New nightmare for BP as Florida closes beaches

The environmental nightmare unleashed by the crippled BP oil well in the Gulf of Mexico has reached the white-sand paradises of Florida.

Officials announced a swimming ban along a six-mile stretch of popular beach while researchers warned of mass lay-offs in the state's all-important tourism sector this year.

The damage being inflicted on BP itself meanwhile continued to worsen as shares in London fell another 4 per cent in nervous trading that reflected the campaign by the federal government in Washington to shift all blame for the catastrophe on to the company by serving notice that it will be expected to pay all bills.

Pressure on BP was even harsher in New York where early trading saw its depositary shares fall 9 per cent in value. "People are resigning themselves to the fact that there may be a suspension of the dividend," said Tony Shepard, an oil analyst at brokerage Charles Stanley in London.

The Interior Secretary, Ken Salazar, told US Congress he now expected BP to pay for the cancelled salaries of anyone unexpectedly without work because of the six-month moratorium on deep-ocean drilling announced in the wake of the blow-out.

A memorandum from Goldman Sachs, the Wall Street brokerage giant, meanwhile put at US$33bn the eventual cost to BP for everything associated with the disaster, including clean-up, legal bills and compensation payments. The analysts said it may be a decade before all these costs have materialised, however. The bank predicted the two-quarter dividend holiday by the company in response to direct pressure from US politicians.

Tar balls have been puncturing the sands of Pensacola in Florida since last weekend. Yesterday, officials introduced the first swimming ban in the state associated with the leak, covering a six-mile stretch of Perdido Beach on the Gulf Shore Islands.

The White House said Barack Obama, whose presidency has been knocked off course by the crisis, would make a fourth trip to the Gulf Coast next week, notably making his first stop since the disaster began in Florida, an all-important political swing state.

Sean Snaith, an economist with the University of Central Florida, released an initial study into the potential impact of the disaster on the state's economy, concluding that as many as 195,000 Floridians employed in the tourism sector could be laid off as a result of the spill. Mr Snaith contended that a direct hit by the surface slick on Florida could spell a 50 per cent drop in tourist visits.

Exactly how serious a scenario will unfold is difficult to predict, he admitted. "The whole economic impact of the episode is a giant layer cake of uncertainty," he said. "How many counties will be affected? I don't know. We won't really know until the oil starts washing up on the shore."

Just days ago, however, officials at BP were publicly suggesting Florida would escape all impact from the spill. As in other areas, the company seems now to have downplayed the fall-out from the disaster.

Similarly, officials continued yesterday to dispute findings by the US government that large suspended plumes of crude are hanging in the Gulf as far down as 3,000 feet. The existence of the plumes was confirmed by the government on Tuesday.

Admiral Thad Allen of the US Coast Guard released a letter he had sent to BP expressing concern that the company was fouling up in its disbursement of compensation claim monies. He said he had demanded a meeting with company executives, which was due to take place later yesterday.

In the letter to BP sent on 8 June, he said: "The Federal Government and the public expects BP's claims process to fully address the needs of impacted individuals and businesses."

- INDEPENDENT