WOW, according to this story by FOX NEWS, the clean up cost for BP could be over 62 billion dollars.
Here's the story.
Friday, June 18, 2010
Raymond James Ups BP Cleanup Costs To $62.9B
By Dunstan Prial
FOXBusiness Raymond James analyst Pavel Molchanov has raised his estimate for the total costs to BP Plc (BP: 31.77, 0.069, 0.22%) related to the Gulf of Mexico oil spill to $62.9 billion, well above earlier estimates.
Citing the 1989 Exxon Valdez spill in Alaska as a useful precedent, Molchanov updated his estimate based on information that has emerged since the analyst first attempted earlier this month to put a price tag on the disaster.
Since then the amount of oil leaking from the well has been estimated by the government at anywhere from 35,000 to 60,000 barrels a day, much more than the 5,000 barrels BP suggested shortly after the well blew on April 20. And the impact on the environment and the livelihoods of gulf fishermen and other businesses tied to the water is looking increasingly bleak.
Using a formula derived from the costs for cleaning up the Exxon Valdez spill, Molchanov put the BP cleanup costs at nearly $8,000 per barrel for a total of about $42 billion.
Molchanov wrote in a research note: We think this is too low, however, since the U.S. legal system has generally become more plaintiff-friendly over the past 20 years, especially in environmental cases such as this. To reflect this cost inflation, we add another 50% on top of the $41.9 billion, yielding a grand total of $62.9 billion.
On Tuesday, BP agreed to put $20 billion into an escrow account that will be used to clean up the mess and compensate those affected by the spill.
BP officials and members of the Obama administration noted that there is no cap on the fund and that the $20 billion is just a starting point.
The oil giant also said it will suspend its dividend payments for the rest of the year and set aside a separate $100 million fund for oil workers idled in the wake of the disaster.
I sure am glad that we have a strong President that will hold BP accountable for all of this and not let the cost be passed on to the American taxpayer.