/ 8 June 2010

BP will pay ‘many billions of dollars in fines’ for oil spill

Bp Will Pay 'many Billions Of Dollars In Fines' For Oil Spill

The White House has warned BP that it faces “many billions of dollars” in fines for the Gulf of Mexico oil spill disaster, easily dwarfing the clean-up cost, which has already topped the billion dollar mark.

The steady escalation in costs for BP was seen as further evidence today that the gusher in the Gulf of Mexico continues to exceed the administration’s and BP’s worst-case scenarios for an oil spill.

“We are adapting to an enemy that changes,” Thad Allen, the coast guard commander overseeing the response told a White House briefing. “We are no longer dealing with a monolithic spill.”

The break-up of the slick into a massive collection of smaller spills was challenging efforts to keep the oil offshore, and crude was now attacking the shore line from Louisiana to Florida. “I don’t think any plan envisioned it would get out that far and disaggregate,” Allen said. “If anything is taxing our resources, it’s the breadth.”

BP confronted a parallel escalation today. Since the explosion on the Deepwater Horizon rig on April 20, the oil giant has been forced to pay out a steadily increasing sum for clean-up costs and compensation to those put out of work or business because of the spill.

As of today the spill had cost BP $1,25-billion. But the White House, in moves to deflect public anger said BP could expect a final bill for much more. “There will be penalties in the many billions of dollars,” said Robert Gibbs, the White House spokesperson. He said the final tab for those penalties would be determined by the volume of oil polluting the Gulf. US law allows for fines of $4 300 per barrel of oil. BP was also told to hasten payments to small businesses such as seafood processors and hotels seeking compensation.

Barack Obama said BP needed to cut through the red tape. “What is clear is that the economic impact of this disaster is going to be substantial and it is going to be ongoing,” Obama said. “I do not want to see BP nickel and diming these businesses that are having a very hard time.”

A Washington Post-ABC news opinion poll today suggested the oil spill has linked the fortunes of the government and BP. About 69% said the government had done a poor job of handling the spill — still behind the 81% who have a negative view of BP’s performance but an unsettling result for Obama in an election year.

The poll said a majority of Democrats were also disappointed with the response. Such anger, especially from liberal Democrats, could grow amid reports today that BP may be able to finance some of its clean-up costs by oil it is collecting through the containment cap over the gusher.

The reports overshadowed the encouraging news that BP was collecting 11 000 barrels of oil a day through the containment cap installed last week.

But Allen said the effort can not be expanded because the company does not yet have vessels big enough to capture more of the oil. The only sure way to stop the gusher on the ocean floor remains the drilling of relief wells to 18 000 feet below sea level, and inject heavy mud at high volumes to suppress the flow.

But even that process — which he said he would not be complete until August — will not be the end. Allen said he expected the clean-up to continue for four to six weeks after the oil is capped. Restoration of damaged marshlands and recovery of endangered wildlife could take years. “This is a long campaign”, he said.

In the meantime, BP is trying to limit further damage to its image. Chief executive, Tony Hayward, is now ranked as one of the most hated men in America. At a congressional hearing in Louisiana on Monday, members of Congress held up full page newspaper ads from BP with scorn.

The oil company is pushing back by buying up phrases such as “oil spill” on search engines like Google to try to direct people seeking information to its company website, ABC news reported.

“We have bought search terms on search engines like Google to make it easier for people to find out more about our efforts in the Gulf and make it easier for people to find key links to information on filing claims, reporting oil on the beach and signing up to volunteer,” BP spokesperson Toby Odone told ABC News. – guardian.co.uk