Gulf oil spill costs BP billions

Brian Matheneny, of the Pass Christian, Miss., Harbor Patrol, checks for any dead sea turtles that might have been washed onto the beach.

NEW YORK --- The oil spill spreading across the Gulf of Mexico has drained $32 billion from BP's stock market value. Lawsuits, fines, cleanup and reputation-repair are certain to cost the company billions more and could tie up BP for many years to come.

Yet the still-unfolding environmental disaster isn't likely to put one of the world's largest oil companies out of business.

BP PLC earned close to $40 billion in 2008 and 2009 combined, and more than $6 billion in the first three months of 2010.

Exxon Mobil -- which shelled out more than $4 billion in cleanup costs and legal payouts after the Exxon Valdez spill in Alaska 21 years ago -- managed to pull through the disaster just fine. Today it is the world's largest publicly traded oil company.

In the long run, BP will be fine too, said Mark Gilman, an analyst at The Benchmark Co.

Still, London-based BP will face a litany of challenges as a result of last month's accident, not the least of which will be scrutiny from politicians and regulators in Washington. BP could find itself at a competitive disadvantage when vying for offshore drilling permits if the Obama administration moves ahead with plans to open vast swaths of the U.S. coast to oil exploration.

How much the disaster costs depends on how much worse the spill becomes, and how much fault is ultimately assigned to BP for the oil-rig explosion and fire that caused the spill. The oil company leased the offshore platform from Transocean Ltd. and hired subcontractors, including Halliburton Co., to help drill the well that is now spewing an estimated 200,000 gallons a day.

On Monday, a fact sheet on the BP Web site gave assurances to shrimpers, oil workers and scores of others that they will be compensated for any "legitimate and objectively verifiable" claims for property damage, personal injury and commercial losses.

The site also says BP takes responsibility for cleaning up the spill. The company is spending $6 million a day to contain the oil spill; the federal Oil Pollution Act requires BP to pay the cost of any cleanup work done by government agencies such as the Coast Guard and Homeland Security. But the real costs will come later, when BP starts paying for damage to wildlife, coastal businesses and tourism.

"The worst-case scenario is enormous," said Keith Hall, a New Orleans lawyer who represents oil and gas companies. "There are already a number of wrongful-death and personal injury cases out there. There will be no doubt more."

It will take at least another six days before crews can lower 74-ton concrete-and-metal boxes being built to capture the oil and siphon it to a barge waiting at the surface. The first of the boxes will be loaded onto a barge today to be taken to the well site.

That delay could allow at least another million gallons to spill, on top of the roughly 2.6 million or more that has spilled since the April 20 blast.

Senators seek to raise damages cap

WASHINGTON --- A federal law might limit how much BP has to pay in damages such as lost wages and economic suffering in the Gulf Coast oil spill, despite President Obama's assurances that taxpayers will not be on the hook.

A law passed in response to the 1989 Exxon Valdez spill in Alaska makes BP responsible for cleanup costs. But the law sets a $75 million limit on other kinds of damages.

Losses to the Gulf Coast are likely to exceed that. In response, several Democratic senators introduced legislation Monday to raise the liability limit to $10 billion.

White House press secretary Robert Gibbs said Monday the administration's commitment was for BP to pay for all costs associated with the spill.

Kenneth Baer, spokesman for the Office of Management and Budget, also noted that if BP were found to have acted negligently or to have violated federal laws, the damages cap would be lifted.

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