Monday, December 24, 2012

BP vs. The World: Who is Winning?

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Joe Wright
Activist Post

The financial penalties levied against BP began as a landmark $4.5 billion settlement, topping the previous largest U.S. criminal penalty issued against Pfizer for marketing fraud.

More than 2 1/2 years on, the BP oil spill is still ravaging the food chain and the environment. The impact has now resulted in a second ruling, covered in the video below, ordering BP to pay $7.8 billion in additional payouts to businesses and tourist companies affected by the spill. The latter is particularly ironic as BP has actually produced ads for tourism to the Gulf via a $100 million campaign to ensure people that the area had become the "Best Place" for a nice vacation. 

The class action suit was signed off on by Judge Carl Barbier in a 125-page ruling covered by CNN:
BP will pay $2.3 billion to commercial fishermen, seafood boat captains and crew, seafood vessel owners and oyster leaseholders. 
The money represents 'approximately five times the annual average industry gross revenue for 2007 to 2009 of the seafood industry in the region covered by the settlement agreement.' It also 'represents 19.2 times lost industry revenue in 2010,' the ruling said. 
The ruling notes that 'the settlement program is processing claims in an "impressive fashion."' By last month, 4,500 claims were processed per work. (Source)
However, not everyone is happy about this settlement.

While these settlements are at least a record of BP's guilt, families who have lost loved ones, such as Arleen Weise whose son, Adam, was one of the 11 workers directly killed in the initial explosion had this to say about her bittersweet feelings over BP's financial penalties:
'I knew all along that BP was the devil in that accident,' Weise said. 'Now they're getting their due . . .  
It doesn't matter how much money anyone pays. It doesn't nearly amount to what we've lost,' said Weise. (Source)

Others who opted out of the settlement like shrimp processor, Dean Blanchard, are planning their own lawsuits.
'BP is trying to make a one size fits all,' he said, saying some people and businesses were hit worse than others and deserve more money. 'It's not right.' (Source)
Meanwhile, two men who worked for BP during the 2010 Gulf oil spill disaster have been charged with manslaughter and a third with lying to federal investigators, according to indictments made public hours after BP announced it was paying $4.5 billion in a settlement with the U.S. government over the disaster. (Source)

BP also is sure to face many more payouts from their $38 billion dollar allotment under SEC fines and fines under the Clean Water Act. 

However, despite it all, BP is still in business. And perhaps most telling about what kind of impact these seemingly huge numbers are having on the corporate behemoth, as Huffington Post noted after the first $4.5 billion fine: "BP Oil-Spill Fine So Horrible, BP's Stock Price Only Rises 1 Percent," one of the five ways to put this in perspective is as follows:
Sales And Profits: BP in 2011 recorded revenue of $234.25 billion, with net income of $16 billion, according to data tracker FactSet. In other words, BP could pay even a $10 billion penalty with just nine months' worth of profits. A $4.5 billion penalty would wipe out a little more than a single quarter's profits. In this case, it will be paid out over five years -- beginning in 2013 -- meaning the hit to quarterly profits will be much gentler. BP has more than enough cash to cover this, meaning it won't have to borrow money to pay the costs, saving on interest payments.
This latest Friday night ruling awaits its Wall Street reception in a short session on Monday before closing for Christmas. You can follow the stock price HERE. Every indication is that there will be little to no effect.

If only the damage to the economy, the environment, and perhaps the entire global food chain for generations to come could weather the storm so easily.


There is, however, the remaining question of how the health impacts will be handled by courts, since this latest ruling only covers financial losses. For an up close and personal perspective at what the economic and health impacts of the Gulf Oil Disaster really looked on the ground in the aftermath of one area most affected, please view the documentary Kindra's Window featuring Gulf Activist Kindra Arnesen.


Read other articles by Joe Wright Here


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4 comments:

Anonymous said...

Well put. The billions make headlines, but what impact has there really been on BP? I see right now the stock is off less than 1%. There you have it.

Unknown said...

I work for BP and contrary to what many people are saying, I can assure you that there has been a HUGE financial impact. We've sold billions in assets to pay bills. We've sold all but four platforms in the Gulf of Mexico to raise money. We've sold assets across the globe to pay off Macondo debts.

We screwed up, yes. But does anyone even remember Transocean? That was NOT a BP rig that lost control of the well, nor was it BP personnel operating the rig.

We screwed up. We're trying to make it right. I'm not sure we will survive this, but we work our butts off trying our best.

Anonymous said...

I have a question about the environmental impact
... is the oil still leaking ? Sludge from oil spills in temperate waters tend to dissapear after 10 years ....30+ in near freezing waters ...and probably less than that in the warm gulf waters...

Anonymous said...

BP made more money off of the cleanup. If you think this was an accident, your drinking the same koolaid They eventually want the whole gulf coast to be a huge oil production facility.

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