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BP's Oil Disaster: The Numbers Will Shock You

At best 20% of the oil spill may be recoverable. Though we don't yet know the full extent of the disaster, one thing is for sure: regulatory failures paved the way.
 
 
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When it comes to British Petroleum's Deepwater Horizon oil spill in the Gulf of Mexico, questions about the extent of the damage -- and how to quell it -- are spreading  as quickly as the oil slick.

No one is quite sure just how many gallons of crude oil have been flowing freely into the Gulf since April 20, when the Deepwater Horizon oil rig exploded, killing 11 workers and allowing for an entirely indefinite amount of oil to gush from a damaged well as well as from the rig itself. (Is it any wonder that Halliburton was involved?)

BP has publicly admitted that 5,000 barrels are likely being injected into ocean waters each day -- but at a closed-doors congressional hearing on Tuesday, executives admitted that as many as 60,000 barrels may be contaminating the Gulf daily. If the last big spill -- Exxon Valdez in 1989 -- is any indication, experts say the best clean-up scenario is to recover 20 percent of the spilled oil. (Only 8 percent of the crude oil deposited in the ocean and coastlines off Alaska were recovered in the 1989 spill clean-up.)

On Wednesday afternoon, BP touted its having capped one of the three leaks in the pipe from the mangled oil well as a great success. But a Coast Guard spokesman told the Washington Post that having stopped that leak would not reduce the rate of oil spillage, it would merely make the oil come out stronger from the other two.

BP is also hyping up three giant steel containment domes that will be used to collect oil streaming into the Gulf and transfer it to a waiting tanker. But the domes look rather flimsy in the face of what may very well end up being the worst environmental disaster in U.S. history. And then there's the question of whether the domes could make things worse -- some experts fear that they may further damage the underwater oil pipes.

Tyson Slocum, the energy program director at Public Citizen, is worried about the chemicals being used to try and remedy the damage. "We're injecting a whole suite of chemical mixtures in an effort to neutralize the oil spill," he says. "This has the potential to make an ecological disaster worse."

Environmentally speaking, the worst effects of the BP spill have yet to be felt. Most of the known damage wreaked by Exxon Valdez came when the spill contaminated 1,300 miles of shoreline. But the extent of the damage it caused to marine life is not totally known, even 20 years out. Indeed, each day will give us a clearer picture of what short-term ecological destruction Deepwater Horizon has wrought -- on- and off-shore -- but environmental experts believe the damage made to the Gulf of Mexico will be very long-term.

On the economic side of things, estimated damages are slightly easier to tally. According to the Harte Research Institute for Gulf of Mexico Studies, approximately $1.6 billion in annual economic activity and services are at risk. Compare this number to the current cap on BP's liability for economic damages like lost wages and tourist dollars, which is $75 million. And compare that further to the first-quarter profit BP posted just one week after the explosion: $6 billion.

BP: Unregulated billionaire perpetrator

BP has a long record of oil-related disasters in the United States. In 2005, BP's Texas City refinery exploded, killing 15 workers and injuring another 170. The next year, one of its Alaska pipelines leaked 200,000 gallons of crude oil. According to Slocum of Public Citizen, BP has paid $550 million in fines. BP seems to particularly enjoy violating the Clean Air and Clean Water Acts, and has paid the two largest fines in the Occupational Safety and Health Administration's history.

Fines are the primary mechanism for punishing corporations found of violating laws in our country, Slocum says. "The problem is that that the amount of the fine is generally miniscule when compared to the profitability [of breaking the law]." In other words: "A felony becomes a cost of doing business."

Undeterred by fines that pale in comparison to its ghastly profits, BP has also learned to avoid stringent regulation of its business practices.

A recent Center for Responsive Politics study shows that BP is one of the top donors to political campaigns over the last two decades -- having shelled out $6 million to fund congressional and presidential campaigns. Naturally, a good amount of their targeted lobbying has been directed at the House Committee on Energy & Commerce, the very legislative group slated to begin hearings on Deepwater Horizon this week.

That same study also shows that President Obama is actually the biggest recipient of BP money. (Interestingly, Obama is also the largest recipient of dollars from Goldman Sachs, another under-regulated behemoth.)

Though Obama may have been specially targeted, BP has made sure to spread its money all over Capitol Hill, donating just as much money to Democrats as to Republicans in the 2008 election cycle. Through what is essentially legalized bribery, they have a lot of influence, which explains a lot of the reports of special passes on regulation that have begun to surface since Deepwater Horizon exploded.

The most striking one involves the Interior Department's Minerals Management Service giving Deepwater Horizon a " categorical exclusion" from the National Environmental Policy Act, almost exactly a year before it exploded.

This doesn't mean no one was watching, though. This January, Reps. Henry Waxman (D-CA) and Bart Stupak (D-MI) wrote a letter to BP that raised concerns that the company's efforts to cut costs could imperil the safety of BP operations. As Abrahm Lustgarten notes at ProPublica, this indicates that policy-makers were concerned about the safety of BP's facilities as recently as January, just a few months before the disaster in the Gulf of Mexico left 11 people dead.

Trying to reverse governmental failure

While BP has certainly spent a lot of money so as to exert influence on decision-makers in Washington, it's clear the regulatory system had a few holes of its own.

Ten years ago, there were already warnings that the backup systems on oil rigs that failed on Deepwater Horizon would be a problem. The Interior Department issued a "safety alert" but then left it up to oil companies to decide what kind of backup system to use. And in 2007, a government regulator from the same department downplayed the chances and impact of a spill like the one that occurred last month: "[B]lowouts are rare events and of short duration, potential impact to marine water quality are not expected to be significant."

The White House is trying hard to fend off accusations of inefficacy and comparisons to the last disaster in the Gulf -- Hurricane Katrina. On Wednesday, the administration released a 7,000-word document detailing the government's response to the BP oil spill, and Obama has publicly stated that all the clean-up costs would be covered by BP, which is estimated to be spending $6 million a day on those efforts.

But there's still the issue of the $75 million cap on BP's liability for economic damages. Sen. Robert Menendez (D-NJ) has introduced a bill that would raise the liability limit to $10 billion, and he wants to make it retroactive so that it will apply to the April 20 spill. The measure has the White House's support.

And then there's the pressing question of how to prevent this from happening again. There seem to be two good options.

One is to ban off-shore drilling, an environmentally invasive and hazardous practice long despised by environmental activists. Earlier this year, Obama reversed his campaign position on off-shore drilling and called for expanding such drilling far beyond the levels of even George W. Bush. (Take a look at these terrifying maps that show what the Gulf oil spill would look like in parts of the country Obama opened to off-shore drilling.)

But this week Robert Gibbs, Obama's press secretary, said it was " premature" to change positions on off-shore drilling. (Ominously, the same Interior Department that failed so completely on regulating Deepwater Horizon will be preparing a report on this question, Gibbs said.)

The other option is to hit corporations like BP where it hurts, because fines obviously haven't made much of a difference.

"Habitual violators like BP must be hit with something that really gets at the value of the company," says Slocum. "We should revoke BP's existing leases or even revoke its corporate charter and kick it out of the United States. We do that for people -- our laws for individuals are much more strict than those for corporations. They've been found guilty of crimes that have resulted in death."

And if the Supreme Court's shameful Citizens United ruling established corporate personhood, then it follows that we ought to start punishing corporations like people, too.