We all know the BP oil spill is a huge mess. It’s going to be costly to clean up – but just how much?
On the June 10 broadcast of Fox Business Network’s “Bulls & Bears,” Fadel Gheit, a senior analyst at Oppenheimer & Co., offered a huge estimate. But, he explained what is done is done and that going after BP with harsh penalties, as in elimination of the BP stock dividend, now will hurt a lot of American retirees.
“Couple of things – I mean, it is water under the bridge, it is over and you will have to live with it,” Gheit said. “BP will have to live with it. We have to remember one thing -- BP bought 10 years ago, Amoco, Arco, a very large American corporation with a lot of people working for BP today. And the retirees are pensioners from the Amoco and Arco days. So by cutting the dividend we're penalizing completely innocent people that worked very hard for many years. And now, the dividend is the way they support themselves. So, I don't understand.”
And he suggested a compromise – not the total elimination of the BP’s stock’s dividend but that something should come down in the middle.
“Yes, I understand clearly that we have to set the money aside to clean up and all those things but we have to reach a compromise and not throw [out] the baby with the bath water,” Gheit continued. “So there has to be some balance between my view here, BP should cut dividend by at least 50 percent. And I think they will have the financial feasibility to clean up the mess they created.”
But over time, the spill would be cleaned up he explained.
“Eventually it will be cleaned up,” Gheit said. “It will cost more”
How much more? A lot more, he said.
“I estimate it will cost about $60 billion,” Gheit said.
This figure was a bit of a shock to “Bulls & Bears” co-host David Asman: “Wow! $60 billion.” However, Gheit explained it won’t come in one lump sum but over 10 years.
“But it’s not going to be in a day or a week or a year,” Gheit said. “Might take about 10 years. So, that the present value of the $60 billion is pretty manageable.”