Newsy: The High Cost of the Oil Spill

British Petroleum says it will pay for all of the clean up costs associated with the oil rig collapse in the Gulf of Mexico, but who's responsible for the economic damage? 

BP's CEO told ABC News the company is not responsible for the whole disaster: "This wasn't our accident. This was a drilling rig operated by another company. It was their people, their system, their processes. We are responsible, not for the accident, but we are responsible for the oil and for dealing with it and cleaning the situation up."

The Oil Pollution Act of 1990 limits the amount of money BP is required to pay for economic damages to just 75 million dollars. CNN's Anderson Cooper explains how that $75 million liability looks to the multi-billion dollar company's bottom line: "Now 75 million may seem like a lot, but take a look at this, this is basically $75 million. Now BP raked in, get this, $5.6 billion in profit and that's just in the latest quarter. In other words, $75 million in damages, that's about 29 hours of BP profits." 

There is an "Oil Spill Liability Trust Fund" funded by a tax on oil companies specifically for these kinds of disasters — a tax passed on to consumers at the pump. Up to a billion dollars could be used to compensate economic losses. Progressive blog Firedoglake echos the widespread belief this isn't nearly enough.

"One billion? Hm. ... The Oil Spill Liability Trust Fund may work for a floating oil slick the size of Duluth, not Puerto Rico. ... In the end, I’m banking on at least some taxpayer money funding the aftermath of this catastrophe, or a lot of uncompensated people with their lives in tatters."

Three Democratic senators introduced a bill titled "The Big Oil Bailout Prevention Act" that would increase BP's liability to $10 billion. New York Magazine Blog Daily Intel says it's going to be very difficult to vote against this bill: "There are few things more unpopular in this country right now than big oil and bailouts. If you vote against the bill, you might as well grow some chin hair and grab a pitchfork, because you're basically the devil."

So what will the price tag of this disaster ultimately be? That remains to be seen. PBS reports many fishermen unable to work are now taking jobs with BP to help clean up the waterways: "The Hopedale fishermen are working under a verbal contract with BP, hoping their paychecks will come quickly. Many are afraid the fisheries will remain closed well beyond the 10 day moratorium and need the income to feed their families." 

The blog Money Morning says the oil is impacting more than just fishing, but the future of drilling as well: "It ... may eventually crimp global oil supplies and curtail the efforts of other companies involved in oil exploration and production. And it could have a chilling effect on President Barack Obama's recently announced plan to increase offshore oil production."

So where should the money come from to pay for the economic impact? Should BP shoulder it all?

Writer: Erika Roberts

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