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Watercooler – Will BP Survive?

It goes without saying that the primary concern with the BP oil spill is the environmental and economic devastation that is being wrought on the Gulf Coast. Nonetheless, this catastrophe will also be significant in that it could spell doom for one of the world’s most powerful corporartions:

BP’s brand is by no means damaged beyond repair at this stage, but as things worsen at the disaster in the Gulf of Mexico some observers are saying the company would be better off selling itself or many of its prized assets to its rivals.

Since the April 20 explosion at BP’s deep-water rig started gushing oil, BP’s stock has lost as much as 30% of its value. Despite that dramatic US$55-billion drop in its market value, with so much uncertainty, BP’s rivals aren’t likely to be circling with a takeover in mind at this juncture, analysts said.

Another hurdle would be antitrust concerns given the huge size of BP and its rivals. If its competitors acquired some of BP’s assets, rather than the whole company, the liability probably wouldn’t follow. But analysts doubt BP is ready to go that route, noting that Exxon’s brand was able to recover after the disaster that spilled 250,000 barrels of crude in Prince William Sound, Alaska, in 1989 and BP might do the same.

One thing we can be sure of is that no matter what happens, somebody will be going home filthy rich.

What’s on your mind tonight?

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Jim Moss

Jim Moss

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