Video - The Ongoing Impacts of the BP Oil Spill in the Gulf of Mexico

Years after the 2010 Deepwater Horizon disaster people are still getting sick. Despite a huge effort to cleanup the spill, the aftereffects of the BP spill in the Gulf of Mexico continue to adversely impact human health and natural ecosystems. This sad state of affairs illustrates that once spilled, oil cannot be contained and this has long-term ramifications. Massive cleanup efforts have not been able to protect people and wildlife from the noxious impacts. BP spent billions on the cleanup and billions more will be paid out in lawsuits.  However, this does not factor the real costs to human health and the environment which are far more than just monetary. These impacts beg the question, can we really afford to continue to our reliance on fossil fuels?

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The Cost of Oil: BP Barred from Doing Business with the US

BP has been barred from doing business with the US government for its role in the 2010 Gulf of Mexico Deepwater Horizon rig disaster and oil spill. Although BP is currently one of the largest holders of federal oil leases, the company will not be able to bid on any new federal oil leases, until they meet the EPA's standards.

In November, BP pleaded guilty to more than a dozen felony counts related to the disaster in the Gulf, including 11 counts of manslaughter over the deaths of 11 workers. The company also pleaded guilty to felony obstruction of justice for lying to Congress over the amount of oil spilling into the ocean.

"EPA is taking this action due to BP's lack of business integrity as demonstrated by the company's conduct with regard to the Deepwater Horizon blowout, explosion, oil spill and response," the agency said in a statement on its website.

The EPA's decision came as the Interior Department was planning to auction off roughly 20 million new acres of federal waters in the Gulf of Mexico for oil exploration. BP will not be allowed to bid on those parcels, the department said.

These measures are forcing BP to make "key leadership changes," and they are also creating a new internal safety and risk management division.

Although many have claimed these penalties are too insignificant to make a difference to an oil giant the size of BP, Phil Flynn, a senior energy analyst with the Price Futures Group, said "If this lasts an extended period of time, I really do think it's going to hurt BP."

These punitive measures may not be the crippling blows some would have liked, but the tougher measures send a message to BP and the world's dirty energy giants.

"Had these types of actions been taken in years past, as our firm had urged in the Texas City disaster, BP may have altered their behavior sooner and the Deepwater Horizon tragedy would have never occurred," said Brent Coon, a Houston attorney who filed a class-action suit against BP on behalf of victims. "Hopefully denying business opportunities to a company which flagrantly ignores safety will not only change their behavior, but set an example for the industry, which as a whole has much room for improvement."

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The Costs of Oil: BP Liable for up to 90 Billion

BP has been ordered to pay an unprecedented 4.5 billion in fines as the costs of their 2010 oil fiasco in the Gulf of Mexico continue to mount. On Thursday November 15, 2012, BP pleaded guilty to 14 felony counts related to the explosion and subsequent oil spill at the site of its Deepwater Horizon oil rig. The plea agreement with federal prosecutors includes charges of manslaughter for the 11 workers who were killed and one felony count for obstruction of justice for false statements made to Congress about the amount of oil leaking from the out-of-control well.

The breakdown of the 4.5 billion in fines is as follows:

• $2.4 billion for is to be paid to the National Fish and Wildlife Foundation for environmental restoration, preservation, and conservation efforts throughout the affected area
• $1.3 billion in criminal fines, which the company would pay out in installments over five years
• $350 million is to be paid to the National Academy of Sciences over five years
• $525 million civil penalty satisfies a Securities and Exchange Commission charge that BP had obstructed Congress by lying to Congress about the amount of oil flowing from the well

BP's cleanup efforts have already cost the company nearly $18 billion which are part of $42 billion in pre-tax accounting charges the company has taken. Here is a partial breakdown:

• 4.5 billion announced on November 15 (the largest corporate criminal penalty in U.S. history)
• $15 billion that BP has paid so far into a $20 billion trust fund to compensate victims of the spill
• $7.8 billion settlement for private injury claims from roughly 100,000 fishermen and other business owners in the Gulf region that were affected by the spill

Other civil claims are still pending and they could amount to tens of billions in additional penalties. Potential civil claims under the Clean Water Act allows for fines ranging from $1,100 to $4,300 per barrel (and even higher end if gross negligence is determined) which could amount to additional fines of $20 billion.

These are not the only fines that could be levied, there could also be federal and state sanctions under the Natural Resource Damages Act, and assorted private civil claims, securities claims, or state economic loss claims.

Estimates for the total amount of penalties that BP will ultimately have to pay reach as high as $90 billion. Claims may also be filed against BP's corporate partners including the rig owner Transocean and the well services company Halliburton.

In addition to the fines levied against BP, individuals are also being held accountable. three former BP employees are facing felony charges of manslaughter and obstruction of justice. Two of the three men could face up to 10 years in prison for each of the 11 deaths that resulted form the Deepwater Horizon explosion.

© 2012, Richard Matthews. All rights reserved.

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Responsibility for the Costs of the Gulf Oil Spill

The oil spill in the Gulf of Mexico has adversely impacted all the key players. BP's stock has dropped more than $32 billion, Likewise the stocks of Transocean which owned Deepwater Horizon, and Cameron International, which made the blowout preventer that failed, are also declining.

Transocean's shares lost almost half their value since closing above $92 on April 20th, today they are valued at under $50. Cameron has declined more than 25% from its peak.

Fitch Ratings estimated the cost of the cleanup could exceed $3 billion but insurance will likely cover most of that cost.

The Obama administration has pledged to recover "every dime" of taxpayer expense from the spill, however US law caps company liability at $75 million per spill. Transocean has already taken legal action to limit its liability to $27 million.

For the Exxon Valdez oil spill, Exxon Mobil paid out $4.3 billion in compensation, cleanup costs, fines and settlements before insurance kicked in.

A full accounting of blame appears to implicate the government agency in charge of monitoring oil rigs. The US Minerals Management Service (MMS) director, Elizabeth Birnbaum has been fired due to reports of fraternization between MMS employees and oil industry employees. The MMS regional supervisor is also alleged to have received inappropriate gifts from BP.
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Next: Obama Presidency and the Gulf Oil Spill

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