BP brand faces further damage as oil crisis deepens

BP’s woes in the Gulf of Mexico seem to be deepening after the US Geological Survey said the oil spill crisis could double the number of estimates previously thought.

The survey predicts that at least 40,000 barrels (1.7 million gallons) of oil a day may have been gushing out from a blown-out Gulf of Mexico well, before the oil giant successfully placed a cap on the well on 3 June.

BP’s chairman Carl-Henric Svanberg has been asked to meet the US president Barack Obama next week and UK Prime Minister David Cameron will also meet Obama in a bid to ease tensions arising from the crisis.

Oil has been leaking into the Gulf since the Deepwater Horizon rig exploded on 20 April and sank off the coast of the US state of Louisiana, killing 11 workers. The firm’s share price has collapsed more than 40% since the Deepwater Horizon rig sank on 22 April. The company is responsible for almost one in every seven pounds of dividends paid to British pension pots.

BP is under pressure to convince US politicians that it will have enough cash to pay for the clean-up operation and compensation for those affected after the US government said it “not pay a dime” for cleaning up and that BP would be held responsible for all damages.

The US Speaker of the House of Representatives, Nancy Pelosi, has accused BP of a “lack of integrity” over its approach to the spill. An ad campaign for BP apologising for the oil spill polluting the Gulf of Mexico was also slammed by President Obama.

The oil giant has admitted the spillage crisis is costing it millions and says the project will cost about $360m (£244m). According to Louisiana Governor Bobby Jindal, the White House had ordered BP to pay for the construction of sand barriers.

BP estimates that the disaster has so far cost the company approximately $990m (£674m) in clean-up costs, but has refused to speculate on future expenses. This is a massive increase from May when the cost was $350m (£235m).

Greenpeace recently unveiled a press advertisement accusing BP CEO Tony Hayward of cutting investment in clean energy in favour of dirty sources of oil.

However, BP’s brand reputation crisis following the oil spill in the Gulf of Mexico has left rival petroleum companies relatively unscathed, according to YouGov BrandIndex data published last month.



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