According to reports today, British PM, David Cameron, allegedly told BP chairman Carl-Henric Svanberg: “it is in everyone’s interests that BP continues to be a financially strong and stable company”.
BP’s dividend is so important to UK pension investments that the British Prime Minister, David Cameron, has been forced to step in and defend BP against USA moves to ban the next dividend. Unsurprisingly, the BP share price has recovered somewhat following the news.
The UK government is hassling the USA to go soft on BP’s financial future because, once again, the UK cannot afford a large organisation to go bust, or skip a payment. This begs the question – why are companies allowed to be so large they they cannot be allowed to skip a dividend payment, and banks so essential to the financial system that they must be bailed out by a government?
The correct balance between business, investors and government lies in sensible legislation to curb the excesses of business and then allow the natural limits of the market to take their toll.
The US government should not stop a dividend – there is already adequate provision for punishing BP, but neither should the UK Prime Minister make comments about the need for BP to continue on its present catastrophic trajectory.
If pensions are so essential, should not a Government make provisions for them instead of kowtow-ing to a company which is responsible for a giant mess in the Gulf of Mexico? Don’t leave an entire country and economy over a barrel because of inefficient pension provisions.
The same applies to gas and oil. If the UK and USA cannot provide for their energy needs without going to war or filling oceans with oil, maybe they should take more than a passing glance at alternative energy. Not only would self-sufficiency protect the UK from tricky negotiations over pipelines and Russian gas, but it would also lessen the need to wage war and meddle in the affairs of oil-rich states.
By getting involved in the detail of BP’s business, both premiers may come out with oily hands.