Democrats, Gulf Coast demand BP pay oil spill cleanup and other costs, refuse to pass along cost to taxpayers

The Gulf Coast region relies heavily on fishing and tourism as an economic base. Both are decimated by the ongoing and ever-expanding oil spill in the Gulf of Mexico.

Tourism is projected to be a $20 billion business annually, and fishing is $1.8 billion in Louisiana alone. 

The environmental impact of the oil spill is huge, "The magnitude of the problem for fish and wildlife depends on how long the well continues to leak oil and where and when it touches land, said Karen Foote, marine fisheries division administrator for the Louisiana Wildlife and Fisheries Department.

Foote said marshes may suffer long-term damage from the oil spill. The Louisiana coast includes 3 million acres of wetlands that serve as a nursery for game fish such as speckled trout and red drum and are currently nurturing the brown shrimp crop to be harvested by the state’s fishing fleet."

In the last week, Congress and the Gulf Coast tourism industry have demanded that BP be held financially accountable for these losses.

In AdAge.com, "Gulf Coast's $20B Tourism Biz Asks BP to Foot Advertising Bill" article, Michael Bush reports

"Even as BP struggles to control the oil spilling into the Gulf of Mexico and government authorities and scientists struggle to determine the extent of the environmental damage, Gulf Coast states have landed on a way for the oil company to start making amends: shoring up their tourism industry with advertising dollars.

Authorities in Mississippi, Alabama and Florida have turned to the energy giant to fund ad campaigns, fearing that their summer-tourism business will disappear as major media outlets continue to fill the news cycle with reports and images of the catastrophe. There's a lot at stake. According to figures cited by the Environmental Protection Agency, the Gulf of Mexico's shores and beaches stretching from Texas to Florida support a $20 billion tourist industry.

"We just want to get the word out that we are open for business," said Kenneth Montana, president of the Harrison County Tourism Commission, the convention and business district bureau on the Mississippi Gulf Coast.

On Monday, Senator Kirsten Gillibrand stated that BP had to be held accountable, and asked for support to prevent any government bailouts

Watching the tragic consequences of the oil spill in the Gulf of Mexico these past few weeks-from the economic pain of local businesspeople to the environmental degradation-has been positively gut-wrenching.

So I was appalled yesterday when a Senate bill to hold oil companies accountable for their actions and require them to pay the full cost of their deadly mistakes was blocked by a single Republican dissenter.

We can't let one of the worst environmental catastrophes in decades go unpunished, and we can't allow something like this to ever happen again.

Senator Gillibrand is referring to Republican Senator Lisa Murkowski (R-AK), who opposed the legislation Senator Gillibrand fully supports legislation Senators Robert Menendez (D-NJ), Frank Lautenberg (D-NJ) and Bill Nelson (D-FL) proposed to raise the cap on damages from $75 million to $10 billion. Senator Gillibrand said she supports this legislation to, "...make sure that taxpayers don't have to foot the bill for spills caused by reckless oil companies."

Senator Murkowski said the legislation would give large oil comanies an unfair advantage over smaller ones for offshore drilling. 

According to a recent study by Georgetown University economist Robert Hahn and Milken Institute economist Peter Passell, the benefits of producing offshore oil greatly outweigh the costs.

In a breakdown of that study on reason.com

At $100 per barrel, outer continental shelf oil production of 11.5 billion barrels of oil would reap $1.15 trillion in revenues, lower oil prices by $99 billion, and reduce the costs price disruptions by $51 billion, resulting in total benefits of $1.3 trillion. Drilling costs would be $238 billion, environmental costs and greenhouse gas damages would total $2 billion, the costs of local air pollution, traffic congestion, and traffic accidents would be $22 billion, $33 billion, and $38 billion respectively. So the total costs of producing 11.5 billion barrels of offshore oil would be $332 billion. Hahn and Passell calculate that at $100 per barrel, the net benefits of producing offshore oil would come to $967 billion, or a trillion dollars. They note that even if the total costs were doubled in both scenarios, “the qualitative conclusion that resource development passes any plausible benefit–cost test still holds.”

Based on the cost, revenue, risk, and benefit breakdown, it appears large oil companies already have an advantage. As a Gulf Coast resident who has seen waterfront areas decimated by oil spills, and dealt with the aftermath of refinery explosions, I fully and freely believe that with great benefit comes great risk.

I find it immensely challenging to support a philosophy of "every many for himself, but let's protect companies" alongside "no regulation and smaller government is best, until it comes to protecting corporate interests" and that's exactly what Murkowski and fellow GOP objections appear to be.

At best it's disingenuous, at worst it's a massive conflict of interest at the expense of the American citizen.

Personally, I fully agreed with Senator Gillibrand when she said, "How can we not do everything possible to prevent a disaster like this from ever happening again? I, for one, cannot sit back and watch my colleague protect the rights of big oil, and I hope you can't either."

Once again, I find myself grateful to a Senator who doesn't even live on the Gulf COast for protecting our interests here on the Gulf Coast. Where are my Texas representatives, what are they and those from Louisiana, Mississippi, Alabama, and Florida doing?

Making sure BP doesn't suffer too heavy a profit loss? A couple of weeks ago, Senator Cornyn (R-TX) sounded as if he might possibly be somewhat supportive of a raise of the damage cap, but it was other Gulf Coast representatives who counter-proposed to the Oil Company Bailout Prevention Act.

According to Firedog Lake:

Republicans have put together their own bill, raising the liability cap to a floating, easily gamed number.

A day after Alaska Republican Lisa Murkowski shot down a Democratic-led effort to lift the liability cap on oil companies, Florida Sen. George LeMieux and three other Gulf Coast Republicans introduced legislation they say would “dramatically increase” the industry’s liability.

The legislation — which also has the backing of Sens. David Vitter, R-La., Jeff Sessions, R-Ala. and Roger Wicker, R-Miss., would set a new cap equal to the last four quarters of the responsible party’s profits — or double the current limit, whichever is greater.

“BP is already responsible for the costs of the cleanup, but we must ensure taxpayers are not forced to pay for associated damages,” LeMieux said. He said economic damage from the spill will “far exceed” the current $75 million cap, and that under the bill, BP’s liability would jump to $17 billion dollars.

Firedog Lake's David Dayen goes on to ask some very valid questions, "Obviously, the question becomes “what year is applicable to the cap,” and if it’s in the same year as this spill for BP, for example, that cap suddenly shrinks. If the company loses money in a calendar year, do they become not responsible at all (for a startup company with capital expenditures, that’s entirely possible)? Plus we’re putting the calculations in the hands of the accountants for the responsible party. Does that seem viable to you?"

Bottom line is that, based on information from the Wall Street Journal, ther eis a strong case for negligence here. Either way, regardless of whether BP stands to lose a week's profit or a month's, the Gulf Coast ecosystem and economic system have suffered a devastating hit. Law states they must be held accountable to this loss, and I agree.

Taxpayers shouldn't shoulder the burden, nor should the innocent bystanders. BP took the risk in anticipation of a big payoff benefit, and now they need to cover the cost of the catastrophe.

My town certainly can't afford to pay for another coastal cleanup. We barely finished recuperating from the last one and the subsequent hurricane. And it shouldn't be on our financial ledger anyway.

If you'd like to sign a petition supporting legislation to prevent bailouts to big oil companies and to support holding BP accountable, go here.

Comments

[Deb Rox]

Great update. Florida's economic impact is gargantuan. Tourism IS our state's tax system, and it is already in crisis from the spill. That there is concern about protecting the oil companies rights is outrageous.

[dining room table]

Tourism was the key yet they made something so irresponsible. This crisis is so serious. This is not the first time that it happened.

[BP Blows T-shirt]

I read some related article to this one. But you elaborate it more here.

Lets just hope and pray that this crisis will trully end.