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How much should BP be held responsible for financially, and how much do you think they'll end up paying?

There is a $75 Million federal cap on what BP will be responsible for, but BP executives have repeatedly said that number is meaningless. I have heard the number $3 Billion thrown out a lot as an estimate on how much this will cost to clean up, so I decided to look up how much Exxon has paid for their spill near Alaska and here's what I found.

Spill was for 250,000 barrels, which is more than 10 million gallons
The Gulf disaster is spilling 200,000 gallons per day. Thats 1.4 Million gallons per week.
Exxon paid $2.5 Billion for cleanup
Exxon paid $300 million soon after the disaster to 11,000 fishermen, fish processors and others affected
In 1994, a federal jury ordered Exxon to pay $5 billion in punitive damages, but appeals reduced that award to $507.5 million
Last year, a federal court ordered Exxon to also pay $470 million in interest on the punitive damages.

How much do you think BP should be liable for, especially in the fishing industry which may NEVER be the same?

References

Tags: bp, exxon, financial, gulf, mexico, of, oil, responsibility, spill

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Permalink Reply by Nicholas Nagao on May 15, 2010 at 11:42pm

All these attempts by BP to capture the oil that's causing this disaster has me thinking. How about if BP uses ALL of the money from the oil that is salvaged to the effected communities. What do you all think?

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Permalink Reply by Morgan Zuckerman on May 17, 2010 at 1:07pm

That's incredible! Those numbers just blow my mind. This is truly the worst scenario ever imagined. It will take so much time for our ecosystem to heal from this disaster, I can't even fathom it. In my opinion, the amount BP should be responsible for should put them out of business, and then in debt! It's not just their financial responsibility, or their responsibility to the environmental catastrophe, or their responsibility to the people whose livelihood has been blown away. It is their moral responsibility. (HA! Did I just say "oil company" and "morals?!") This disaster is an absolute outrage and BP should be held accountable for every aspect of it's impact. They should be ashamed. I'm ready to hear someone from BP come out and apologize with his head low and his tail between his legs.

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Permalink Reply by Nicholas Nagao on May 17, 2010 at 1:51pm

Morgan, I agree BP needs to feel it, but think about this. Exxon paid upwards of $3 Billion and I still see them all over the place. The number that would be required for them to feel it is something I'm very interesting in finding. Also, the estimates on how much oil is being dumped into the ocean has been updated. It's now estimated that every 4 days that the oil continues to leak is equivalent to another Exxon spill.

Check out the latest news on the BP Oil Spill here

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Permalink Reply by Nicole on May 18, 2010 at 11:14pm

The media and American culture has trained us to ask ourselves whether BP will PAY (money) for this. Unfortunately, I feel like the question, while perfectly legitimate and the only way to make BP feel the pain, misses the point. This is a national tragegy of epic proportions. We've just LOST everything that is alive in the Gulf of Mexico! Besides the fishing industry, what about the fish? Or the dolphins? Or our beaches? Or the coral? What about Mexico, where the fishermen have no social security whatsoever, and will starve if they don't have fish? How are those people going to figure out how to sue BP?

I personally think that because BP is a public company (where profits are shared) and due to the way executive compensation works, the only way to change the system - and make BP "feel the pain" is to tie executive compensation directly to environmental risk. So, for example - big oil spill? There goes your golden parachute, and you are not permitted to be compensated more than xxx per year. XXX would be more than most people make in a year, but the CEO of BP is making millions a year, and has zero risk of losing his millions without this type of regulation.

Tying performance to compensation works, which is why companies use variable compensation plans. The government should issue regulations to do the same to the executives of companies that are benefiting from OUR national natural resources.

After the Enron disaster caused major trouble for the US economy, directors of US companies were made PERSONALLY liable for the accuracy of their company's financial statements. While imperfect, SOX compliance requirements led to a major change in attitudes towards compliance. Apply the same standards towards our environment and social issues, and we will all be better off.

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Permalink Reply by Nicholas Nagao on May 18, 2010 at 11:30pm

Nicole, I share your utter disgust and agree there is no way that BP can ever "pay back" the world for what it has done. However, I am trying to quantify the damage and make people realize that this is no small incident. I was hoping it would show the true magnitude of this disaster, and open people's eyes about things like offshore drilling and learn about electric/fuel cell cars and discuss alternatives to oil as a result of seeing the destruction this dependency on oil has caused.

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Permalink Reply by Nicholas Nagao on June 5, 2010 at 1:42pm

Newest numbers being thrown around are $40 Billion, and now the US senate has recommended BP not pay dividends until further estimates on the cost of the disaster are in. President Obama warns that there will be trouble if BP nickel and dimes fisherman and others effected by the disaster while paying out a $10 Billion expected dividend.

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Permalink Reply by Nicole on June 7, 2010 at 7:28am

Nick, you are absolutely right, the numbers are atrocious, and they are the only way of illustrating the magnitude of the issue. I wish BP could be liquidated as "punishment" but unfortunately, we are helpless as we watch this continuing disaster. My only hope is that this disaster will result in changed US policy towards developing clean energy.

We have a strong leader in Barack Obama, and I do not believe that anyone is capable of dealing with this situation - and what I hope will be improved, progressive policies - better. Mid--term elections are coming up. Those who feel strongly about clean energy should focus on giving Barack Obama as many tools as possible to continue with progressive policy change, which means minimizing obstructionism in the Senate and the House of Representatives. While we may be frustrated, creating a deepening blockade to progress via internal politicking will not help. That is why I believe that a democratic congress is the best tool we can give our country for creating continued progress and change 2010 - 2012.

HOPE * STRENGTH * PRESEVERENCE

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Permalink Reply by Nicholas Nagao on June 7, 2010 at 7:37am

Nicole, have you been watching what's going on to their stocks? It's unbelievable how much this company is worth! They can lose Billions in a day of trading and still be one of the largest companies in the world! Even with all of this going on, they have enough money to pay dividends in the Billions!

I see a HUGE problem developing. First I agree that fisherman and others that are being effected need to be compensated. However, how long should they be compensated and in what way? I can't imagine fisherman will be able to collect checks for the next 10 years, and I'm not sure that they should. I definitely think BP needs to clean up everything no matter how long it takes, but I wonder whether the fisherman will attempt to move, or just stay in the contaminated area.

While I understand how important home is, I also think we are all going to need to adapt to the changing planet we are now living on (Bill McKibben calls it Eaarth).

I saw your post about the California elections, and I am going to be joining the Obama campaign efforts in Austin once I return. Have you subscribed to their Facebook page? They have been great in informing us of new campaign events as well as new videos Obama does every week.

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Permalink Reply by Robyn Bagy on June 7, 2010 at 1:21pm

All,

Great points here. How American are we to realize the loss will never repay anything back fully.

This is an interesting article - was written in 1999 but it was looking at the Alaskan spill, ten years later.

http://arcticcircle.uconn.edu/SEEJ/Alaska/miller2.htm

Makes you realize that you never really can "clean up" to be as good as new.

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Permalink Reply by Nicholas Nagao on June 7, 2010 at 5:08pm

According to this FastCompany article:

"Big seafood is a $2.4 billion a year business here, but more than a quarter of the Gulf fishing and oystering waters were shut down, the workplaces for generations of fishermen, shrimpers, crabbers, oystermen, and charter guides"

$2.4 Billion per year, plus whatever the restaurants are losing from the lost margins of having local seafood vendors...Alaskan fishermen are still reporting that things are not back to normal...so that's $20.4 Billion lost on fishermen over 10 years. That doesn't include the cleanup costs, and tourist business that is lost from this catastrophe.

I'm starting to see how that $40 Billion estimate could even be low. I sure hope BP at least tries it's best to make things right. Do you think it would be reasonable to have BP pay to relocate people to other areas around the country to allow them to continue their fishing business?