BP Oil Distaster Could Affect Every Pension Plan in the UK
As the BP oil disaster in the Gilf of Mexico continues its share price continues to fall.
BP’s dividend payments currently account for approximately 14% of every pension scheme in the UK. So many pensions have the “safe” equity as part of their portfolio, and they are all suffering.
The BP oil disaster in the Gulf of Mexico is damaging BP’s reputation and share price. It has also already spent £770 million trying to plug the hole in the Gulf of Mexico. BP’s reputation in the USA has plummeted and it may not win any new contracts in the Gulf of Mexico which is still a rich oil ground. The environmental damage may take years to clear up and for this the proud Americans may simply shun foreign players on their doorstep.
What Happened in the Gulf of Mexico?
On the 20th April 2010 one of BP’s exploration platforms exploded and sank. 11 people were killed in the event. The platform had discovered an oil source and therefore the oil reservoir was opened when the rig was destroyed after sinking. The oil spill is threatening the US coastline around the Gulf of Mexico.
The rig was managed by Transocean Ltd. who are working for BP. BP have the biggest stake in this particular oil field. The oil leak is releasing in the region of 5000 barrels of crude oil every day. On 27th May BP are hoping to plug to hole using a “top kill” method.
The disaster has highlighted the need for increased safety and environmental protection in the oil industry. Oil rigs in Brazil and Norway must now be fitted with remote control off switches that mean in the even of a disaster the drill can be closed off before any further damage is done. These devices are not required by US regulators so are seldom installed in rigs drilling in US areas.
Purdue University has analyzed videotape of the leak using particle image velocimetry and estimated oil flow rates at between 56,000 to 84,000 barrels per day (8,900 to 13,400 m3/d), or equivalent to one Exxon Valdez spill every 3.5 to 2.4 days, A second, smaller leak has been estimated to be releasing 25,000 barrels per day (4,000 m3/d) by itself , suggesting that the total size of the leak may well be in excess of 100,000 barrels per day and could possibly be one of the largest oil spills in history and the worst man-made disaster recorded.
BP’s share price did recover slightly yesterday on news of the new attempts to plug the oil leak. BP’s daily profits are still in the region of £30 million per day.