SCENARIOS-Limits to US government on plugging Gulf oil leak

WASHINGTON, May 21 (BestGrowthStock) – A month-old gusher of oil
into the Gulf of Mexico off the U.S. coast has resisted efforts
by BP Plc (BP.L: ) to plug it up, and the Obama administration is
under increasing pressure to do something about it.

President Barack Obama has sought to respond actively to
the disaster and limit the environmental and economic impact in
the Gulf.

Here are some potential scenarios for what might happen
next.

WHITE HOUSE PUSHES BP

The federal government, not in the oil well business, is
limited by what direct impact it can have on stopping the leak.
The U.S. military does not have skills in the oil sector and
officials have stressed the Pentagon is already providing
whatever support it can to assist the U.S. response to the
disaster.

The Obama administration has piled heavy pressure on BP to
speed up its efforts to plug it up. “We are continuing to push
BP to do everything that it can,” said White House spokesman
Robert Gibbs.

LEGAL ACTION

In terms of potential legal action, the Obama
administration’s Justice Department eventually could charge BP
with violating U.S. environmental laws. So far, the Justice
Department has not launched an investigation. Officials there
say they are monitoring the situation to ensure BP pays for the
cleanup as promised.

Reparations for the last major oil spill, the 1989 Exxon
Valdez disaster, were tied up in court for years as the company
appealed an Anchorage, Alaska jury’s award of $5 billion in
punitive damages and it was reduced to $2.5 billion. The U.S.
Congress has talked of raising a liability cap of $75 million
to $10 billion for such disasters.

PAYING THE BILL

The federal government will pile heavy pressure on BP to
foot the complete bill, with Americans in no mood to use
taxpayer dollars for the disaster after the billions of dollars
spent to bail out banks and auto companies.

ProPublica is reporting that that the Environmental
Protection Agency is considering whether to bar BP from
receiving U.S. government contracts, a move it said would cost
the company billions of dollars in revenues and could end its
drilling in federally controlled oil fields.

Obama is creating a commission to investigate the cause of
the spill, evaluate industry practices and study government
oversight. One likely scenario is that Obama will put off his
plans to expand offshore oil drilling, making it unlikely that
Republicans would join in energy legislation.

The president, whose Democrats face congressional elections
in November, is getting modest marks from the public on his
handling of the spill.

A Pew Research Center poll on May 11 found 38 percent of
Americans approved of his handling of the oil leak and 36
percent disapproved. Opinion about Obama’s performance is not
as negative as opinion about former President George W. Bush’s
response to the flooding caused by Hurricane Katrina in 2005.

WORST-CASE SCENARIO

The worst-case scenario is that it takes BP two more months
to complete drilling a relief well that the company has said
would provide the ultimate solution to halt the oil flow. A
better solution: BP is working on attempting a “top kill” —
pumping heavy fluids, and then cement, into the well to stop
the flow in the next few days.

“I think the best-case scenario is actually either late
Sunday or early Monday as this top kill procedure works and the
flow stops. … I think worst case is it takes us until the
relief well gets down which is probably early August,” BP Chief
Operating Officer Doug Suttles said on CBS’s “The Early Show.”

Stock Report

(Writing by Steve Holland; Editing by Will Dunham)

SCENARIOS-Limits to US government on plugging Gulf oil leak