execuitve, although Alf would happily put himself before a corporate firing squad if he could pocket the millions in settlement dosh the BP boss will pocket.

Just one more thing.

BP has reported a second-quarter loss of $US17 billion, including $US32 billion in charges related to the oil spill, the largest in US history.

But Alf found a post by a bloke whose sums suggest this is but a spit in the BP bucket.

I’ve been going though BP’s second-quarter earnings press release and results to get a better sense of the impact of the Gulf Coast oil spill on the company’s finances. It’s a measure of the scale of a “Supermajor” like BP and the robustness of its underlying cash flows that it could continue to invest more than $6 billion (B) in capital projects and acquisitions in the quarter and even pay down a bit of debt, while recording a charge of $32.2 B against earnings related to the Deepwater Horizon disaster and ensuing oil leak. To put that figure in perspective, it’s more than the market capitalization of Exelon Corporation, the largest owner and operator of nuclear power plants in the US. Yet among all of the remarkable and morbidly-fascinating numbers presented here, the one that stood out for me was the net decrease of shareholder equity by $16 B since the end of 2009. Anyone seeking to explain the decision of BP’s board to change CEOs should start there.

Alf – as his constituents know – stands proudly behind most things British.

But not football hooligans, lager louts or BP.

One Response to Judge Fred is the bloke to punish BP over the creation of an unwanted Black Sea

  1. lucky says:

    Damn shame that the high court overturned all of the convictions in that URS/Brown Bros case.

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