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Obama Warns BP on Paying Big Dividends Amid Oil Spill

President Obama participated in an update meeting with state and local officials including United States Coast Guard Admiral Thad W. Allen before traveling to the Gulf Coast to survey the effects of the BP Deepwater Horizon oil spill on Friday.Credit...Luke Sharrett/The New York Times

NEW ORLEANS — President Obama visited the Gulf Coast on Friday and chastised BP for paying billions of dollars in dividends to shareholders and on advertising to save its image while some people whose livelihoods were wrecked by the company’s oil spill were reporting difficulties in getting their claims paid.

“My understanding is that BP has contracted for $50 million worth of TV advertising to manage their image during the course of this disaster,” President Obama said after meeting with local and federal officials at the airport near here.

“In addition, there are reports that BP will be paying $10.5 billion – that’s billion, with a B – in dividend payments this quarter,” he continued. “Now I don’t have a problem with BP fulfilling its legal obligations, but I want BP to be very clear they’ve got moral and legal obligations here in the Gulf for the damage that has been done. And what I don’t want to hear is, when they’re spending that kind of money on their shareholders, and spending that kind of money on TV advertising, that they’re nickel-and-diming fisherman or small businesses here in the Gulf who are having a hard time.”

The president’s stern words for BP came after he faced a barrage of criticism for not showing enough anger, or emotion, in the face of an environmental disaster that is now nearly seven weeks in the making.

On this trip he made sure to meet with people directly affected by the disaster, paying a visit to Camardelle’s Live Bait and Boiled Seafood on Grand Isle to visit with an oysterman, a shrimper, and some local business owners and officials. And officials announced that President Obama would meet at the White House next Thursday with relatives of those killed on the Deepwater Horizon rig to offer his condolences.

Officials reported tentative signs of progress in their latest efforts to contain the spill, which has pumped millions of gallons of oil into the Gulf of Mexico. Mr. Obama, however, cautioned that “it is way too early to be optimistic.”

The failure to stop the leak has fed concern about the administration’s powerlessness in the face of this crisis, and the White House, hoping to keep an environmental disaster from turning into a political one, has been determined to show that it is fully engaged.

Federal officials have been assigned to look over the claims process to make sure that BP pays valid claims, the president said. “They say they want to make it right – that’s part of their advertising campaign – well we want them to make it right,” he said.

“The fact that BP could pay a $10.5 billion dividend payment is indicative of how much money these folks have been making,” he said. “Given the fact that they didn’t fully account for the risks, I don’t want somebody else bearing the costs of those risks that they took.”

Many local officials have expressed concern that the moratorium on some drilling operations that the president declared could end up harming the Gulf Coast economy as it reels from the oil spill. President Obama said that if a commission he has appointed to study the safety of offshore drilling is able to reach conclusions about how such drilling can be done safely, he would be open to allowing drilling to resume sooner.

“We discovered that companies like BP, who had provided assurances that they had failsafe, back-up, redundant systems, in fact not only didn’t have failsafe systems but had no idea what to do when those failsafe systems broke down,” he said.

In response to the president’s comments, BP said later on Friday that it would be sending another payment this month to people and businesses who lost income due to the oil spill. With the second payment, it said, it will have spent $84 million reimbursing people for their loss of income.

“We deeply regret the impact the oil spill has had on individuals and businesses, and understand the need for quick and reasonable compensation,” Doug Suttles, its chief operating officer, said in a statement.

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Gov. Charlie Crist of Florida, Lisa Jackson, the the Environmental Protection Agency’s administrator and Adm. Thad W. Allen of the Coast Guard greeted President Obama in New Orleans on Friday.Credit...Luke Sharrett/The New York Times

As for efforts to stanch the flow of oil from the leaking well, Adm. Thad W. Allen of the Coast Guard, who is commanding the federal response to the disaster, said earlier in the day that some oil had been collected in a cap that was placed over the well and that it was beginning to be funneled up to a ship on the surface. But he noted that a great deal of oil was still escaping, by design, through vents in the cap. The vents were intended to let some oil out in order to keep cold Gulf water from rushing in and forming icy hydrates that could block the flow of captured oil to the surface.

Until those vents are closed, it will not be clear whether the cap is seated tightly enough on the cut end of the well’s riser pipe to prevent large amounts of oil from continuing to pour into the Gulf of Mexico, Admiral Allen said. He said that current plans call for closing those vents on Friday.

He said that a rough estimate of the rate at which leaking oil was being captured by the cap was 1,000 barrels a day, a small fraction of the estimated 12,000 to 19,000 barrels of oil a day that is gushing into the Gulf. But he said that as the vents on the cap are progressively closed, more oil should be captured, as long as the seal continues to hold.

The president traveled here to assess the situation and meet with officials responding to the crisis on Friday, after the White House announced late Thursday night that he would be cancelling a trip he had planned to Australia, Indonesia and Guam.

President Obama made the decision to postpone his trip to Indonesia and Australia, Robert Gibbs, the White House press secretary, told pool reporters traveling here with the president. "The president made the decision that with all that’s going on, particularly on the response right now, it would be difficult to go,” he said.

Mr. Obama has called the spill his “highest priority” and the White House understands it will absorb a considerable portion of the president’s time this summer.

The president arrived at the New Orleans airport in Kenner, La., at 1:07 p.m., and went into a field house at the airport for a briefing from local, state and federal officials. He was greeted at the airport by Admiral Allen and Gulf Coast officials, including Gov. Bob Riley of Alabama and Gov. Charlie Crist of Florida.

From here, the president planned to travel on to Grand Isle, La., officials said.

BP’s chief executive, Tony Hayward, told investors on Friday that “the financial consequences of this incident will undoubtedly be severe,” but that BP’s current finances give it “significant flexibility in dealing with the costs of this incident.” He declined to estimate how much it would cost to stop the leak and clean up the spill.

In his first address to BP investors since the April accident, Mr. Hayward apologized for the damage the company caused to American citizens, to the gulf region, and to the company’s employees, investors and other stakeholders.

“Everyone at BP is heartbroken by this event, by the loss of life and by the damage to the environment and to the livelihoods of the people of the Gulf Coast,” Mr. Hayward said on a call with investors. “It should not have happened, and we are bound and determined to learn every lesson to try and ensure it never happens again.”

BP plans to set up a separate organization to manage the response once the well is no longer leaking oil. That would allow some BP employees to focus exclusively on the situation in the Gulf rather than being sidetracked to run the daily operation of the company, Mr. Hayward said. The unit will be led by Robert Dudley, the former chief executive of BP’s Russian venture.

Mr. Obama’s decision to cancel his Asia trip underscored the way the oil spill is forcing the White House to recalibrate plans for this summer. BP and the government have given up trying to plug the leak and are focusing now on siphoning or containing it until relief wells can be completed, perhaps by August. As a result, the president faces another two months in crisis management before he can even turn his focus exclusively to cleanup and recovery.

On Thursday, the White House announced that it had sent a $69 million bill to BP for the first installment of clean up costs. The White House has made a point of criticizing BP lately and the Justice Department has opened criminal investigation into what caused the April 20 explosion that ultimately sank the Deepwater Horizon rig, killed 11 workers and touched off the leak.

Mr. Obama, who has also been confronted by questions about his cool public reaction, said Thursday night that he is “furious at this entire situation” but does not show it because it does not accomplish anything.

“I would love to just spend a lot of my time venting and yelling at people,” he said on “Larry King Live” on CNN. “But that’s not the job I was hired to do. My job is to solve this problem and ultimately this isn’t about me and how angry I am. Ultimately, this is about the people down in the Gulf who are being impacted and what am I doing to make sure that they’re able to salvage their way of life.”

Peter Baker in Washington and Henry Fountain in New York also contributed reporting.

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