WASHINGTON—President Barack Obama wrested a $20 billion compensation guarantee and an apology to the nation from British oil giant BP Wednesday, announcing the company would set up a major claims fund for shrimpers, restaurateurs and others whose lives and livelihoods are being wrecked by the oil flooding into the Gulf of Mexico.
Applause broke out during a community meeting in Orange Beach, Ala., on the news.
"We asked for that two weeks ago and they laughed at us," Mayor Tony Kennon said. "Thank you, President Obama, for taking a bunch of rednecks' suggestion and making it happen."
Obama had said he would "make BP pay," and the company's chairman said after four hours of intense White House negotiations that BP was ready.
The unending oil spill saga had yielded almost no good news before this. Creation of the fund - to be run by an administrator with a proven track record - is the first big success Obama has been able to give to Gulf residents and the nation in the eight weeks since the explosion, a period during which the spill has taken ever more of the public's attention, threatening anything else the president hoped to focus on or accomplish.
Huge as the $20 billion seems, both Obama and London-based BP PLC said it was by no means a cap.
The deal also adhered to what Obama had said was his non-negotiable demand: that the fund and the claims process be administered independently from BP. It won't be a government fund, either, but will be led by the administration's "pay czar," Kenneth Feinberg, better known as the man who oversaw the $7 billion government fund for families of victims of the Sept. 11, 2001, terrorist attacks.
The April 20 explosion of an offshore oil rig killed 11 workers and sent millions of gallons of crude spewing into the water from the broken well a mile below the ocean's surface - as much as 118 million gallons so far and still flowing. More wildlife, beaches and marshlands are fouled every day, jeopardizing not just the region's fragile ecology but a prized Gulf way of life that is built on fishing and tourism.
On Wednesday, BP began burning oil siphoned from the ruptured well as part of its plans to more than triple the amount of crude it can stop from reaching the sea by the end of the month, the company said. It's the first time this particular burner has been deployed in the Gulf.
Though the company hopes to install equipment soon to capture as much as 90 percent of the escaping oil, the leak is expected to continue at least until relief wells are finished in August.
The use of the BP escrow fund is intended to avoid a repeat of the painful aftermath of 1989 Exxon Valdez oil disaster in Alaska, when the fight over money dragged out in courts over roughly two decades.
"What this is about is accountability," said Obama in brief remarks in the State Dining Room after a four-hour, on-again, off-again White House negotiation session with BP executives. "For the small-business owners, for the fishermen, for the shrimpers, this is not just a matter of dollars and cents. ... A lot of these folks don't have a cushion."
On the driveway outside, BP Chairman Carl-Henric Svanberg apologized for "this tragic accident that should never have happened."
"We care about the small people," he said.
That comment wasn't as well-received as the promise of compensation.
"We're not small people," said Justin Taffinder of New Orleans. "We're human beings. They're no greater than us. We don't bow down to them."
Added Terry Hanners, who has a small construction company in Gulf Shores, Ala.: "These BP people I've met are good folks. I've got a good rapport with them. But BP does not care about us. They are so far above us. We are the nickel-and-dime folks of this world."
Asked about the remark by Svanberg, who is Swedish, BP spokesman Toby Odone told The Associated Press in an e-mail that "it is clear that what he means is that he cares about local businesses and local people. This was a slip in translation."
The apologetic talk was expected to continue Thursday when company CEO Tony Hayward will face sharp questions from lawmakers on Capitol Hill.