President Barack Obama will outline a plan to reduce the country's addiction to oil today after US lawmakers say BP's cost- cutting culture caused the worst spill in US history.
A day after BP shares fell 9 per cent in London and New York, US lawmakers will ask the company's US head Lamar McKay why the company made repeated choices that appeared to favour cost savings over safety before its rig blew up in the Gulf of Mexico.
The accusations come as BP, a listed company which has lost about half it's market value since the spill began almost two months ago, was stripped of its AA debt rating by rating agency Fitch.
The downgrade follows a precipitous fall in shares after more than 50 Democratic senators proposed that the company make a $20 billion payment into an independently managed account to cover compensation for victims and the clean-up.
US politicians have also been calling on BP to scrap its quarterly dividend to ensure it has enough money on hand to cover these costs.
BP shares were down 1.3 per cent at 350.7 pence at 12.45 pm Irish time today.
Mr McKay, the head of BP America, will be surrounded at the congressional hearings by executives from Exxon Mobil, Chevron, ConocoPhillips and Royal Dutch Shell seeking to stave off repercussions for the industry. Mr McKay's rivals are likely to hang him out to dry in a rush to prove their companies would never take such risks or face such failures as the spill that has poured millions of gallons of oil into the Gulf of Mexico.
"This incident represents a dramatic departure from the industry norm in deepwater drilling," Exxon Mobil chairman and chief executive Rex Tillerson said in prepared testimony obtained by Reuters.
The April 20th explosion on an offshore rig killed 11 workers and ruptured BP's well. The spill has fouled 190km of U.S coastline, imperilled multibillion-dollar fishing and tourism industries and killed birds, sea turtles and dolphins.
In a pivotal week in the crisis, Mr Obama wraps up a two-day trip to the Gulf today before returning to Washington to give a televised speech aimed at seizing political momentum that has slipped away as the oil flows unabated.
A spokesman said that Mr Obama's speech would focus on ways of speeding up payment of damages and plans to deal with the leaking well as well as outline a plan to reduce US dependence on fossil fuels.
"He will talk about what our fundamental energy approach must be going forward to reduce our dependence on oil and fossil fuels", a White House official said.
Despite his attempts to move the debate forward and focus attention on BP, some Gulf residents are angry at Mr Obama.
"This is ridiculous. This is America. They're letting BP control this country? Or any other oil company? What's going on in this world?" said oyster dock manager Terry Alexis in Empire, Louisiana.
The spill has overshadowed Obama's political agenda of job creation and Wall Street reform -- both key issues in November congressional elections in which his fellow Democrats are expected to face tough fights to hold on to their majorities.
BP has also faced a barrage of criticism over its handling of the clean-up.
Two Democratic lawmakers said British-based BP chose faster and cheaper drilling options in the Gulf of Mexico that "increased the danger of a catastrophic well failure".
"It appears that BP repeatedly chose risky procedures in order to reduce costs and save time and made minimal efforts to contain the added risk," Henry Waxman and Bart Stupak, the top Democrats on the House of Representatives Energy and Commerce Committee, said in a letter ahead of today's hearing.
They quoted e-mails sent before the explosion by BP drilling engineers who called the project a "nightmare well" and said a team leader who opted not to use extra equipment to reduce the potential for gas flows into the well was "right on the risk/reward equation".
BP has hired investment banks Blackstone Group, Goldman Sachs Group and Credit Suisse Group as advisers, a source familiar with the matter said, without identifying the purpose of the advice.
But stopping drilling is a double-edged sword for many on the Gulf of Mexico, who count on oil rigs to keep their states economically afloat.
BP's McKay will argue that cutting back drilling operations will hurt American workers and increase risks of a spill, POLITICO reported, citing testimony provided to the Energy and Commerce Committee in advance of today's hearing.
"America's economy, security and standard of living today significantly depend upon domestic oil and gas production. Reducing our energy production, absent a concurrent reduction in consumption, would shift additional jobs and dollars off-shore and place millions of additional barrels per day into tanker ships that must traverse the world's oceans,"Mr McKay is scheduled to say.
Reuters