Wednesday, May 05, 2010

BP's Advantages

Joe Romm writes

BP knows it can't blame the feds since it fought efforts to change the voluntary self-regulation laws,the industry opposed mandates for the remote-control shutoff switanding damage on the Gulf Coast, generated by a tax on oil for use in cases like the Deepwater Horizon spill.

Up to $1 billion of the $1.6 billion reserve could be used to compensate for losses from the accident, as much as half of it for what is sometimes a major category of costs: damage to natural resources like fisheriesch, BP sold the Minerals Management Service on a laughable planning scenario- it was "unlikely that an accidental surface or subsurface oil spill would occur from the proposed activities"- and the industry,not the feds, have the relevant equipment to stop the gusher.

That's Romm's summary of his excellent post. Unfortunately, it may be irrelevant that British Petroleum "can't blame the feds." For that, we have corporate spokesman Rush Limbaugh, who on Tuesday remarked of President Obama

He does not know what he's talking about. He's pure propaganda here trying to sell the greatness of the government. It's not just enough to sell the greatness of government. He's gotta go out and trash the private sector. Private individuals aren't going to do good works; corporations aren't going to do good works; only government will do good works, only government is good, we are the good people. Private individuals and private sector business are evil and we're gonna keep demonizing until everybody understands that they are the biggest problem the country faces.

In another segment, Rush laughed and sarcastically said

And we could trace it back to Bush in 2003, to the lax attitude by minerals management agency.

As Romm noted, however, the United States Mineral Management Agency did have a lax attitude. On April 30 The New York Times reported

Last year, when the federal Minerals Management Service proposed a rule that would have required companies to have their safety and environmental management programs audited once every three years, BP and other companies objected.

And the Times noted

regardless of the out-of-pocket costs, the long-term damage to BP’s reputation — and possibly, its future prospects for drilling in the Gulf of Mexico — is likely to be far higher, according to industry analysts.

Staff writer Clifford Krause doesn't know how accurate his prediction is likely to prove. According to a New York Times article (of April 30, hard copy; of May 1, on-line)

The federal government has a large rainy day fund on hand to help mitigate the exp and other wildlife habitats.

Under the law that established the reserve, called the Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government.

It's not as if the federal government hasn't had warning. Times writer Matthew Wald added:

A count made by the Department of Homeland Security last August found that since 1991, there had been 51 instances in which liability exceeded caps.

And he concluded:

Payments are limited by the amount actually on hand in the fund; if this spill depletes the trust fund, it might take time to replenish it for future use.

The balance was projected to rise to about $1.9 billion from the current $1.6 billion — but that was before the spill.

That would be 75 million dollars for which BP is responsible. The Exxon Valdez oil spill, whose costs have been estimated to have been as high as $7 billion, contaminated approximately 1300 miles of shoreline, whereas the BP spill area includes approximately 9,000 miles of shoreline.

So pity not British Petroleum. It benefited from lax regulation for which it lobbied, it has extraordinarily limited liability, and it has a powerful defender in the nation's #1 talk show host. And oh, yes. $5.6 billion in profits in the first quarter of 2010.

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