Obama to capitalize on spill in high-stakes speech

WASHINGTON/PENSACOLA, Fla. Tue Jun 15, 2010 9:44pm IST

U.S. President Barack Obama makes remarks on the BP oil spill beside National Incident Commander Admiral Thad Allen at the Theodore Staging Facility in Theodore, Alabama, June 14, 2010.  REUTERS/Jim Young

U.S. President Barack Obama makes remarks on the BP oil spill beside National Incident Commander Admiral Thad Allen at the Theodore Staging Facility in Theodore, Alabama, June 14, 2010.

Credit: Reuters/Jim Young

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WASHINGTON/PENSACOLA, Fla. (Reuters) - President Barack Obama will make a high-stakes address to the nation on Tuesday night that aims to restore public confidence in his handling of the Gulf of Mexico oil spill and drive forward his ambitious plans to cut U.S. dependence on fossil fuels.

In his first nationally televised address from the Oval Office, Obama will seek to show that he is on top of the BP Plc oil spill (BP.N) (BP.N) crisis that has tested his presidency and overshadowed his efforts to reduce U.S. unemployment and reform Wall Street.

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

The speech 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 additional financial costs.

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An April 20 explosion on an offshore rig owned by British energy giant BP killed 11 workers and ruptured a deep-sea well. The ensuing spill has fouled 120 miles (190 km) of U.S. coastline, imperiled multibillion-dollar fishing and tourism industries and killed birds, sea turtles and dolphins.

Executives from other major oil companies turned on BP and defended their own drilling practices during a U.S. congressional hearing in Washington on Tuesday. During the hearing, lawmakers criticized oil companies for having insufficient plans to handle a deepwater oil disaster.

Summoned before the U.S. House of Representatives subcommittee on energy and environment, executives of the biggest oil companies moved to isolate BP as they sought to stave off new government regulations in the wake of the spill.

"I believe the independent investigation will show that this tragedy was preventable," said John Watson, chairman and chief executive of Chevron.

BP's U.S. boss Lamar McKay is expected to face tough questions by lawmakers on why the company made repeated choices that appeared to favour cost savings over safety before its rig blew up.

Two Democratic lawmakers said in a letter to BP's CEO Tony Hayward on Monday that the company appeared to have chosen faster and cheaper drilling options in the Gulf of Mexico that "increased the danger of a catastrophic well failure."

BP LOSES AA RATING

The accusations come as BP, a listed company that has lost about half its market value since the spill began almost two months ago, was stripped of its AA debt rating by rating agency Fitch.

The downgrade follows a precipitous 9 percent fall in BP's shares on Monday. Its stock price dipped 4 percent in London trading on Tuesday, while its U.S.-listed shares were down about 1 percent in early trading in New York.

Ahead of his 8 p.m. EDT (0001 GMT) 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.

As he strolled on a seashore in Pensacola with Florida's Republican governor Charlie Crist, a crowd shouted "Save our Beach."

Obama is expected to use his speech to say the spill underscores the need for the United States to end its dependence on oil and move to a "clean energy" economy.

"This is a tremendously important time," Obama's spokesman, Robert Gibbs, told ABC's "Good Morning America" program. "The president understands the challenges and will lay out a direct and clear plan to meet them."

"If we refuse to heed the warnings from the disaster in the Gulf -- we will have missed our best chance to seize the clean-energy future we know America needs to thrive in the years and decades to come," the Democratic Party quoted Obama as saying in an email to supporters on Monday.

Obama's influential chief of staff Rahm Emanuel famously once said: "Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before."

REPUBLICAN WARNING

Obama's speech could reinvigorate energy legislation that has been languishing in the Senate amid opposition from Republicans and lawmakers from oil and coal states. The bill aims to combat global warming and increase domestic energy production.

Senate Majority Leader Harry Reid wants to have an energy bill on the Senate floor next month, but it will likely need to be rejigged to take account of the safety concerns highlighted by the Gulf of Mexico spill.

Hours before Obama was due to speak, Republican Senate leader Mitch McConnell warned him 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."

Away from Washington, BP continued to siphon off more oil from its blown-out oil well and said its new containment cap system had captured 15,420 barrels on Monday. Overall, 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 will complete drilling two relief wells.

Under intense administration pressure, BP unveiled a new plan on Monday to vastly increase the amount of oil it can collect from the well.

Gibbs said on Tuesday BP should be siphoning off about 90 percent of the oil leaking from the well by the end of June.

Despite his attempts to move the debate forward and focus attention on BP, some Gulf residents are still angry at Obama.

"This is ridiculous. This is America. They're letting BP control this country? Or any other oil company? What's going on in this world?" said oyster dock manager Terry Alexis in Empire, Louisiana.

(Additional reporting by Jeffrey Jones in Louisiana, Tom Bergin;Steven Phillips and Steve Holland on the Gulf coast, Kristen Hays and Chris Baltimore in Houston, Tom Doggett, Timothy Gardner in Washington; Writing by Andrew Callus and Ross Colvin; Editing by Will Dunham)

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