Is it possible that Tony Hayward — the oh-so-typical member of the post-Thatcherite, post-Big Bang British financial establishment — is really a mole, a secret agent for one of China's national oil companies, China National Offshore Oil Corporation (CNOOC)? It's certainly beginning to look that way.
It seems hard to believe, especially considering that the U.S. Congress, amid much fanfare, blocked CNOOC's acquisition of the U.S. oil company Unocal a few years ago. Yet, circumstances may push a far larger oil company — BP — into CNOOC's hands.
|The safer, home-spun solution to the BP problem would be a de-merger of BP, with the leading U.S. oil majors taking over BP's U.S. assets.|
For Mr. Hayward, an individual whom City of London pundits on BBC World still dutifully insist on referring to as "brilliant," has done something that should have been impossible. He has driven the most profitable corporation in the sixth-largest industrial economy on earth — and the fifth-largest oil corporation in the world — to the brink of ruin. And it may well go down all the way.
True, Tony Hayward did not create the managerial culture at BP that resulted in the ecological destruction of the Gulf of Mexico and the ruin of the economies of the Gulf Coast. That culture had been decades in the making, exemplified by the feckless, growth-obsessed orgy of acquisitions and empire-building of his predecessor, Lord Browne.
But Hayward ended up playing Barack Obama to Lord Browne's George W. Bush. Like Obama, he posed as a kinder, gentler, far more enlightened, youthful and dynamic chief executive.
He would bring perestroika and glasnost — restructuring and openness — to the managerial culture of BP, just as Obama was widely expected to extricate U.S. military forces from Iraq and rein in the unregulated excesses of Wall Street.
Well, as the whole world knows, President Obama didn't change Bush's policies on Iraq — and he exceeded his predecessor by plunging headlong into an un-winnable, full-scale war in Afghanistan.
Compared to Hayward, Obama can plausibly claim simply not knowing what he is — or more accurately, isn't — doing.
|Watching BBC World television service today is eerily similar to watching state-controlled national broadcasting services cover the disintegration of the Soviet Union 20 years ago.|
But Hayward really is supposed to know what he was doing. He blithely and cynically continued to play Lord Browne's double game. BP spent hundreds of millions of dollars on a no-holds-barred advertising campaign to portray itself as the greenest and most environmentally conscious of all the great oil majors.
At the very same time, BP operations executives and engineers were driven frantic with pressures to cut costs, slash safety measures and ignore the more conservative and responsible practices maintained by the other oil majors engaged in deep sea oil extraction operations.
BP has already paid a very heavy price for this combination of hypocrisy, technical sloppiness, managerial incompetence and sheer, naked greed. Its share price has almost halved — and may drop further.
President Obama — acting belatedly, his modus operandi in times of crisis — got BP to create a fund of $20 billion to clean up the threatened shorelines and ecologies of the U.S. Gulf states and to compensate businesses and workers affected by the spill.
After BP absorbs all these shattering financial blows, it will still have to face a perfect storm of devastating regulatory and retributive measures passed by a furious U.S. Congress, as well as lawsuits that could cost it many billions more filed by hundreds of thousands of plaintiffs in the afflicted southern states.
The British Establishment still doesn't get it. Watching BBC World television service today is eerily similar to watching state-controlled national broadcasting services cover the disintegration of the Soviet Union 20 years ago.
|The only difference is that, in the era of Gorbachev's glasnost, Soviet television was far harsher on the state than BBC World television is on BP.|
The only difference is that, in the era of Gorbachev's glasnost, Soviet television was far harsher on the state than BBC World television is on BP.
BP is one of Britain's biggest investors in the United States, and British-based companies own a far larger chunk of the U.S. economy than Japan or Saudi Arabia does. (Germany and France don't come close.)
City of London shills on BBC World have even been reduced to whining that President Obama and the U.S. Congress must not take measures that could destroy BP.
And one can see them asking for clemency for BP so as to avoid a truly spectacular outcome — BP falling into the hands of the China National Offshore Oil Corporation (CNOOC). Come to think of it, though, it may well be the only major oil company with the financial clout to bail out the fumbling, stumbling British giant.
That might be no bad thing. Remember also that the City of London money managers are huge on the virtues of no-holds-barred international takeovers and mergers — as long as they are the ones doing the takeovers and the mergers. If the shoe is on the other foot, not so much.
The cold facts of chemistry, physics and engineering are that the world still needs oil in gigantic quantities — and that it is going to need it for generations to come. No comparable technologies in energy conversion and utilization exist, except for nuclear power — which comes with far worse potential environmental dangers of its own.
By the gospel of the “free market,” as preached by the Apostles of Thatcher in the City of London since the Big Bang deregulation of 1987, CNOOC should therefore snooker (CNOOC-er) BP — with reference to Britain's third national sport after soccer and cricket.
|Like Obama, Tony Hayward posed as a kinder, gentler, far more enlightened, youthful and dynamic chief executive.|
The fact that CNOOC is Chinese shouldn't even bother the U.S. Congress that much. After all, the Russian oil giant Lukoil acquired Getty Oil which, unlike BP, was a signature American firm to start with. U.S. drivers have already gotten used to buying gas from Communist-owned gas stations (so to speak) across their nation.
And, in fact, if CNOOC can't or won't take over BP, or if the British and American governments are too alarmed at the strengthening of Chinese national power that this will cause — all their preaching of the gospels of globalization and free markets to the contrary — there are other constructive options available.
The safer, home-spun version would be a de-merger of BP, with the leading U.S. oil majors Exxon Mobil, Chevron and Conoco Phillips creating a consortium to take over and operate BP’s U.S. assets.
Since the British have paid lip service for so long to being America's most loyal and most valuable ally, this could be the most elegant solution and certainly the one most acceptable to the British, as well as to the American public.
The likely continued plunge in BP's market value will put it far more easily in the range of acquisition by a consortium of American oil majors than anyone previously anticipated.
The U.S. oil majors are very skilled in getting together and operating consortiums. They created ARAMCO, the Arab-American Oil Company in Saudi Arabia, and made it the most financially and technically successful oil extraction operation the world had ever known to that date.
|Tony Hayward has driven the most profitable corporation in the United Kingdom to the brink of ruin.|
They continue to organize, operate and participate in oil-producing consortiums with major corporations around the world with consistent success, environmental responsibility and large profits. Their safety record is infinitely superior to BP's.
It's hard to see how the City of London — and even the BBC and its talking heads — could object to such an outcome. After all, it would be such good business.