Why the U.S. Can't Turn Its Back on BP

With public anger off the charts over BP's role in the Gulf of Mexico oil disaster, there's not much sympathy about the financial burden the British oil company faces from future legal claims and cleanup costs. BP (BP) says it's considering asset sales to help cover the cost of a $20 billion escrow fund that the White House demanded the oil major set up to handle U.S. claims. The company's survival may also be in doubt if the financial hit from the Deepwater Horizon rig explosion approaches $100 billion, as some analysts suggest is possible.

Such a scenario would destabilize U.S. energy policy at home and abroad. President Barack Obama recognized as much when he said on June 16 that "BP is a strong and viable company, and it is in all of our interests that it remain so." The company's demise would be disruptive to the American oil industry, given that BP is the largest oil and gas producer in the U.S., with about 1 million barrels per day of production. Some 7,000 of BP's 23,000 U.S. employees work in the Houston area, many in a suburban office park just off the Katy Freeway. From there the company runs its Gulf of Mexico offshore operations with a phalanx of engineers, geologists, and computer scientists. "These are highly compensated people," says J. Robinson West, chairman of Washington-based consultants PFC Energy.