Cost of oil spill and can/will BP pay for it all?

[Puppycow]

I've read that the cost of the oil spill in the Gulf of Mexico is going to run into the tens or possibly hundreds of billions in economic damage. This raises the following questions:

Is BP really going to pay for it all?
Do they have the money to pay for it all?
Does that include making whole everyone who suffered economic damage due to the oil spill?
Are they even required by law to pay for it all? According to current law, there's a $75 million cap on economic damages such as lost earnings and damage to local resources. U.S. lawmakers are seeking to raise that cap to $10 billion. But usually you can't make laws retroactive (bill of attainder).

[Darth Rotor]

I've read that the cost of the oil spill in the Gulf of Mexico is going to run into the tens or possibly hundreds of billions in economic damage. This raises the following questions:

Is BP really going to pay for it all?
Do they have the money to pay for it all?
Does that include making whole everyone who suffered economic damage due to the oil spill?
Are they even required by law to pay for it all? According to current law, there's a $75 million cap on economic damages such as lost earnings and damage to local resources. U.S. lawmakers are seeking to raise that cap to $10 billion. But usually you can't make laws retroactive (bill of attainder).

Since the spill isn't finished spilling yet ... and did you mean ex post facto law? :confused:

[thaiboxerken]

Exxon has yet to pay all of their obligations for their spill. So I doubt BP will be doing it either.

[Darth Rotor]

Exxon has yet to pay all of their obligations for their spill. So I doubt BP will be doing it either.
Still in court after all these years? :confused:

I wonder how much their legal fees, added up, would measure up to damages/costs avoided, or not paid.

DR

[daredelvis]

Still in court after all these years? :confused:

I wonder how much their legal fees, added up, would measure up to damages/costs avoided, or not paid.

DR
My bet is a lot less. You can bet that Exon and BP have some people working for them that are pretty good a running an excel spreadsheet.

Daredelvis

[KingMerv00]

Are they even required by law to pay for it all? According to current law, there's a $75 million cap on economic damages such as lost earnings and damage to local resources. U.S. lawmakers are seeking to raise that cap to $10 billion. But usually you can't make laws retroactive (bill of attainder).

I obviously don't have that law in front of me but is that $75 million cap per plaintiff or per defendant?

[thaiboxerken]

l believe the cap is per incident.

[daredelvis]

I obviously don't have that law in front of me but is that $75 million cap per plaintiff or per defendant?

l believe the cap is per incident.
Per incident is my understanding from listening to the talking heads. A paltry sum.

Daredelvis

[KingMerv00]

l believe the cap is per incident.

Per incident is my understanding from listening to the talking heads. A paltry sum.

Daredelvis

What law is this? Exxon has paid far more that $75 million.

Maybe the law is new?

[Cleon]

BP says it has spent some $350 million (http://money.cnn.com/2010/05/10/news/economy/bp_costs/index.htm?cnn=yes&hpt=T2).

[daredelvis]

75 mil is paltry in light of BP profits weighted against the damage done to the environment and economy of the gulf coast. People will lose jobs, health insurance, homes and go out of business over this. I wonder if any of them will be BP executives?
From wiki.
Financial data in millions of US$
Year 2002 2003 2004 2005 2006
Sales 180,186 236,045 294,849 249,465 265,906
EBITDA 22,941 28,200 37,825 41,453 44,835
Net Results 6,845 10,267 15,961 22,341 22,000
Net Debt 20,273 20,193 21,607 16,202 16,202 I find similar numbers for recent years, with the exception of 2008 where the profits appear similar to 2002.

Daredelvis

[Tricky]

BP will be making full reparation to every person who doesn't use any oil.

[daredelvis]

BP will be making full reparation to every person who doesn't use any oil.
I am sure that is tong in cheek, but should our driving and energy consumption habits in the big city be paid for by the loss of shrimping jobs on the gulf coast?

Daredelvis

[Tricky]

I am sure that is tong in cheek, but should our driving and energy consumption habits in the big city be paid for by the loss of shrimping jobs on the gulf coast?

Daredelvis
Yes, it was tongue-in-cheek, but I didn't mean it to be a "screw all the shrimpers" kind of statement. Believe me, I am just as horrified by this as anyone. I'm a big environmentalist myself.

But what I mean is that oil is a very vital part of our nation, and getting it out of the ground is neither cheap nor free from danger. Like everybody else, I want to get this problem fixed with a minimum of damage, but what I see sometimes are people who rail at the "bad old oil companies", but scream themselves blue when the price of gas goes up, and expect to be able to drive wherever they want.

Every energy form entails risk. The more of it you use, the more risk. This is not to suggest that we should wink this off, but to say that the most important thing is to fix the problem, not to assign blame.

BP will pay through the butt for this. Obviously, they'll try to keep their cost down, but BP is a lot better about shouldering their load than any other oil company, in my opinion. The Gulf Coast is very lucky that this wasn't Exxon that had this accident. Their first step would have been to increase internal security to make sure reporters were given no info.

But just as there are ethical and unethical ways to face the responsibility of causing the damage, it should also be noted that there are more than a few people out there who will regard this as an opportunity to extract money from BP and the government. I think Katrina showed us that. Some people are going to feel cheated. That is inevitable. Some are going to be harmed. It will be less harm than if it wasn't BP doing the reparations, but it will still be harm. There is no way to "put everything right". Some may lose their livelihoods.

And if the Gulf were shut down to oil exploration, many hundreds of thousands would lose their jobs. Whose living is more important? We can't judge these things. I deeply hope that the impact as small as possible. I will work toward that, both in my job and my volunteer time. I can't pretend that it will be zero damage though. And for that, I'm deeply sorry.

[Puppycow]

Since the spill isn't finished spilling yet ... and did you mean ex post facto law? :confused:

I'm sure some in congress would like to do that, but I don't think the constitution allows it. Here's what Ben Nelson had to say (http://moneymorning.com/2010/05/10/gulf-oil-spill-2/)
Analysts estimate that the Louisiana fishing industry could sustain $2.5 billion in losses, while Florida could lose $3 billion in tourism income. The total cost to the region could be $8 billion-$12 billion, according to estimates.

Federal laws enacted after the Exxon spill require the "responsible party" to pay for all the costs associated with the cleanup. And while there is a $75 million cap on economic damages such as lost earnings and damage to local resources, U.S. lawmakers are seeking to raise that cap to $10 billion.

"[BP] says it'll pay for this mess. Baloney," said U.S. Sen. Bill Nelson, D-FL. "They're not going to want to pay anymore than what the law says they have to, which is why we can't let them off the hook"

U.S. Sen. Bill Nelson has filed a bill that would increase oil companies' liability to $10 billion and put them on the hook for lost business revenues.

BP chief executive Tony Hayward - who promised to pay "all legitimate claims" privately balked at committing to paying all claims for economic damage caused by the company's oil spill, said Nelson.

"When I said 'Will you be responsible for the economic damages?' he said, "That's something we'll have to work out in the future,'" Nelson said.

What law is this? Exxon has paid far more that $75 million.

Maybe the law is new?

The $75 million is for economic damages (fishermen, etc.), and doesn't include the cost of cleanup. I don't know what the limit was back then though.

[KingMerv00]

The $75 million is for economic damages (fishermen, etc.), and doesn't include the cost of cleanup. I don't know what the limit was back then though.

I really doubt the $75 million is a cap on total damages. It seems amazingly low. Are we sure that is $75 million per fisherman? Then again who knows. There are some remarkably stupid civil caps out there.

[daredelvis]

Yes, it was tongue-in-cheek, but I didn't mean it to be a "screw all the shrimpers" kind of statement. Believe me, I am just as horrified by this as anyone. I'm a big environmentalist myself.
I specifically said "tong-in-cheek", either you misunderstood, or I've been drinking again. Either is equally plausible.

...it should also be noted that there are more than a few people out there who will regard this as an opportunity to extract money from BP and the government. I think Katrina showed us that.
I get what you are saying. You should see the FEMA "Ike" roofs in my neighborhood still up 20 months after the storm. Most of the blue tarps still up are on roofs that have likely leaked for the last 20 years.

Daredelvis

[Tricky]

I specifically said "tong-in-cheek", either you misunderstood, or I've been drinking again.
Um... I did see that. Thought it was a typo and decided not to flame you on it. I guess you should flame me. I don't get the joke. They use tongs on the drill floor, but I'm not aware of how that fits in the context. But then, I've been on vacation. I've missed a lot. And yes, I did drink.

I get what you are saying. You should see the FEMA "Ike" roofs in my neighborhood still up 20 months after the storm. Most of the blue tarps still up are on roofs that have likely leaked for the last 20 years.
This sort of thing is not new. I have a friend who is an insurance adjuster and he says you wouldn't believe the old deeply rusted spots in the car body that people try to claim "happened in the accident".

[daredelvis]

It was a typo, and I had been drinking.

Daredelvis

[Darth Rotor]

It was a typo, and I had been drinking.

Daredelvis
I PWD on occasion, and I approve this message. :D

[Cain]

Of course they're going to **** everyone over -- they're butt pirates.

[Darth Rotor]

Of course they're going to **** everyone over -- they're butt pirates.

The topic is oil and BP, not Congress. :p

[KingMerv00]

Holy crapballs. I heard on NPR today that the damages will total 40-80 billion dollars IF the leak is stopped in the next 2 weeks.

They also said it will be the largest class action suit of all time.

[daredelvis]

Of course they're going to **** everyone over -- they're butt pirates.

The topic is oil and BP, not Congress. :p

BP does have a tendency to blow up their employees. While the same could be said for many members of congress, one would have remove the word "up"... Just saying.

Daredelvis

ETA: And replace "employees" with "interns".

[Darth Rotor]

BP does have a tendency to blow up their employees. While the same could be said for many members of congress, one would have remove the word "up"... Just saying.

Daredelvis

ETA: And replace "employees" with "interns".
Or pages ...

[Darth Rotor]

Holy crapballs. I heard on NPR today that the damages will total 40-80 billion dollars IF the leak is stopped in the next 2 weeks.

They also said it will be the largest class action suit of all time.

Merv, if you have not yet passed the bar, do so as soon as you can and get in on that action. Folks are going to need attorneys, why not you? :cool:

DR

[KingMerv00]

Merv, if you have not yet passed the bar, do so as soon as you can and get in on that action. Folks are going to need attorneys, why not you? :cool:

DR

I'm taking the bar in July...for PA. :( I doubt we'll get much oil up here. Do you think BP will start using flying supertankers any time soon? Let's hope so.

On the other hand, the lawsuit will last a decade so there is plenty of time to change my plans.

[Darth Rotor]

I'm taking the bar in July...for PA. :( I doubt we'll get much oil up here. Do you think BP will start using flying supertankers any time soon? Let's hope so.

On the other hand, the lawsuit will last a decade so there is plenty of time to change my plans.


The cube/square law, and laws of buoyancy, are at odds with flying supertankers being in our near future.

Best wishes on the bar!

Go Merv, Go!

DR

[Cleon]

I'm taking the bar in July...for PA. :( I doubt we'll get much oil up here. Do you think BP will start using flying supertankers any time soon? Let's hope so.

On the other hand, the lawsuit will last a decade so there is plenty of time to change my plans.

You never know, it might back up and blow up some of the oil wells in Titusville or something. ;)

[KingMerv00]

The cube/square law, and laws of buoyancy...

Easily vanquished by the Rule of Cool (http://tvtropes.org/pmwiki/pmwiki.php/Main/RuleOfCool).

Best wishes on the bar!

Go Merv, Go!

DR

:D