Limited Liability for BP Oil Spill?

[my2sense]

Matthew Wald of The New York Times reports the details of the previously obscure Oil Spill Liability Trust Fund, a $1.6 billion fund financed by a minuscule tax on oil -- eight cents per barrel, which Wald says is roughly 0.1%. According to Wald, the fund is designed to pay damage claims resulting from oil spills, though not cleanup and containment costs. But that's not all it does. It also limits the liability of oil companies like BP.

Under the law that established the reserve, called the Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government, although they are responsible for the cost of containing and cleaning up the spill.

The fund was set up by Congress in 1986 but not financed until after the Exxon Valdez ran aground in Alaska in 1989. In exchange for the limits on liability, the Oil Pollution Act of 1990 imposed a tax on oil companies, currently 8 cents for every barrel they produce in this country or import.

The tax adds roughly one tenth of a percent to the price of oil. Another source of revenue is fines and civil penalties from companies that spill oil.

According to Wald's report, there have been 51 instances in which damages under the $75 million liability cap has been exceeded. That figure will certainly be exceeded with BP's Deepwater Horizon spill. Up to $1 billion from the fund can be used for any single accident, but in this case, $1 billion is likely to be peanuts.

In other words, it was a pretty sweet deal for oil companies: they agreed to a tiny tax which they can pass on to consumers, and in exchange their liability is limited to $75 million. Because they can pass the oil tax along to consumers, it's like they got the liability caps for free.

If this law does indeed carry the final word, and there isn't another way to hold BP accountable for the damage it has caused, then you can chalk up another victory for corporate socialism. And you can bet your bottom dollar that the right won't shed a tear over it.

edited to add source: http://www.dailykos.com/storyonly/2010/5/3/863045/-NYT:-1990-law-limits-BPs-damage-liability-to-$75-million

[DJ13]

1. Privatize the profits, socialize the risks

I think weve seen this movie before.

[slay]

3. Yep. We already have socialism - but only for the corporations

people don't matter. i fucking hate how all this pro-corporate shit is destroying this country, and the world, at breakneck speed while the rest of us can barely keep our heads above water (soon to be oil) as corporate fat cats sit back in their giant offices and mansions and gated communities unphased by any of it. :puke:

[leveymg]

2. It's a publicly-funded incentive to pollute.

Like the Wall Street Bail-out. The companies can always buy a CDS that pays them a big profit if there's a catastrophic event, and the taxpayer will pick up the actual cost.

Disgusting.