As per the oil pollution act passed in 1990 the liability for the oil spill is $75 million. BP agreed to pay the full amount for the cleanup which is close to $40B. Efforts were made to increase BP’s liability but the constitution disagreed. BP transferred $20B in an escrow account as BP settlement fund out of which an amount of $3.8B was paid to the gulf Coast residents in April 2011. Around 857,000 BP claims were file out of which BP could only clear 300,000. It is being said that all the money in the fund would be spent in clearing BP claims and BP lawsuits. Prior to the oil spill BP was in profit. It had a profit of close to $20B annually but after the oil spill BP has suffered losses. After paying $40B for clean up BP would faced a loss of $3.7 billion which in turn reduced the BP share price to half.
There was a lot of argument on whether the cap of $75 million should be increased or not. The constitution did not agree to make amendments to the oil pollution act as that would be unfair to the small oil drilling companies. After the explosion on Deepwater Horizons the oil spilled at the rate of 200,000 gallons per day this cause great loss to the shipping, tourism and fishing industry. The $75 million cap is applicable to a company only if it has no violations associated with the accident. However, this was not the case with BP, out of 35 causes for the oil spill, the panel held BP responsible for 21 causes. Recently BP has come to an agreement with the attorneys of the claimants on BP final settlement. BP has agreed to pay approximately $7.8B as oil spill settlement amount to compensate for the medical and economic –loss claims of 100,000 individuals and business owners. After the explosion on Deepwater Horizon on April 20th 2010, the BP’s oil well to which this oil drilling rig was connected was damaged that resulted in the oil spill. This has been the worst oil spill till date. The damages were massive.
Investigation into the matter revealed that to a great extent BP was responsible for the spill. If BP had provided strong support to the well this wouldn’t have happened. In order to keep its expenses low BP had order to use less amount of cement for well’s security. The cement protection could not withstand the impact of the explosion. Besides, this BP had made some last minute changes in the plan of action. It failed to read the crucial data and did not respond to it actively. Out of 35 the panel held BP responsible for 21 causes.
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