Wednesday, May 5, 2010

BP CEO: Yeah, We'll See...

A story by Mike Soraghan in today's Energy and Environment Daily (subscription required) reports that Tony Hayward, the global CEO of BP, is offering conflicting responses on the lengths to which his company will go to cover the liabilities resulting from the Gulf spill.

Publicly he had stated, "BP is taking very seriously its responsibility. ... All legitimate claims will be paid." In a meeting with Democrat Florida Senator Bill Nelson just minutes after, however, he said in response to Nelson's question about BP's responsibility for economic damages that "That's something we'll have to work out in the future."

As I had mused in yesterday's post on the economic impact on the Gulf Coast region, this looks as if the stage is being set for a series of long and messy court battles - perhaps dragging on for years. And the pending Senate bill retroactively raising the $75 million cap for legal liability to $10 billion - well, is that going to be enough? Following the Valdez accident in 1989, Exxon paid $3.8 billion to cover damages and cleanup costs, and that was just for a portion of coastline in one state - the most expensive spill in history, if not the largest.

With the potential that this spill could impact not just the Gulf Coast but also the East Coast (depending on how the currents direct the oil), what will this figure ultimately be? Will $10 billion even come close?

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