BP shares plunge to 14-year low

British Petroleum Plc's stock price plunges to a 14-year low in US amid concerns over its ability to meet costs of the Gulf of Mexico oil spill.

WASHINGTON // British energy giant BP's stock price plunged to a 14-year low in US trading overnight amid concerns over its ability to meet mounting costs of the giant Gulf of Mexico oil spill. President Barack Obama's administration, getting tough as polls show public disapproval over its handling of the worst oil spill in US history, threatened new penalties on the company. BP depositary shares trading in New York fell nearly 16 per cent to close at US$29.20 (Dh106), their lowest level since August 1996, on jitters about the costs the company will have to assume. BP said last week it has "plenty of" cash to deal with the problem and the Obama administration has made similar comments.

A BP spokesman said "nothing has changed" since Friday and restructuring experts agreed that by running the numbers alone, BP looked able to handle the financial damage. But such confidence was not evident in the market. "It seems that shares are under pressure from the fear of whether BP can survive. It is not just a rumour about the potential of a dividend cut in BP anymore. Now it's about the survivability of the company," said Jon Najarian, a founder of Web information site optionMonster.com in Chicago.

The US interior secretary Ken Salazar told a Senate hearing he would ask BP to repay salaries of any workers laid off because of the six-month moratorium on deepwater exploratory drilling imposed by the US government after the spill. Turning up the heat on the British oil major, a senior US Justice Department official said after the markets closed that the department was "planning to take action" to ensure BP had enough money on hand to cover spill damages.

BP's total bill so far, including cleanup costs, has reached US$1.25 billion and the US government has already said it will have to pay billions more in penalties. The White House echoed Mr Salazar's comments. "The moratorium is as a result of the accident that BP caused. It is an economic loss for those workers, and ... those are claims that BP should pay," White House spokesman Robert Gibbs told a briefing.

BP believes it may be heading for a showdown with the White House over widening liability demands, a BP source said. While the company has said it will pay for the clean up and direct damages to those affected by the spill, the moratorium was a government decision and costs related to it were a different matter, the source said. After contaminating wetland wildlife refuges in Louisiana and barrier islands in Mississippi and Alabama, the black tide of crude oil has taken aim at some of the famous white beaches of Florida, whose economy is heavily dependent on tourism.

One-third of the Gulf's federal waters are closed to fishing and the toll of dead and injured birds and animals is climbing. Frustration with BP and the U.S. government's response to the leak is growing in southeastern Louisiana, where fishing bans are taking a heavy toll on the local economy. Joan Strohmeyer, who owns the Lighthouse Lodge in Venice, Louisiana, said her hotel is fully booked with BP workers and others responding to the spill, but that may not last.

"Is there going to come a time where I have nobody in my hotel?" she asked. "I don't know whether we're going to end up being ahead or behind." * Reuters