BP liability limited to $75 million (with an "m") in economic damages?

[Kurt_and_Hunter]

If, after the trust fund is exhausted ($1 billion eligible for this incident) BP will not be liable for economic damages over $75 million then constantly saying BP will pay for all of this is a political exploding cigar. Makes people calmer today at the cost of making them angrier tomorrow. BP does have to pay, but only for cleaning up the oil itself.

But people laid of at fisheries and hotels are going to be the government's look-out, not BP's. Businesses will either go under or be bailed out by the government. State government will lose revenue (and cut services) and BP won't be making up the difference.

If the facts are ugly then just lay out the ugly facts and try to fix blame in advance.

(If anyone knows more or different about the prevailing liability limitation chime in.)

Tax on Oil May Help Pay for Cleanup

WASHINGTON — The federal government has a large rainy day fund on hand to help mitigate the expanding 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 fisheries 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, although they are responsible for the cost of containing and cleaning up the spill.

The fund was set up by Congress in 1986 but not financed until after the Exxon Valdez ran aground in Alaska in 1989. In exchange for the limits on liability, the Oil Pollution Act of 1990 imposed a tax on oil companies, currently 8 cents for every barrel they produce in this country or import.

http://www.nytimes.com/2010/05/02/us/02liability.html

[flvegan]

1. This could cost BP a kazillion dollars, they'd still pass it on to the consumer somehow.

[Kurt_and_Hunter]

2. Somehow, but not 100%

The oil world is far from optimally competitive but it isn't quite a perfect monopoly. BP cannot have higher prices than the other companies without losing some sales volume so their profits would be hurt some by money they have to pay that Exxon or Mobil do not.

Probably not 1:1, but some.

[PinkFloyd]

3. What needs to be done yesterday...

They need to put a plain, simple, short, easy-to-read bill through congress that simply make the oil compnay that occupies the drill site has to pay 100% of the clean up expense, should a disaster occur, regardless of what the disaster is. There should never be a limit on liability on anything, ever.

[Joe Chi Minh]

4. The CEO of BP made a bizarre statement on our TV news in the UK. He said they accept full

responsibility, though they were not the people with "hands on", "in situ" (my words) responsibility, who actually caused it. I suppose he was implying that BP were the prime contractors, so the buck stopped with them. They presumably subcontracted the actual engineering, etc to Halliburton and the other companies. If not, he sounded more like Ghandi or Mother Theresa than Milton Friedman or Lloyd Blanfein.

[Kurt_and_Hunter]

6. There's responsibility and then there's re$$$ponsibility

We will see which one they're accepting.

[customerserviceguy]

5. My theory is that BP will try to weasel

by saying the Swiss company they leased the platform from was at fault. I saw the CEO of BP on tonight's news, and he was starting to point the finger that way.

Any effort to tax the entire oil industry is just going to get passed on to consumers. Leaving the liability with BP, and seizing their assets to pay it keeps the rest of us from paying for this.

[Kurt_and_Hunter]

8. Sounds about right

[Kurt_and_Hunter]

9. ---

[BlooInBloo]

7. ....

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8265439