BP agreed today to set up a $20 billion escrow fund to pay damage claims resulting from the Gulf of Mexico oil spill.
Less than 24 hours after President Obama told the nation he would make BP pay for all the damages it has caused, he brought the oil giant's top executives to the White House where they conceded to his demand that they pay billions into an independently administered escrow fund.
Among the company executives Obama had at the White House were Chairman Carl-Henric Svanberg, CEO Tony Hayward and BP's U.S. boss Lamar McKay.
The independent fund will be led by lawyer Kenneth Feinberg, who oversaw payments to families of victims of the Sept. 11, 2001, attacks on the World Trade Center and the Pentagon. Feinberg has been the administration's point man for setting salary limits for executives of companies that received aid from a $700 billion government bailout fund.
The president summoned the executives to the White House less than 24 hours after he, in a nationally televised address, accused BP of recklessness and vowed to fight the spill "with everything we've got."
"We will make BP pay for the damage their company has caused," Obama declared in his Oval Office address. He called the massive spill a "siege" on the people and the environment of the Gulf Coast and announced that former Mississippi Gov. Ray Mabus will develop a long-term Gulf Coast Restoration Plan - also to be funded by BP - in concert with local communities hit hard by the crisis.
The president's speech contrasted sharply with White House remarks made in the early days of the crisis when BP was described as an "essential partner" in plugging the oil gushing from the broken well a mile below the surface. During his speech last night the president said BP has threatened a whole way of life and "I refuse to let that happen."
Meanwhile, both the damages from the spill and the estimates of its size continue to grow.
Shortly before the president spoke, a government panel of scientists determined for the second time in three days that the well is leaking yet more oil than the higher estimates of just a few days earlier. The new figures are 2.52 million gallons a day, bringing the total spilled so far to 116 million gallons, more than 11 times the size of the spill during the Exxon Valdez disaster.
Leo Gerard, president of the United Steelworkers union, said "corporate greed" was the explanation behind both the disaster itself and what the said was the "lying afterwards."
He deplored how BP, after the deadly rig explosion, contended that the well was spewing only 1,000 gallons a day when, in fact, the government now says 1.2 million gallons a day have been flowing into the Gulf. He said the company had a "greed-based" reason to deny access to its own video recording the spill because "BP will be fined based on the number of barrels of oil its well disgorges into the Gulf."
BP was forced to begin releasing its live video stream of the spill only after a freedom of information suit and pressure from labor and community organizations and Congress itself.
"Greed is one of the seven deadly sins," Gerard said, "and when it afflicts corporate CEOs it is deadly to workers."
Some progressives were critical of the president's speech last night for not being specific enough, particularly when it came to putting pressure on the Senate regarding climate change legislation and for not setting a specific amount BP should pay into the independently administered damage claims fund. Most progressive critics, however, cheered the announcement of the escrow fund when it was made today.
Unlike many who wanted more specifics on other issues, the Green Energy Reporter argued in an editorial today that, at least on the issue of climate change, "this is how Obama governs effectively. The speech was actually pure Obama and those who expected something else haven't been paying attention to the way he governs. Just as when the health bill passed, he has provided a general outline of what he wants and asked Congress to work out the details."
The Reporter article noted that the president pushed for higher fuel efficiency standards, which was controversial, at least up until the spill, and said Obama's mention of wind and solar-powered electricity "probably refers to a Renewable Electricity Standard." Establishment of such a standard has been an important issue for environmentalists.
The oil spill is continuing to increase the discomfort level of Republicans who are seen as big long-time defenders of the oil industry. Politico noted today that "Republicans are now struggling with how to show appropriate outrage at Big Oil while sticking to their long-standing pro-drilling, pro-oil-company policies."
Photo: Oil from the Deepwater Horizon spill coats marsh grass at the Louisiana coast along Barataria Bay. Charlie Riedel/AP