Make Them Pay

How to calculate what BP owes America.

BY MICHAEL COREN | JUNE 1, 2010

"I'm worried to hell and back, so is everybody else," says Roland "Mac" McRae, 74, owner of the Cedar Point Fishing Pier on Alabama's Gulf Coast. We spoke by phone on May 29. His business leases time on a fishing pier located just a few hundred miles from the Deepwater Horizon offshore oil rig, which on April 22 caught fire and sank, unleashing what is now the largest and most destructive oil spill in U.S. history.

As local fishermen stay home and business plummets, McCrae tries not to think too far ahead. "I don't even go there. All my life, I've had a little jingle in my pocket," he says. "To me, life's not worth living if you don't have a little jingle in your pocket." McRae is one of an estimated 14 million people living along the Gulf of Mexico, millions of whom are likely to be affected one way or another the oil spill. "When they finally close that well, if they can," he reflects, "the entire ecology of the Bay and the Gulf of Mexico will never be the same."

Ecology isn't the only unknown. More than 20 years after the Exxon Valdez dumped 11 million gallons of crude into Alaska's Prince William Sound and caused billions in damages, the United States is again facing a massive oil spill and a vast undetermined price tag. But this time, the rules are different. The legal system, also entering uncharted waters, must now grapple with two difficult questions in fielding the concerns of people like McRae. The first, of course, is: Who's to blame? The second is: Who will pay?

The first answer is easy; the second, not so much.

BP, of course, is taking the blame. The company was leasing the rig from Transocean, the world's largest offshore drilling company, and managed operations with subcontractors such as Halliburton, when the disaster occurred. The explosion and sinking of the rig has thus far released between 18.6 million gallons and 29.5 million gallons of oil into the blue waters of the Gulf, according to the latest government estimates. On its website, BP says it "takes full responsibility for responding to the Deepwater Horizon incident"; however, the company has already attempted to share the blame with its contractors during intense questioning at a congressional hearing.

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Michael J. Coren is a freelance writer in Washington, D.C. He is the former science producer at CNN.com and served as managing editor of the Phnom Penh Post in Cambodia.

COMMENTATOR

7:22 PM ET

June 2, 2010

What BP owes

To the extent that it can be shown by neutral economists that the BP disaster caused an incremental rise in US prices (gasoline, transportation, food, etc.), BP owes the American people that sum; since individual payments probably cannot be managed efficiently by BP, or by the courts without enriching attorneys disproportionately , such payments should be made to the US treasury, which can then redistribute them via income tax credits. Enabling litigation should thus be pursued by US attorneys paid from the public purse, not contingency fee private attorneys.

In the longer run, to the extent that errors were made by foreign (BP) executives, BP might be forced to divest its American ARCO acquisition if the result would be a viable ARCO (with its former refineries, petrochemical plants, Alaskan oil share etc.)

Anecdotal testimony suggests that the fatal error here might have been a bad judgement; calling in fireboats whose water sunk the platform, rather than letting the fire burn until it could be extinguished in expert ways that would save the platform from sinking.

 

EILLYBORING

4:09 AM ET

June 3, 2010

Make Them Pay

I just started working last week. I hadn't worked for over a year & didn't have much of an income while I was pregnant. So I was eligible for Medicaid. My daughter is 5 months old now & I only just finally got a job. I got a letter from the Medicaid today stating that they received information from someone else other than in my household. It said something along the lines of my information being different than what I told them & whatnot. They didn't say exactly what.
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CLEAR SIGHT

7:22 AM ET

June 3, 2010

pointing the finger

Interesting that most do not seem to question the liability of BP.

It seems a politically convenient short-term scapegoat. The announcement of the start of a criminal investigation has only just been made - but it seems that minds are made up.

Why not Halliburton, who were the key contractors?

Why not Transocean, who owned the rig?

Conveniently, BP is not from the USA - handy.

 

ANDY MOORE

12:05 AM ET

July 1, 2010

BP oil spill costs

BP has said the cost of cleaning up the oil leak in the Gulf of Mexico has now reached $2.65bn. The oil giant said this included the cost of the spill response, containment, relief well drilling, grants to Gulf states and claims paid. free auto insurance quotes More than 39,000 people are now involved in the response effort, the company said, as oil from the spill washed onto the beaches of Mississippi resort town Biloxi for the first time. BP added it remained on track to complete its relief well, which aims to kill the leaking well at the point it meets the reservoir, in the three month timeframe initially envisaged, despite progress slowing on the well in recent days. "We're looking at multibillion dollar criminal and civil penalties against BP, certainly record amounts under U.S. environmental laws," said David Uhlmann, a University of Michigan law professor and former chief of the U.S. Department of Justice's environmental crimes section. missouri car insurance "They weren't even prepared for an accident. So now, they are totally making it up on the fly," said Scott Summy, a lawyer at Baron & Budd PC in Dallas who represents 18 fishermen and other plaintiffs against BP. "These acts play very well under various state common law theories, such as negligence or gross negligence, as well as federal statutes."

 

SHANEAZEN

10:24 AM ET

July 1, 2010

Check out details of "The Deepwater Horizon incident"

Of the 126 people on board, 11 are missing, feared dead, and 17 were injured, three of them critically. BP's Group Chief Executive Tony Hayward said: "On behalf of all of us at BP, my deepest sympathies go out to the families and friends who have suffered such a terrible loss. Our thoughts also go out to their colleagues, especially those who are recovering from their injuries."
At the time of the incident, the contractor Transocean Ltd was drilling an exploration well on Mississippi Canyon Block 252. BP has a 65% interest in MC252.
The rig subsequently sank on Thursday 22 April and an extensive spill response operation was activated, involving more than 2500 people, a fleet of vessels, aircraft, dispersants and booms.

- Shane

 

MATTRODRIGUE

10:35 AM ET

June 3, 2010

Money?

How does BP have to pay? How much does BP owe? By how much should Congress raise the cap? Let's get the terms of the debate set: it's about the environment, stupid.

 

HURRICANE

3:34 PM ET

June 3, 2010

What about the environment?

This is a very interesting story about the financial situation of BP. I think Haliburton, Transocean, and BP all should fit the bill for the cleanup and for damages. The Gulf of Mexico will take hundreds of years to recover, if they ever stop the leak.

This spill will effect the entire oceanic ecosystem, not just the immediately affected area. There should be no cap for damages or cleanup. Even if these companies go bankrupt for the amounts they have to pay it should be an example.

 

SPSDEL99

5:38 AM ET

June 29, 2010

The spill is a problem, but

The spill is a problem, but not one anybody was prepared to deal with.
BP is in the oil business, and provides us oil. Governments and consumers need that oil.
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