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Originally Posted by JERRY2KONE
I seriously doubt that will come to pass. BP recorded profits last year of something like $61 billion. Lets just say worst case scenerio that this disaster ends up costing BP $5 billion. Sure that is a huge amount of money to most, but that will equal out to less than 5% of last years profits. Hardly puts them into bankruptcy I would think. According to the AP they also have an insurance policy on every rig which pays out $500 million towards any damages or losses in the event of an accident such as this one. So far according to the AP BP has spent nearly $1 billion trying to recitfy the matter. I would think that the tough part in all of this is getting things cleaned up to our satisfaction, which will take a few years of their time and money, and that is once they get the leak stopped however long that takes. BP now says that they will have the leak stopped 100% next week.
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I think $5B is a very low estimate. Wyeth, the makers of the drugs known as Phen-Fen (the diet drug craze of the 90's) ultimately lost $20B from lawsuits and penalties when a handful of deaths occured from taking the drugs. Phen-Fen was actually a combination of two drugs Wyeth had sold for decades, and wasn't even a recommened use by the company. Doctors themselves were proscribing the drugs for off-label use after one Dr did one small study, claimed it worked, and people and the media ran with it and hyped it. Wyeth got in trouble not for recc the drugs, but for not doing much to stop Drs misproscribing the drugs.
BP, otoh, is responsible for 11 deaths of workers, thousands of animals, including many endangered species, the destruction of a key habitat for wildlife, food production and economic activity. BP has an abysmal safety record and has shown a pattern of lying and deceit to the public and the gov't about the extent of the spill. Part of the eventual fines will be based on the amt of oil spilled, and they've consistantly underreported the extent of the spill and actively undermined outside estimates of higher amts and flowrates. I think their release of only poor quality video from the wellhead heavy and use of dispersants was an effort to mask the size of the spill, and keep it off beaches where it would be more easily seen by the public and elicit outrage, rather than based on sound scientific reasoning given the extend of the oil release.
They have been slow to pay claims, and often underapaid completed claims.
As bad as anything, has been BP's behavior in response to the spill, for which the company deserves to be severly punished financially and if not criminally. BP will be litigating this for decades.
BP has one of the worst safety records in the industry, yet pays one of the highest dividend yields. Are the two related? Possibly. I think the shareholders need to suffer quite a loss for their tolerance of the company being run in such a fashion. If we have decided in the US that we are going to have a low-regulation laize-faire capitalist economy, we have to let market forces act swiftly and brutally towards the company and not once again treat a company as too big to fail and let the populace bear the burden of the company's mismanagement and hubris. Market forces can't prevent such an action, but can hopefully realign industry behavior to stop the next one.
Obama did get BP to pledge that they would pay for every dime of the cleanup and damages (brillant.) We have to hold them to it, even if it requires them suspend their juicy dividend and even sell off chunks of the company until the residents and environment of the Gulf Coast is made whole. If this results in deepwater offshore drilling to risky for the freemarket to bear, then so be it. We shouldn't be subsidizing stupidity and destruction just because gas prices get high and we'd rather "drill baby, drill" rather than come up with more creative and sustainable solutions to our energy needs.
Just because oil is instrinsic to the modern economy, that does not give license to BP to extract it in completely unsafe and negligent ways.