While it's being paraded as a major accomplishment, referring to Obama getting BP (NYSE:BP) to agree to some type of fund with approximately $20 billion in it to pay claims related to the Gulf oil spill, in reality, there hasn't been much call for it at all from the general public, although those in the region who have been affected by the accident have been pushing for quicker action.
So far negotiations over the matter show that if the fund is indeed going to have $20 billion put in it, it will be done over a period of years, and overseen by an independent mediator, in this case: Kenneth Feinberg.
This isn't conclusive yet, but that's the direction talks are going.
The period of at least several years to fund the account is to maintain the financial health of BP, so they can in fact take care of the liabilities without destroying the company.
A major problem with all of this is it's premature. At this time there simply isn't any way of gauging the actual damages, and the wild and fluctuating estimates of the oil spill by government scientists isn't any better than the estimates made by BP. Now they say it could be anywhere from 35,000 barrels a day to 60,000 barrels a day flowing into the Gulf, not long after the recent estimates of 20,000 to 40,000. These are so far apart that they can't be taken seriously, and muddy the waters as far as liabilities go, as the range is just to inconclusive to be reliable to project liability costs.
This may give the Obama administration a little boost, but it really doesn't do much of anything to expedite the process, as the past experiences of "independent" mediators being appointed to take care of similar situations.
I don't see this fund doing anything to make the process go faster, and if we use the Exxon Valdez situation as a guide, it could easily take years for people to get paid, if they ever do.
3 comments:
you always try to pull share price down...post also good news
It's clear you are shorting this company. You and this so called blog can go eff yourself
Agreed. The limit is questionable to say the least. 20b is just peanuts compared to the damage caused. Will this also cover civil liabilities. So has the government come to a conclusion of total costs and penalties without the leak actually stopping? If this happened in a third world country everyone would be saying how the politicians are corrupt and industrialists get away with everything. But since it is not I suppose it is the perfect amount of money for something as simple as an oil spill.
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