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Obama tackles oil spill in Oval Office address

Text by News Wires

Latest update : 2010-06-15

US President Barack Obama is expected to push the case for a shift towards clean energy as he seeks to restore public confidence in his handling of the Gulf of Mexico oil spill during a high-stakes address to the American people.

AFP - President Barack Obama will make a high-stakes address to the nation on Tuesday night seeking to restore public confidence in his handling of BP Plc's Gulf of Mexico oil spill and drive forward his ambitious plans to cut U.S. dependence on fossil fuels.

Ahead of the televised speech, BP's efforts to curb the flow of oil into the sea suffered another setback.

A small fire aboard a ship collecting the crude forced the company to suspend its operations to siphon oil from its ruptured deep-sea well, BP said. As a live video feed of the seabed leak showed clouds of crude billowing freely into the Gulf, the British energy giant said it did not know when it would be able to resume capturing oil.

In Washington, major oil company executives told a U.S. congressional hearing that BP had not adhered to industry standards in building its deep-sea well that blew out on April 20, unleashing a torrent of crude that has causing the biggest environmental disaster in U.S. history.

But their efforts to distance themselves from BP did not stop Democratic lawmakers from criticizing as "virtually worthless" industry plans to handle deepwater oil disasters.

In his first nationally televised address from the Oval Office, Obama will seek to show that he is on top of the oil spill crisis that has tested his presidency and overshadowed his efforts to reduce U.S. unemployment and reform Wall Street. The speech is set for 8 p.m. EDT (0001 GMT).

Public opinion polls show a majority of Americans believe Obama has been too detached in his handling of the spill, and he has come under intense pressure to show more leadership.

Tuesday night's address will be closely watched by the oil industry and investors worried about the future of off-shore drilling in the United States, in particular the possibility of tighter regulations that could impose new financial costs.

Investors also will be looking for Obama to jump-start alternative energy initiatives such as solar, wind and geothermal that are now stalled in Congress. Shares in U.S. solar companies rose ahead of the speech.

Obama may use the address to revive energy legislation that has been languishing in the Senate amid opposition from Republicans and lawmakers from oil and coal states. The bill aims to curb global warming and increase domestic energy production.

Senate Republican leader Mitch McConnell, however, warned Obama against using "the justifiable public outrage over an explosion that killed 11 people and the oil spill that followed as a tool for pushing a divisive new climate change policy."

Lawmakers slam BP

At Tuesday's congressional hearing, executives from Exxon Mobil, Chevron, ConocoPhillips and Royal Dutch Shell declined to answer when one lawmaker asked whether they would disagree that BP had made mistakes in constructing its ill-fated Macondo well in the Gulf of Mexico.

Representative Edward Markey pushed BP's U.S. boss, Lamar McKay, to apologize for not being able to accurately estimate the amount of oil spilling into the Gulf of Mexico.

Millions of gallons have poured into the Gulf, fouling 120 miles (190 km) of U.S. coastline, imperiling multibillion-dollar fishing and tourism industries and killing birds, sea turtles and dolphins.

"We are sorry for everything the Gulf Coast is going through, we are sorry for that and the spill," a drawn-looking McKay said, adding that the company did not have the technology to measure the amount of spilled oil.

Laying out the steps that his company was taking to contain the spill, he said BP soon would have up to six ships on the scene to deal with oil siphoned from the spewing well.

BP stock price

As McKay was speaking, BP's U.S.-listed shares jumped and trading volumes spiked. They rose 4 percent at one point in afternoon trading before closing up 2.35 percent. They had plunged 9 percent on Monday.

BP shares trading in London closed down 3.78 percent on Tuesday.

Rating agency Fitch smacked BP with a hefty six-notch downgrade on its debt rating. That puts BP's debt just two notches above junk, which would mean a significant boost in the company's cost of borrowing. BP has lost about half of its market value since the spill began two months ago.

Ahead of his speech, Obama was in Florida on the second day of a two-day tour of Gulf Coast communities hit by the 57-day-old spill.

"This is an assault on our shores and we're going to fight back with everything that we've got," Obama said in a speech at the Pensacola Naval Air Station.

 BP said its new containment cap system had captured 15,420 barrels from its Gulf of Mexico well on Monday. The system has collected 149,900 barrels since it was installed on June 3. One oil barrel equals 42 U.S. gallons (160 litres).

But thousands of gallons of oil are still pouring into the Gulf every day and a definitive solution is not expected until August, when BP is due to complete drilling two relief wells.

It is a critical week for the company -- top executives are due to meet Obama at the White House on Wednesday, when the president will press them to set up a special fund to pay damage claims to victims of the spill.

CEO Tony Hayward, the public face of BP's response to the spill, is due to testify for the first time at a U.S. congressional hearing on Thursday.

Date created : 2010-06-15


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