Risks and rewards of offshore oil drilling

The risk of offshore oil drilling is environmental catastrophe that jeopardizes the livelihoods and well-being of people who live and work along the coast.

It makes possible the depletion of the U.S. 3 percent share of the world’s known oil reserves, which we might need in the future.

The only reward is more profit to the oil industry.

BP made a profit of $163 billion from 2001 through 2009. In the first quarter of this year, BP made a profit of $5.6 billion.

BP’s liability for damages to individuals, businesses and the government is limited to $75 million, under the Oil Pollution Act of 1990, which funded an Oil Spill Liability Trust Fund.

That fund, financed by an 8 cents a barrel tax on oil production and imports (roughly one-tenth of 1 percent), now contains $1.6 billion.

Estimated damage to individuals, businesses and the public is $12.5 billion, and rising.

Separately from the damage, the federal government will try to collect the cost of the cleanup from BP and its insurers.  It will be interesting to see how much of the cleanup cost BP actually pays.

Click on this for a New York Times article on the Oil Spill Liability Trust Fund.
Click on this for figures and commentary on oil company profits.

[Update 10/21/10]  Click on this for a Washington Post article on how the BP / Obama compensation plan is working out.  It is working better than I expected.

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2 Responses to “Risks and rewards of offshore oil drilling”

  1. Jane Hickok Says:

    Hi Phil,

    Although I back President Obama on most things, I hope that in light of this recent catastrophe he revisits his plan to open the Atlantic coast to offshore drilling. Wouldn’t it be a mess if an oil well off the East Coast ruptured and leaked?


  2. philebersole Says:

    Hi, Jane.

    I think that what President Obama is doing, as in many other situations, is trying to position himself as the responsible pro-corporate conservative, while the Republicans marginalize themselves as the Monster Raving Looney Party.

    This is all very well, except the liberals and environmentalists are left without representation.

    Phil Ebersole


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