02
Jun 10Oil slick.
Guest-blogging for Ezra Klein, Kate Sheppard guesses at the potential fines in store for BP:
The company will be expected to pay for the response efforts, including all the money spent sending the Coast Guard and federal employees to the scene. It will also be expected to compensate the coastal communities and businesses destroyed by the spill. This is the area where there’s been much debate over raising the liability cap, currently set at the very, very low figure of $75 million. But the company will also be forced to pay up under the Clean Water Act, which allows the government to levy civil penalties in court for every barrel of oil spilled. (There could also be criminal penalties, depending on what the Justice Department determines.)
The base fine for a spill is $1,100 a barrel, but it can go as high as $4,300 a barrel if a federal court determines that the spill was the result of gross negligence by the responsible party. From what has come to light in the past few days, it’s looking more likely that BP ignored a number of warning signs about problems with the rig and well, so that might well be the case.
How do these numbers stack up? Well, if BP is found to be negligent and we believed their initial 1,000-barrel-a day figure, they’d only owe $184.9 million. If the low end of the government estimate is right, they’d owe $2.2 billion. And if the highest end is right? They’d owe $4.6 billion.
Of course, BP’s 2009 operating income was $26.4 billion, so even a $5 billion fine wouldn’t push them into bankruptcy. This all makes Scott Adams’ suggestion to buy BP stock sound pretty sane (although he wrote that before the top kill failed)–if you don’t mind dirty money.