Saturday, June 12, 2010

States Want More from BP (NYSE:BP)

States located along the Gulf of Mexico are increasing the demand to be compensated financially for the large oil spill in the region.

With the fishing and tourism industries so vital to the region getting hit hard, the tab is adding up.

One state getting ready to bill the company is Alabama, which according to education superintendent Joe Morgan, counts on about 90 percent of the $5 billion annual budget comes from the income and sales receipts now being lost.

"We're already down to the bone" in terms of funding, Morton said in an interview Friday (referring to the effects of the recession).

My only problem with this is if these state officials attempt to wring more out of BP than they should have to pay, using the accident to get money that isn't coming in because of the recession rather than the oil spill.

Alabama cut their education budget by about 7.5 percent this year, to $5.3 billion. All their emergency funds are also empty, lending credence to the possibility they may run with this further than they have a right to.

If all the states were to do this, it could end up being far more than BP could pay, when including overall liability.

In other words, will the states take advantage of this to shore up their budgets which have taken a beating from the recession, at the expense of BP?

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