NEW ORLEANS (AP) – Undersea robots maneuvered a mile beneath the Gulf on Monday to delicately lower a new, tighter-fitting cap over BP’s busted well, a fix the oil giant hopes can finally stop the leak after nearly three months.

The new cap, a 150,000-pound metal stack, was about 300 feet from where it’s supposed to be installed on top of the leaking well, BP Chief Operating Officer Doug Suttles said in a Monday morning news briefing.

A swarm of remote-controlled robots moved around heavy equipment near the seafloor on live video provided online by BP PLC. It was not clear how close the cap was to the well, but Suttles said the operation was complex and could take longer than they expect.

Oil could still be seen flowing freely from the top of the well where the cap will be attached.

The BP executive was careful to keep expectations grounded, stressing that once the cap is in place, it will take days to know whether it can withstand the pressure of the erupting oil and feed it through pipes to surface ships. The cap and vessels together make up BP’s plan to stop oil from spewing into the Gulf for the first time since April 20.

“Until we have the cap on, securely fitted in place, and know it’s operating per the design, we have to recognize this is a complex operation,” Suttles said.

It is the nation’s worst offshore oil spill. The well has spewed between 89.3 million and 176.4 million gallons of oil into the Gulf of Mexico, according to federal estimates. The Exxon Valdez spilled about 11 million gallons.

Gulf residents were wary after weeks of failed efforts to stop the spill and downcast about the damage already done to the biologically rich Gulf and the coast’s two leading industries, fishing and tourism.

Matthew Peterson, a crabber in Yscloskey, La., hasn’t put out his traps since oil began washing ashore.

“The oil is still out there, and it’s going to be there for, what, maybe 10 years?” he said. “Until it’s cleaned up, nothing’s going to get back to normal.”

BP has tried and failed to counter the gusher with a giant concrete box over the well, mud and shredded rubber pumped into it and a pipe to siphon the crude.

“At this point, there have been so many ups and downs, disappointments, that everybody down here is like, ‘We’ll believe it when we see it,’” said Keith Kennedy, a charter boat captain in Venice, La.

First lady Michelle Obama was expected in Panama City, Fla., on Monday to meet with local community leaders and tourism officials. The Panhandle city recently opened a new international airport to draw additional tourists to the area but the oil spill has kept many away — even though pollution on local beaches has been minor so far.

BP’s new cap is designed to snap into place atop the well, held by a connecting piece that was installed overnight on top of the well pipe, said Eric Smith, associate director of the Tulane Energy Institute.

Once the cap is firmly in place, the company will begin “shutting in” the well by closing perforated pipe at the top. The company will be looking to see if the pressure rises inside the cap. If it does, that means there are no other leaks, and the cap is stopping oil from leaking into the Gulf.

But lower pressure readings may indicate leaking elsewhere in the well. In that case, Suttles said, the company will work to collect the leak with surface vessels and by dropping yet another cap on top of the stack.

The testing should last about 48 hours, Suttles said.

Even if the tests show the cap is successfully holding in the oil, it will not be the final fix for the blown well. That will have to wait until one of two relief wells reaches the leaking well from underground and can inject heavy drilling mud and cement to form a permanent plug.

BP expects one relief well will do the job, but it’s drilling a second as a backup. Officials have offered varying estimates for when that work will be done, but mid-August is the most common timeframe.

Work on the new cap has been moving briskly, with the old, leaky cap coming off the well on Saturday. One snag in the operation has been a delay in the startup of a vessel called the Helix Producer, which is supposed to connect to the well by a link below the cap, ultimately collecting roughly 1 million gallons of oil a day.

The ship was supposed to begin collection Sunday, but two minor technical glitches prevented that, Suttles said. He expects the ship to begin Monday, reaching full capacity within two days or so.

Weber reported from Houston. Associated Press Writer Mary Foster in Yscloskey, La., contributed to this story.

SAN FRANCISCO (MarketWatch) – Crude-oil futures rose Friday, tracking narrow gains in U.S. stocks and buoyed by growth in wholesales inventories that met expectations.

Crude for August delivery added 69 cents to $76.15 a barrel on the New York Mercantile Exchange.

The crude contract fluctuated in early floor trading but gathered steam as U.S. stocks built modest buying momentum. Technology stocks propped up the main equity indexes. Read more about stocks.

Stocks are oil’s “latest hangout buddies,” said Peter Beutel, president of trading advisory firm Cameron Hanover in Connecticut. Prices are likely to move in tandem with stocks in the absence of other news and supply data, he added.

“The assumption is if the stock market is higher, it implies increased economic activity” and therefore more demand for oil, Beutel said.

In the one bit of U.S. economic news out Friday, wholesale inventories rose in May as warehouses were restocked with durable goods, a government report showed. Wholesale sales dropped a little, but they were up 15% from May 2009.

“As long as we have the economy stable — not great, but stable — we are going to see higher oil prices,” said Carl Larry, president of Oil Outlooks and Opinions in Houston. “We know the commercial side of America is growing. … People are buying goods, and these goods have to be made, they have to be delivered, and people have to drive to buy them.”

Oil futures snapped a six-session losing streak early this week amid hopeful signs about the global economic recovery. Reports of boosted global oil demand and a surprisingly large decrease in stockpiles also lent support to prices earlier in the week.

On Wednesday, the Energy Information Administration revised its forecast, saying it underestimated oil consumption in 2009. The agency expects global oil demand to rise by 1.5 million barrels a day in 2010 and 2011.

And on Thursday, the EIA reported a decline of 5 million barrels in the nation’s crude inventories last week.

Meanwhile, natural gas for August delivery reversed higher, adding 4 cents, or 0.8%, to $4.44 per million British thermal units. August reformulated gasoline gained a penny to $2.06 a gallon.

But for the week, natural gas has lost 6% so far. Gasoline futures have gained 3.9% this week.

The dollar index (DXY 83.94, +0.11, +0.13%) , which compares the U.S. unit to a basket of six other currencies, added 0.1% to 83.93. A stronger dollar usually pressures commodities prices as it makes them more expensive to holders of other currencies, but the stock market gains cancelled out that dynamics for Friday.

The euro (CUR_EURUSD 1.2644, -0.0052, -0.4095%) was marginally lower after hitting a two-month high on Thursday.

Claudia Assis is a San Francisco-based reporter for MarketWatch.
Cynthia Lin is a MarketWatch reporter based in New York.

NEW YORK (Dow Jones)–Crude futures pared gains Thursday after a U.S. government report showed an unexpected increase in gasoline inventories, suggesting that demand remains weak.

Light, sweet crude for August delivery was recently trading up $1, or 1.4%, at $75.07 a barrel on the New York Mercantile Exchange, falling from $75.65 before the U.S. Energy Information Administration released its weekly inventory data. August Brent crude on the ICE futures exchange recently traded 95 cents, or 1.3% higher, to $74.38 a barrel.

Gasoline stockpiles rose by 1.3 million barrels in the week ended July 2, according to the EIA, defying expectations in a Dow Jones survey of analysts and traders for a 500,000-barrel drop. Gasoline stockpiles are at the highest level since 2001 for early July.

The build in gasoline inventories in what is traditionally the peak summer-driving season raised concerns about the strength of demand. While the U.S. economy pulled out of recession months ago, high unemployment has kept gasoline consumption down as fewer people are commuting to work or taking trips. High stockpiles have reflected that weak demand.

“It’s the height of driving season here and we’re still seeing a build,” said Matt Smith, an analyst with Summit Energy. “If we’re not seeing the strength now it’s a bit of a worry for the rest of the driving season.”

Front-month August reformulated gasoline blendstock, or RBOB, saw the day’s gains nearly cut in half after the EIA data, recently trading 2.38 cents, or 1.2%, higher at $2.0491 a gallon.

U.S. crude stocks fell by 5 million barrels for the week ended July 2, the EIA reported. The decline was larger than the 1.8 million-barrel drop analysts expected, helping to keep oil prices in positive territory.

Stocks of distillates, including heating oil and diesel, rose by 300,000 barrels, below expectations for an increase of 1.4 million barrels. August heating oil recently traded 3.15 cents, or 1.6%, higher at $2.0102 a gallon.

Refinery utilization rose 1.4 percentage points to 89.8% of capacity, the highest rate since January 2008.

Crude futures had rallied prior to the inventory report, following a fall in weekly U.S. jobless claims and a report late Wednesday from the American Petroleum Institute, an industry group, that also showed a large oil inventory drop.

Despite the gasoline build, the decline in oil stockpiles was large enough to keep futures in positive territory.

“You have a slight build in gasoline stocks and it put a little bit of softness in the market, but it really isn’t a substantial change,” said Peter Donovan of Vantage Trading.

-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com

WASHINGTON (Reuters) – The U.S. offshore oil drilling ban will reduce crude output by an average of 82,000 barrels per day next year, more than previously estimated, the government’s top energy forecaster said on Wednesday.

The Energy Information Administration had said last month that the moratorium, which the government put on exploration rigs in response to the BP Plc oil spill, would reduce next year’s U.S. crude output by an average of 70,000 bpd.

In May, Interior Secretary Ken Salazar put a six month moratorium on deep water exploration rigs.

The moratorium will delay deep water projects, the effect of which will speed up late in 2011, the EIA said.

“The reductions in crude oil production increase from a monthly average of about 10,000 bpd in September 2010 to nearly 100,000 bpd by December 2011,” the EIA said in its monthly short term energy outlook.

The moratorium will help push U.S. overall crude output lower next year, the EIA said, reversing a pattern of increases that had occurred over several years. Next year U.S. oil output should fall an average of 26,000 bpd to 5.37 million bpd.

During the fourth quarter this year an average of 31,000 bpd of oil output will be lost, compared with last month’s estimate of 26,000 bpd, the EIA said.

The ban was blocked by a federal court late last month. But a U.S. appeals court will consider the Obama administration’s request to keep the moratorium on Thursday.

The administration is expected to unveil a new, more flexible, moratorium in the next few days that could allow drilling in certain subsea fields.

(Reporting by Timothy Gardner; Editing by Marguerita Choy)

PASS CHRISTIAN, Miss. (AP) – Across a wide stretch of the Gulf of Mexico, the cleanup of the region’s worst-ever oil spill has been essentially landlocked for more than a week, leaving skimmers stuck close to shore.

Last week, the faraway Hurricane Alex idled the skimming fleet off Alabama, Florida and Mississippi with choppy seas and stiff winds. Now they’re stymied by a succession of smaller storms that could last well into this week.

“We’re just lying in wait to see if we can send some people out there to do some skimming,” said Courtnee Ferguson, a spokeswoman for the Joint Information Command in Mobile, Ala.

Officials have plans for the worst-case scenario: a hurricane barreling up the Gulf toward the spill site. But the less-dramatic weather conditions have been met with a more makeshift response. It’s not immediately clear how much oil could have been collected without the weather trouble.

Jerry Biggs, a commercial fisherman in Pass Christian, Miss., who has had to shut down because of the spill, is now hiring out his 13 boats and 40-man crew to BP for cleanup. He said the skimming operation is severely hampered by the weather.

“We don’t even have the equipment to do the job right,” Biggs said. “The (equipment) we’re trying to do this with is inoperable in over 1 foot of seas.”

From Louisiana, where skimming resumed after a three-day halt last week, to Florida, there are about 44,500 people, nearly 6,600 boats and 113 aircraft enlisted in the cleanup and containment effort, according to BP PLC.

The British company has now seen its costs from the spill reach $3.12 billion, a figure that doesn’t include a $20 billion fund for damages the company created last month.

For many involved in the cleanup effort, nagging storms have whipped up choppy seas and gusty winds that make offshore work both unsafe and ineffective, stranding crews on dry land.

“We have to send our guys out every day and look at the weather and ask, ‘Can we do this?’” said Courtnee Ferguson, a spokeswoman for the Joint Information Command in Mobile, Ala., which oversees operations in Alabama, Florida and Mississippi.

In the absence of offshore skimming, efforts in the three Gulf states east of Louisiana have turned largely on containment boom, about 550 miles of which has been deployed along the entire Gulf, and shoreline efforts to clean tar balls and other oily debris from beaches.

“We’re operating 24 hours a day on the beaches, and anything that washes ashore we’re able to get,” Ferguson said.

It may be days before those beach crews are aided by skimming vessels, though, according to weather forecasters.

Heavy rain and scattered thunderstorms are predicted throughout the region into Wednesday, National Weather Service meteorolgist Tim Destri said Monday. The National Hurricane Center is also watching a low pressure system in the Caribbean Sea that has a low chance of becoming a tropical depression in the next two days.

If it does develop, it would more likely head toward northern Mexico or southern Texas, Destri said. But it’s too early to predict its path with certainty.

The storms have not affected drilling work on a relief well that BP says is the best chance for finally plugging the leak. The company expects drilling to be finished by mid-August.

As it works to both clean up and contain the spill, BP is billing partners Anadarko Petroleum Corp. and Japan’s Mitsui for their shares of the cleanup. BP has billed Anadarko, a 25-percent stakeholder in the blown-out well, for more than a quarter billion dollars so far. It also has reportedly billed Mitsui, a 10-percent partner, for $111 million.

Biggs, clearly angry over the situation, said the hurricane season will just further hurt the cleanup effort, saying one big storm will push the oil everywhere.

“This isn’t going away. This isn’t a sneeze or a hiccup. This is diarrhea for a long time,” he said. “My lifestyle is screwed. It’s over. The thing that I love the most I’m not going to be able to do anymore.”

Breen contributed from New Orleans.

Sandy Shore, AP – Gasoline prices continue to rise Monday as vacationers in RVs and campers join commuters on the roads during the peak summer driving season.

Pump prices likely will increase over the next couple of weeks but fall short of $3 per gallon in most states. Analysts note that demand remains lackluster while supplies are ample. And consumers worried about the economy may keep traveling to a minimum.

The national average for retail gasoline prices rose 0.1 cent to $2.756 a gallon Monday, according to Wright Express and Oil Price Information Service. That’s an increase of 1.9 cents from a week ago and 11.3 cents from a year ago.

Western states tend to have higher prices. Gas is averaging $3.141 a gallon in California; $2.904 a gallon in Idaho and $2.997 in the state of Washington.

Among those states with the lowest prices were Missouri at $2.562 a gallon; Mississippi, $2.556 a gallon; and Tennessee, $2.585 a gallon.

Oil prices fell slightly after it appeared Tropical Storm Alex would strengthen but stay out of the Gulf region where most oil rigs and refineries are located, and where BP continues to try to stop a massive oil leak.

“The crude market is not particularly tight right now so weather-related production outages will not have the same effect as in years past unless they reach ‘Katrina’ levels,” MF Global analyst Mike Fitzpatrick said in a research note.

“Prices, will however, be sensitive to economic data flow, particularly with respect to the economy,” he wrote.

Benchmark crude for July delivery fell 61 cents to settle at $78.25 a barrel on the New York Mercantile Exchange.

Oil analyst and trader Stephen Schork predicted oil prices would trade in a narrow range this week ahead of the Fourth of July holiday.

The dollar also grew stronger against other global currencies, which can hurt commodities trading. Most commodities are priced in dollars so a stronger dollar makes them less appealing to foreign investors.

In other Nymex trading in July contracts, heating oil fell 1.89 cents to $2.0933 a gallon, gasoline dropped 3.02 cents to $2.1376 a gallon and natural gas was down 14.4 cents at $4.717 per 1,000 cubic feet.

In London, Brent crude fell 53 cents to $77.59 a barrel on the ICE futures exchange.

Associated Press writer Alex Kennedy in Singapore and Pablo Gorondi in Hungary contributed to this report.

Motorists heading out for the long July 4th weekend will find that filling up the family car is getting more costly.
Retail prices for gasoline have climbed over the past week and are headed back toward a national average of $2.80 to $2.90 per gallon with higher prices on the West Coast, said Tom Kloza of the Oil Price Information Service.
Prices dropped for about six weeks as oil prices fell over worries that the European debt crisis could spread and crush the global economic recovery and demand for crude.
Those worries have since ebbed, oil is rising again and the stock market has started to recover some of its recent losses.
Kloza said he expects the price increases to be modest.
“Much higher prices would roil the economic picture, and the oil price rally has been largely on the coattails of the stock market recovery,” he said.
Prices rose 0.3 cent to a national average of $2.737 per gallon on Monday, according to AAA, Wright Express and Oil Price Information Service. Prices have risen 3.9 cents in the past week and are 7.5 cents below levels of a month ago. Pump prices are 4.4 cents higher than a year ago.
The government’s Energy Information Administration will release its weekly report on retail gasoline prices later Monday.
Oil prices continued to surge Monday, after China moved to end its two-year peg to the dollar. Crude rose $1.32 to $78.50 a barrel on the New York Mercantile Exchange. Traders anticipate a stronger yuan will make dollar-based commodities such as oil cheaper in China and bolster demand in the world’s second biggest market for oil. The policy shift also suggests China officials believe their economy is growing enough to absorb any slowdown in exports that a stronger currency may cause.
China’s oil demand hit a record of about 8.6 million barrels per day in May, an increase of 9.8 percent from May 2009, according to Platts, the energy information arm of McGraw-Hill Cos.
In other Nymex trading, heating oil rose 3.42 cents to $2.1631 a gallon, gasoline gained 3.25 cents to $2.1801 a gallon and natural gas jumped 10.2 cents to $5.099 per 1,000 cubic feet.
Brent crude was up $1.26 at $79.49 on the ICE futures exchange.
Associated Press writers Nataliya Vasilyeva in Moscow and Alex Kennedy in Singapore contributed to this report.

By Matt Rocheleau – Eleven days prior to the April 20 Deepwater Horizon blowout, Halliburton Co., the contractor in charge of cementing the rig’s well, agreed to purchase a little-known company.

The firm, Boots and Coots, focuses on oil spill prevention and blowout response. Now, it is assisting with the relief well work – under contract to BP – to help stop the Gulf oil spill.

What appears to conspiracy theorists as more than a coincidence is nothing out of the ordinary, say oil-industry experts. Increasingly, oil-industry titans are buying up smaller companies that provide all manner of services.

IN PICTURES: The Gulf oil spill’s impact on nature

But this trend is worrying in itself, the experts say. As companies grow and work both to drill wells and potentially clean up their own mistakes, the result can be unintentional, but riskier decisionmaking over time due to a lack of focus – particularly in an industry that is poorly regulated.

Moreover, there is concern that – as the Gulf oil spill shows – big bureaucracies are not nimble enough in an emergency.

“Working on both sides of the fence,” is not uncommon in the oil industry, says Robert Gramling, author of “Oil on the Edge: Offshore Development, Conflict, Gridlock.”

But “it makes for a very complex decision-making environment that can become problematic,” he adds.

Creeping complacency

The concern is not so much about intentional negligence but creeping complacency.

“Nobody’s going to say, ‘Oh, don’t worry, we have a cleanup service, we’ll be alright if there’s a spill,’ ” says Hugh Gorman, author of “Redefining Efficiency: Pollution Control, Regulatory Mechanisms, and Technological Change in the US Petroleum Industry.”

But reassurance about how diversified the business’ services are can lead to relaxed decisionmaking over time.

This can be exacerbated by the fact that the oil industry is “very politically powerful” and oil companies do not face the same strict regulatory and safety standards that, for example, airline companies do, says Mr. Gramling a professor at the University of Louisiana, Lafayette. This can allow for big businesses within the industry and the industry as a whole to “become too cozy,” he adds.

WASHINGTON — The chief executives of the world’s largest oil companies faced a Congressional panel of inquisitors on Tuesday and tried to cast the BP spill as a rare event that their companies were not likely to repeat.

In their prepared remarks, the executives said that continued offshore exploration and drilling were essential to American oil and gas supplies and to the health of their industry.

In a moment of Capitol Hill drama reminiscent of the grilling of tobacco industry executives in 1994, the oil company officials were summoned by the House Energy and Commerce Committee to justify offshore drilling and explain how their safety practices differed from BP’s.

Rex W. Tillerson, chairman of Exxon Mobil, said in prepared testimony that if companies follow proper well design, drilling, maintenance and training procedures accidents like Deepwater Horizon explosion on April 20 “should not occur,” implying that BP had failed to do so.

John S. Watson, chief executive of Chevron, also pointed an implicit finger at BP, saying that every Chevron employee and contractor has the authority to stop work immediately if they see anything unsafe. Congressional investigators charge that BP went ahead with risky procedures even after repeated warnings from company workers and contract employees on the ill-fated rig.

“Our internal review confirmed what our regular audits have told us,” Mr. Watson said in his prepared remarks. “Chevron’s deepwater drilling and well control practices are safe and environmentally sound.”

The panel is also scheduled to hear from Lamar McKay, the president of BP America, as well as from executives of Shell and Conoco Phillips.

The executives appeared before the energy and environment subcommittee of the House Energy and Commerce Committee, chaired by Representative Edward J. Markey, Democrat of Massachusetts. He planned to question the oil company representatives not only about safety procedures but about emergency planning, the use of dispersants and differences in regulations in other countries.

Representative Henry A. Waxman, chairman of the House committee, focused on the spill response plans of the five companies. They were prepared by an outside contractor and are virtually identical, Mr. Waxman said.

Each of the plans addresses a worst-case spill. BP’s plan says it can handled a spill of 250,000 barrels a day; Chevron and Shell say they can handle 200,000 barrels a day. The current estimate for the BP spill is about 30,000 barrels a day, and it is clear that the company’s plan was not adequate to deal with it.

Mr. Waxman said it is clear that the plans are “just paper exercises.”

“BP failed miserably when confronted with a real leak,” Mr. Waxman said, “and Exxon Mobil and the other companies would do no better.”

Mr. Markey prepared a series of questions about industry spending on research and alternative energy, and plans to expand offshore operations to the Atlantic, Pacific and Arctic coasts.

“Now the other companies here today will contend that this was an isolated incident. They will say a similar disaster could never happen to them,” Mr. Markey said as the hearing opened. “And yet it is this kind of Blind Faith — which is ironically the name of an actual rig in the Gulf — that has led to this kind of disaster.”

Mr. Markey added: “In preparation for this hearing, the committee reviewed the oil spill safety response plans for all of the companies here today. What we found was that these five companies have response plans that are virtually identical. The plans cite identical response capabilities and tout identical ineffective equipment. In some cases, they use the exact same words. We found that all of these companies, not just BP, made the exact same assurances.”

Like BP, Mr. Markey said, three other companies include references to protecting walruses, which have not called the Gulf of Mexico home for three million years.

“Two other plans are such dead ringers for BP’s that they list a phone number for the same long-dead expert,” he said.

Mr. McKay, of BP America, issued a plea for forbearance from Congressional and executive branch officials, saying in his prepared remarks, “America’s economy, security and standard of living today significantly depend upon domestic oil and gas production. Reducing our energy production, absent a concurrent reduction in consumption, would shift additional jobs and dollars offshore and place millions of additional barrels per day into tanker ships that must traverse the world’s oceans.”

It has been a tough couple of months for Tony Hayward. As the CEO of BP, the company responsible for the largest oil spill in US history, Hayward has been accused of everything from incompetence to lack of integrity.

Life is set to get a little bit tougher for the 52-year-old Ph.D. geologist this week.

On Wednesday, he is expected to meet with President Obama for the first time since the Deepwater Horizon oil rig exploded almost two months ago.

The meeting is likely to be tense, given that Obama and lawmakers in Washington have made it clear they want BP to pay for the disaster. Last week, Obama told NBC News that Hayward would not be working for him after some of comments the CEO made, and and that he was trying to figure out “whose ass to kick.”

The Coast Guard, meanwhile, sent a letter Friday to the energy company demanding that it speed up its spill containment efforts and present a plan for doing so by today. In response to the letter, BP said it would be able to capture 53,000 barrels of oil per day by the end of June and 80,000 barrel by mid-July, according to Bloomberg News. Current containment efforts are capturing 15,000 barrels a day.

Despite government officials’ pointed criticism of BP, the President on Saturday reportedly sought to ease concerns that the U.S. is also blaming Britain for the disaster. He reportedly told British Prime Minister David Cameron in a phone call that “that our frustration has nothing to do with national identity” but instead revolves around “ensuring that a large, wealthy company lives up to its obligations,”according to the Associated Press.

BP Shares Sink After Senators Call for Escrow FundBP Downplays New Higher Estimate of Oil SpillBP Wants Disclaimer on Parody Twitter Account
Over the weekend, the Obama administration indicated that it wants BP to set up an escrow account to pay damage claims related to the spill.

“The President will make clear that he expects, and that if necessary will exercise his full legal authority to ensure, that BP sets aside the funds required to pay individuals and businesses damaged by this massive spill. And that those funds will be paid out under fair, efficient, and transparent procedures administered by an independent third-party panel established just for this purpose,” a senior administration official told ABC News.

BP says Hayward also will discuss the possibility of suspending the company’s dividend payment to shareholders with the President, but the firm says there will be no decision until later this summer.

On Thursday, Hayward is scheduled to testify before the House Committee on Energy and Commerce.

“It’s going to be a grilling,” says Fadel Gheit, head of oil and gas research at investment bank Oppenheimer & Co. He says lawmakers seem bent on publicly punishing Hayward, whether the exercise is productive or not. “Most of the politicians are playing this game because of the midterm elections, they want to get their day in the sun.”

BP Causes U.S.–U.K. Rift
The meetings come as U.S. relations with the U.K. grow cool. British commentators have argued that Americans have come down especially hard on BP because it’s a foreign company, and that the public outcry would have been more muted if an American company had caused the spill.

“The perception here is that the (U.S.) administration and 9 out of 10 commentators are distorting things by talking about ‘British Petroleum,’” says one London-based oil expert who wanted to remain anonymous. BP stopped using the full name years ago after its merger with Amoco, an American company.

BP Bankruptcy Highly Unlikely
Some oil experts say they are also surprised at reports that the oil spill may lead to bankruptcy for BP. They point out that the company posted a profit of more than $21 billion last year and generates cash flow of $3 billion each month.

“This is money that’s available for them to do whatever they want with,” says Oppenheimer’s Gheit.

So far, BP has spent $1.43 billion to clean up the disaster, and analysts at CSFB estimate that BP will probably end up spending $5-$8 billion on cleanup and containment; or $6-$12 billion after factoring in Clean Water Act liabilities.

If BP also ends up suspending its dividend that would free up another $10 billion, says Gheit.

“BP has incredible financial flexibility,” says Gheit. “The demise of BP is greatly exaggerated.”