My Take On Obama's Gulf Speech Last Night

It's a true apocalypse in the Gulf of Mexico! Would Obama's speech measure up to the Biblical-scale of the tragedy?

Apparently not. Some people are giving the speech a big thumbs-down:

Obama said some good things. He made a strong call for a transition from our fossil-fuels economy, declaring that "the time to embrace a clean energy future is now." He said that when he meets with BP chairman Tony Hayward tomorrow, he will tell him he needs to set aside a generous compensation fund that will be controlled by an independent third party. He committed to a long-term Gulf Coast Restoration Plan, headed by Navy Secretary Ray Mabus, and announced that the respected Michael Bromwich will head the compromised Minerals Management Service.

At one point I thought the president was about to do what I'd hoped for, unrealistically, this afternoon – explain why he was wrong to drop his opposition to expanded offshore oil drilling, and recommit to his old position. He didn't. He only said that he had endorsed opening up more offshore drilling "under the assurance that it would be absolutely safe –- that the proper technology would be in place and the necessary precautions would be taken. That obviously was not the case in the Deepwater Horizon rig, and I want to know why." He then committed to a National Commission to study the disaster and explore what new environmental protections are needed. (If he paid any attention to the House Energy Committee's grilling of top oil industry execs today, he'd know the industry has no idea to cope with a disaster of this magnitude.)

I'm not sure anyone walked away from the speech clearer on what Obama will do to hasten the clean up and prevent future disasters. And while I was happy he did make a short pitch for "a strong and comprehensive climate and energy bill," if you blinked, you missed it.

Nevertheless, it's important to get BP committed, NOW, to cleaning up the Gulf Coast and paying for the damage, and if Obama had to pull back his rhetoric to get the commitment, it's OK.

BP's early reaction to the fiasco was to treat the problem as a public relations dilemma. BP tried to bury the problem underwater as much as possible (with Corexit) and to live in denial, particularly by denying people access to information about oil slick location, by hiding dead animal carcasses, by fighting with scientists about the existence of underwater plumes they knew they were intentionally creating with Corexit, and simply by denying the validity of independent flow rate calculations. Denial is an understandable human reaction, but the problem is now so large that denial is no longer an option. Actions like summoning oil tankers to assist with oil recovery have either been delayed by BP, or not done at all, because as long as BP answers first to shareholders, they have to do everything on the cheap. By wielding an implicit threat to put BP in temporary receivership, however, Obama may be able to break BP's fantasy thinking, and maybe help start getting some things done. By keeping BP management in place, however, it may be possible to retain useful operational knowledge. Balance is crucial.

At least, I hope things work out this way....

Meanwhile, Kenneth Feinberg is going to be appointed to be the escrow account administrator:

The Times is also reporting that the fund will be overseen by Kenneth Feinberg -- the pay czar charged with overseeing top Wall Street salaries under TARP. Feinberg also oversaw the 9/11 victims compensation fund.

BP executives met with President Obama at the White House today. Before the meeting, Bloomberg reported that the administration and BP hadn't yet reached a deal on the escrow account.

According to the Times, BP likely won't be in any rush to deposit $20 billion in the escrow account anytime soon: The deal's "preliminary terms would give BP several years to deposit the full amount into the fund so it could better manage cash flow, maintain its financial viability and not scare off investors."

Kenneth Feinberg is quite an amazing person! I remember once seeing him discuss his experiences on C-SPAN regarding the 9/11 victims compensation fund (the link to this amazing program is here). I was very impressed with the guy. Equally interesting was just how little fraud was attempted with the 9/11 victims compensation fund, despite the huge sums involved.

Feinberg has among the most-enviable reputations in the entire United States, and I'm sure there is no one more capable for the position. He is America's go-to Mr.-Fixit guy when apocalyptic disasters have to be paid for. Nevertheless, this disaster is far larger, and will be far costlier, than 9/11, and so Feinberg faces a daunting workload in the years ahead.