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OIL SPILL: How limited is BP’s liability?

Letter by John S. Mills, Tacoma on June 17, 2010 at 12:11 pm with 12 Comments »
June 21, 2010 9:10 am

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.

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  1. Sumner401 says:

    The 20 billion is not the limit, that has been said over and over and over again, didn’t you hear it?
    The 20 billion held in trust is just a down payment.

  2. Sumner401 says:

    “luckily the courts will decide BP’s liability”
    Whats ‘lucky’ about that? The courts decided Exxon’s liability for the Alaska spill and they got off for fractions of a penny on the dollar, and they just finished hearing the cases! Letting the courts decide is the worst thing we could do right now.

    I suspect that fox and the other right leaning ‘news’ outlets are once again attempting to use this for politic gain, despite that being decidedly un-American.

  3. ValleyTarts says:

    Obama spin at its finest. President Blamestormer is doing a fine job diverting attention from his inept leadership of the cleanup fiasco by picking on a short white foreigner with deep pockets. All the attributes he hates. The Democrats in Congress tried really hard to make Haywood fall on his sword with some guilty dumb statement, but he gave the committee a preview of Obama’s next Supreme Court nominee’s responses to the Judicial Committee. Say nothing !
    Good job Tony. Let them and Prez worthless pontificate while you file Chapter 11. Obama will spend BP’s $20B by hiring displaced census workers to administrate the fund. The real victims will be left wanting.

  4. “Good job Tony. Let them and Prez worthless pontificate while you file Chapter 11. ”

    I hate to break this to you, but BP is a British firm. As such, they won’t be filing any chapter 11.

  5. John, understand that BP is a British company. So I suspect any court jurisdiction will be limited to assets owned in the USA.

    Also, understand that BP and the oil and gas industry has bought and paid for members of the US Congress.

    Rep. Joe Barton (R-Texas) is just one of many who will protect BP and the other oil companies. Barton was just stupid enough to do it in the open.

  6. Sumner401 says:

    BP is far from going broke, very far from it.
    20 billion is ‘walking around’ money for BP.

  7. The point of the $20 billion set-aside fund is so that the victims of the callous reckless behavior of this corporate “citizen” that killed 11 of its employees and continues to destroy the lives of many in the region won’t have to take this through the courts and, after a couple of decades of litigation, finally get a settlement that makes their lawyers rich.

    BP’s evasiveness in testimony, their refusal to allow clean-up workers to use respirators and their attempts to keep the press away from public lands demonstrate that this corporation can not be trusted to “do the right thing”.

    It’s a shame that Obama didn’t hit them up for much more.

  8. Sumner401 says:

    I think the President did say this was just a down payment.
    And that is a good thing.
    It’ sort of fun to watch the republicans chase their tails on this, they are trying so hard to make political hay that as usual they have been tripping over themselves and showing their true colors.
    “The President isn’t doing enough!”
    The President is doing too much”!
    “The President should take over!”
    “The President is taking over!”

    They can’t seem to figure out what they are whining about.

  9. Let he who is without sin cast the first stone. Did BP contribute to only one party’s campaign? There is probably NO backroom agreement between BP and ANY political entity or individual that all the rest of us would not know about, right? I agree that it took 98 years for the CEO of BP to surpass the title held by another aloof and greedy Brit (John Ismay, coward of the century 1912) who also escaped a disaster of his doing and slithered away in HIS little boat, too, but there are members of the US regulatory community who signed off on THIS Titanic and Mr. “The buck stops with me” seems to be giving those parties a lot of opaque protection, no?

  10. Sumner401 says:

    No in fact he hasn’t. The President has called for a complete gutting and over haul of the MMS, which is the agency that signs off on the wells.
    It’s the same agency that under the last administration was found to be totally in the pocket of the extraction industry to the point of having parties with them.
    That has came to an end.
    And the oil companys have, for years now under the former oil president, cookie cuttered their EIS, which is why they maintained the walrus population in the Gulf of Mexico would not be harmed.

    The interior Dept. and the MMS need to be over hauled.

    What scares me is the other agencies that were allowed to rot on the vine by the last admin. because “Govt. is bad”.

  11. We continue to pay BP through the extensive contracts with the Pentagon.

    Interesting how the same corporations – Haliburton, BP – that have extensive government contracts are the ones that keep creating problems for the US to deal with.

  12. Sumner401 says:

    When will we stop the billions in subsidies that we give to the oil companys?
    213 billion in profits last quarter and we still give them subsidies?

    You teabaggers want to cut spending, start there and then we can talk about the defense budget.

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