Oil Spill Liability Limit

Bedpan

I've been fuming ever since I first heard about the $75 million liability limit on damages resulting from oil spills. The law that was passed in the wake (no pun intended) of the Exxon spill represents typical collectivist policy--here not in the form of "spreading the wealth around," but rather "spreading the expense around." Each company is limited to a maximum of $75 million in damages, with any damages over that cap being paid out by a government-maintained Oil Spill Liability Trust Fund, itself funded by a tax levied against all domestically produced oil.

In a true capitalist system, of course, a company and its shareholders would be fully liable for all damages caused by that company's actions. As a consequence, you can be sure that a company like BP would not simply have a backup plan for a contingency like this one, but also a backup plan in case the first backup plan failed, and most likely a backup plan to that one as well. Of course, companies could form voluntary agreements if they so chose to share the risk, but if they did so it would be in their interest to ensure that those agreements would include a managing authority that would enforce rigorous safety rules, backup plans, and procedures.

Under this socialized system, in contrast, a company like BP doesn't have to worry too much about large-scale damages. Obviously, $75 million is small change to such a company in comparison with the enormous profits available from such ventures. Of course, the company's public image will suffer somewhat, but public-relations managers can correct that problem easily enough by putting out a few more ads about BP's commitment to alternative energy and to the environment. Meanwhile, should anyone really be surprised that the company was so woefully unprepared to contain this spill?

Barefoot

Love how industry insiders come here to post. Club Polk how do you do it?

concealer404

Do you sell bedpans? I need a new one.

Kex

Mr. Pan, I am considerably less concerned about the sludge that is spewing all over the Gulf of Mexico than the verbal sludge that you have been spewing, polluting the erstwhile tranquil mood here in C.P. ... with a screen name that has "troll" written all over it.

It's interesting, really. You seem able to string your sentences together with a reasonable amount of skill, so there must be some form of intellectual ability hidden somewhere in your brain, so why do you choose to use such mental ressources in such a fruitless endeavour?! What's wrong? Are you not getting any umbongo or something? Does it not work? Is it bent? Surely there must be some explanation. Have you tried putting two bathtubs side by side in some outdoor setting in time for an idyllic sunset scene while holding hands? Anything would be more likely to proove beneficial to your ongoing quest for happiness and fulfillment than your current activities.

Whatever ... methinks thou art nothing more than a scoundrel and a cad.

Kex

Bedpan wrote: »

I've been fuming ever since I first heard about the $75 million liability limit on damages resulting from oil spills. ...

You can already stop fuming ... and spewing, BTW:

... On Monday, BP said it has spent $350 million on cleanup and related costs so far. ...

(Taken from here: http://money.cnn.com/2010/05/11/news/companies/BP_hearings/index.htm?hpt=T1)

mrbigbluelight

concealer404 wrote: »

Do you sell bedpans? I need a new one.

You might want to consider buying "Used" on Audiogon ..... er ..... I mean Craigslist.


What the mess in the Gulf does show, IMO, is that the mentality of "Drill, Baby, Drill" has to be tempered with proper/prudent safety measures.
Done properly, everyone profits.
Done improperly, we wind up with Lake Brylcreem.

Bedpan

Kex wrote: »

You can already stop fuming ... and spewing, BTW:



(Taken from here: http://money.cnn.com/2010/05/11/news/companies/BP_hearings/index.htm?hpt=T1)

That's mostly cleanup costs, which are separate from the damages being discussed in this thread. IIRC, the $75 million limit applies only to damages, not to cleanup costs.

BP probably also has some fear that Obama will push through an ex post facto law to overturn the limit, so the company may be trying to preempt that possibility.

Kex

Bla bla bla bla ...

maximillian

Bedpan, thanks for sharing this bit of information since I wasn't aware of it. However, you doesn't accurately report the circumstances, and then you referred to a socialized system.

Although you are correct that there is a limit on BP's liability, BP has stated that they will pay for all reasonable cleanup costs:

http://www.cbsnews.com/8301-503544_162-20004217-503544.html
http://www.insurancejournal.com/news/national/2010/05/10/109675.htm

Also, although I am not a fan of Obama, if your goal is to attack him by calling him a socialist on this point then read the insurancejournal's article.

Finally, check out where the limit came from:
http://www.uscg.mil/npfc/About_NPFC/osltf.asp

My point is not to defend anyone, and I am not saying that there wasn't wrong doing on BP's part either. The point of my post is simply to offer facts on this issues you raised. If I am wrong on the facts you are welcome to correct.

cstmar01

concealer404 wrote: »

Do you sell bedpans? I need a new one.

Ben why didn't you ask! I have like 5 at home I could of brought them with and you could of given them some try out time! err wait, is that safe? errrrr

:eek:

brain ****.

Bedpan

maximillian wrote: »

Bedpan, thanks for sharing this bit of information since I wasn't aware of it. However, you doesn't accurately report the circumstances, and then you referred to a socialized system.

Although you are correct that there is a limit on BP's liability, BP has stated that they will pay for all reasonable cleanup costs:

http://www.cbsnews.com/8301-503544_162-20004217-503544.html
http://www.insurancejournal.com/news/national/2010/05/10/109675.htm

Also, although I am not a fan of Obama, if your goal is to attack him by calling him a socialist on this point then read the insurancejournal's article.

Finally, check out where the limit came from:
http://www.uscg.mil/npfc/About_NPFC/osltf.asp

My point is not to defend anyone, and I am not saying that there wasn't wrong doing on BP's part either. The point of my post is simply to offer facts on this issues you raised. If I am wrong on the facts you are welcome to correct.

I'm not attacking Obama. I realiize the OSLTF was implemented several administrations ago. My issue is with the way the system is structured, costs are not internalized as they would in a free market, so that there simply isn't the proper incentive for any single oil company to structure its operation in such a way as to minimize risk-related costs. As a consequence the true costs of offshore drilling are not reflected in market prices. Current law effectively sets up a "tragedy of the commons" situation; the company that takes big risks to reap bigger profits becomes a freeloader.

Kex

I like trolls ... they're tasty with some ranch dressing on top.

Since Mr. Pan likes to recommend Emotiva from time to time, I'm wondering if he actually owns one, and came here because he thinks there has been Emotiva bashing here on C.P. that he wants to punish us for, as some form of cyber world masked avenger or something; or if he doesn't even own one, but uses the suggestion so as to incite heated debate or comment, in standard troll operating mode.

Interesting trying to get people excited about Obama and the pending doom of socialism in our time. Perhaps he should try bashing Bush and Cheney instead, to see if that gets more reaction, since the "socialist" response has been muted thus far.