BP’s new $20 billion escrow account to help clean up the Gulf of Mexico and those hurt by the spill does not count for much. It will hurt BP’s shareholders for a while but does not solve BP’s long-term liability problem.
BP could be sued by a number of Gulf states, the federal government, businesses based in the region, along with individuals affected by the spill. When will the suits stop?For 30 years, tobacco companies faced investigations of their R&D and marketing programs that showed that they knew about the dangers of smoking and kept them secret. BP may not have been so malicious, but the damages from its actions may be as far-reaching.
Big tobacco was sued by people who got sick from smoking, family members of people who probably died from smoking-related illnesses, and people who claimed they were hurt by “second-hand” smoke. Tobacco companies are emerging from these legal actions with fairly healthy balance sheets after they spent billions of dollars on legal fees and claims settlements.
BP faces being sued by Americans throughout the country, no matter how improbable that may seem.
The spill may move up the East Coast. Businesses are already claiming that tourists won’t be coming to South Carolina’s beaches this summer.
If oil prices rise considerably, people who buy gasoline and oil-based products will blame the spill for their financial woes. That is absurd because the BP well is such a small part of global oil production, but if drilling in the Gulf stops there could be a modest impact on oil, probably because of speculation.
BP’s biggest liability is yet to be determined. A hurricane storm swell could drive hundreds of thousands of barrels inland. The liabilities from that are incalculable. Many people will sue BP. Most of the suits will be nuisances, unless another Katrina hits the Gulf this year.
Douglas A. McIntyre