Whenever a disaster occurs that approaches the potential magnitude of the gulf oil spill, assessing blame becomes a national obsession.
Tag, BP, you're it.
By federal law, BP — as owner of the oil — is responsible for the cleanup of a still-to-be-determined coastal mess. President Barack Obama already has specified BP will be held accountable, even though other companies tied to the drilling rig, from Transocean (which owned the Deepwater Horizon rig leased by BP) and Halliburton (whose job was to cement the deepwater drill hole) to Cameron International (which made the oil blowout preventer that did not work) and Anadarko Petroleum (BP's 25 percent partner in the well) will all feel the financial pinch of lawsuits and penalties.
BP used to stand for British Petroleum. Recent ad campaigns made BP stand for "Beyond Petroleum" to focus on alternative energy. Now some industry wags have tagged BP as "Beyond Pathetic" — not just because of this runaway gulf leak but because of a history of screwups.
In 2005, BP's Texas City refinery was rocked by an explosion that killed 15. Last fall, BP received an $87 million federal safety fine and recently was criticized for "systemic" safety problems.
Also in 2005, BP's Thunder Horse platform, a $1 billion rig in the gulf, nearly sank.
Since April's oil spill, BP's stock has dropped, already costing the corporation $36 billion in market value and many times that in bad publicity. But BP remains a huge company, still worth nearly $150 billion to investors. It routinely earned over $21 billion annually in recent years.
Goldman Sachs and Toyota, both pilloried by the media, Senate hearings and ongoing federal investigations, are happy to see BP push them out of the harsh spotlight.
Even Exxon, whose 1989 Exxon Valdez oil spill of more than 10 million gallons in Alaska's Prince William Sound was a record-holder for the worst single U.S. environmental disaster ever, may soon forfeit its 21-year crown of infamy. BP's gulf spill may foul large parts of Florida, and disrupt the water- and tourist-dependent economy for years to come.
If BP's on the hook to make things right, how much will the damage cost to fix? Nobody knows how much oil spews each day from 5,000 feet below the gulf, or how long it will take to cap the leak. So cost estimates vary.
Citigroup puts BP's cleanup costs as low as $1 billion, while investment firm Bernstein comes in at $7 billion.
The total bill, some analysts say, could approach $14 billion, including compensation to those industries and people hurt by the spill. Florida on Monday said it, too, will send its cleanup bill to BP.
BP is self-insured, setting aside its own funds for insurance. Once BP taps that reserve, it must pay extra costs out of its own pocket.
In Houston, investment firm Tudor, Pickering, Holt warned in a report on the potential hit from the oil spill: "This is a black eye for the industry that is going to continue to get darker the longer the oil is still leaking."
Yet two things remain constant: Global oil demand is still rising. And deepwater drilling is where most of the remaining oil will be found.
It's just going to cost a bit more to get it out.
Robert Trigaux can be reached at [email protected]