Amid much hoopla, President Obama recently announced that BP would put $20 billion into a fund to compensate victims of its oil spill.
That sounds good until one realizes, according to BP’s 2009 annual report, owner’s equity in BP is a little over $101 billion, all of which should be available to compensate victims of BP’s negligence. Total revenue and income for BP was over $246 billion in 2009 alone, down slightly from $367 billion in ’08. So this diverts less than 10 percent of one year’s revenue into the compensation fund.
Luckily, the courts, rather than the president, will decide the full extent of BP’s liability… unless Obama wants to limit liability to a small fraction of BP’s owner equity and persuades Congress to pass laws limiting liability.
Because it seems doubtful that total damage from the spill is less than $20 billion dollars, this looks like an effort to start down the path of severely limiting BP’s liability for the vast environmental and economic damage its wrought.