BP put profits ahead of safety

That's what Justice Department Attorney Mike Underhill argued yesterday, in the first phase of the trial that could force the oil giant to pay tens of billions more in damages for the 2010 Gulf oil disaster. According to the Associated Press, BP has already racked up $24 billion in spill-related expenses and $4 billion in criminal penalties, but could face up to $18 billion more under the Clean Water Act, and additional fines if found grossly negligent in the high-stakes civil trial. The liability of the rig owner Transocean and cement contractor Halliburton are also at issue in the trial's first phase.

During opening arguments yesterday, the three companies pointed fingers at each other in a triangle of blame, but BP received the brunt of accusations, from its partners and other plaintiffs in the case. The Justice Department's Mike Underhill piled on, saying, “Despite BP's attempts to shift the blame to other parties, by far the primary fault for the disaster belongs to BP.”

This first phase of trial is designed to determine what caused the blowout and determine responsibility of each of the three companies. This phase could last as long as three months, as the case involves hundreds of attorneys, 90 million pages of documents, and more than 300 depositions from witnesses. Once this phase is complete, the second phase of trial will determine how much crude oil actually spilled into the Gulf.

This trial is one of the most complex and costly civil cases our nation has ever seen, and it will be months before we see an outcome. Although no amount of money can ever fully repair the damage done to the Gulf, or bring back the 11 people who died on the rig, at least we'll finally see BP, Transocean, and Halliburton have to answer for the largest environmental disaster in our nation's history.


JLC's picture
JLC 10 years 3 weeks ago

I saw your interview with Marshall Auerbach on your TV show last week. Toward the end of the interview, you asked Marshall whether he agreed with the MMT folk about a government job guarantee program and you had a little discussion about that. In case you do not know, I just wanted to point out that Marshall IS one of the MMT folk. He has written a lot from an MMT perspective and has lectured at MMT conferences with the leaders of the MMT school of thought. He is very knowledgable and articulate about MMT principles and he would be a good guest with whom to have an in depth discussion of MMT the next time you have him on. In addition to Marshall and Stephanie Kelton (who I know you had on your radio show yesterday), I would also recommend Bill Mitchell, Warren Mosler and Randy Wray as guests to discuss MMT. The great James Galbraith is another economist who understands MMT. Here is a link to a great MMT conference held back in 2010 at which Bill Mitchell, Warren Mosler, Stephanie Kelton, Marshall Auerbach and Randy Wray all spoke:


Kend's picture
Kend 10 years 3 weeks ago

I can't imagine how much the oil companies insurance is going to go up after this. I worked on the rigs for years and 99% of all accidents are human error. Mostly short cuts. Because someone screwed up the price at th pump is going to skyrocket. We all know the oil companies are going pass there cost increases on to the end user. Yep you. It seems to me the BOP's failed. What I can't beleive is they ony had one set. Here in Canada they have to have two and sometimes three when working offshore. What government department makes the rules there for this? They should be in court as well.

mrohrer 10 years 3 weeks ago

I agree with you, Thom, that whatever BP pays, it will never be enough to compensate for the devastation that this oil giant and others have caused.

dowdotica's picture
dowdotica 10 years 3 weeks ago

? bummer thought today would be about sequestraion, shucks! well i'ma weigh in anyway. it's half way into tax season and boy are folks making some capital gains!!!! woohoo for those monster cash outs had i brain to i would've cashed out a chunk of mine but with my luck i'dve got taxed, besides it not much anyway, yet!!! I really need to try to understand the loophole!!! taking the money and running!!! yup yesiree! to put it in a nut shell? If i have tracked close to $250,000 in cap gains thus far that have gone un taxed imagine how much the big picture is!!!! And they can't do anything about it in Washington? now think of the combination of 3 coulpes (w-2) whose table income equals 250k and the tax they paid @ 20% average. Pretty sad if you ask me. so much in fact i just wrote John boners office and requested him and his ilk to get it together. i just hope they don't go knocking on my door...Peace out and remember the rich got really rich in 2012 and us working stiffs just got stiffed!!!

HalFonts's picture
HalFonts 10 years 3 weeks ago

I've also worked in the oil industry. And with Kend I agree that it is and must also be in part due to inadequate inspection. Many people in a long chain of command approved or let this happen.

If deregulation or inadequate monitoring approved inadequate designs or procedures, the responsible leasing and regulatory authorities must also be held accountable --(not just the inspector out in the field)-- but his or her supervisors right up to the top-levels of government, agencies who should have been demanding accountability (but must have been looking the other way).

Fear of high-liability costs due to injury or plant shutdown losses due to equipment failures can and do affect management decisions. From my experience BP has relatively high standards and procedures when it comes to plant operations and procurement for themselves. They get high quality where it counts. And safety inside most refineries is very good --due to the high costs of liability. Insurance rates can and do result in changed (improved) operating procedures.

Apparently, they (or someone) thought they could cut corners drilling offshore and get away with it. And, THAT is why accountability must hurt BP and other stock-holders (owners) and insurers where it hurts most, their profits and value.

No, BP can not simply "pass it on to consumers." If BP raises it's prices too much, intelligent consumers can simply drive to another vendor down the street. We have options, if consumers are aggressive enough to exercise them, (instead of just whining about it).

Even if the entire industry must raise prices due to increased liability-risks, management will tend towards minimizing those risks. Meanwhile consumers (and shareholders) can demand greater regulation and accountability of the industry (thereby reducing real-risks, liability-risks and costs) -- instead of bought-off legislators and regulators looking the other way. We all (should) have responsibilities for how our systems do or do not work.

Mike-C's picture
Mike-C 10 years 3 weeks ago

According to Yahoo Finance, BP’s Dec. 2012 financial report showed an income of $370 billion dollars for 2012. So far, BP has been fined $4 billion dollars in criminal penalties. Using the same percentage, this would equate to a person making $50k/year getting a $500 fine. Sounds kind of stiff and would be if this $500 fine was for running a red light or stop sign. Except, considering the damages done, BP has been fined relatively much less then the cost of a DUI or other serious, comparable infractions for the $50k/year person. Now, let’s factor in BP’s $65 billion in profit – seems hardly likely they would even need to file a claim to any insurance carrier for damages or fines, doesn’t it?

MMmmNACHOS's picture
MMmmNACHOS 10 years 3 weeks ago

KEND yer blak gold pals Bush and Chenney threw out the book on safety regulations to help their oil buddies cut expenses...Them BOP's ain't cheap, and in an all out profit driven market...Well you know how the story goes.

...and you are correct; It's the little people who will suffer the burdon of increased prices at the pump, the grocery store, etc. etc. While those who are tardy, careless and irresponsable, continue to reep the benefits while getting away with murder.

MMmmNACHOS's picture
MMmmNACHOS 10 years 3 weeks ago

Who caress about all that...All I want is the families of the 11 people killed to receive hefty compansation, as well as those who suffered loss of income during the spill. My wifes sister received 8k dollars after she filed her claim.

This was not an accedent caused by a natural disaster. This fatal and enviromentally devistating incident; it was pure neglagence brought about by those looking to cut cost by not installing the propper saftey equipment...Safety devices that are mandatory and regulated in other parts of the world. I'd like to see all those in oversight positions who had the say so to not install these devices be stripped of their wealth and go to prison for a very long time.

But that is not complete Justice. True justice is to right a wrong. So how do we correct this and see that it does not happen again.
History has shown us that harsh punishment does not deter criminal activity, and in my book deliberatly not installing mandatory saftey devices that would prevent such a fatal disaster is criminal.

Why is it that MORE profit trumps a persons life?
Is this Capitalism at its worse or is this Capitalism in general?

bobcox's picture
bobcox 10 years 3 weeks ago

One of the features of Committees, Partnerships, Congresses and Corporations is that any decision or non-decision can be taken without responsibility for the outcomes of the decision, Those interested can read about the introduction of the Wesringhouse brakes in the railroads. I suggest Howard Zinn's account.

Interestingly a large part of the benefits of Unions is the emphasis on safety. Corporations are not interested in safety as it reduces their profits and increases their capital costs. Note the efforts of the John L. Lewis's efforts to increase mine safety even though it would reduce workers and membership. I wish corporations would be so responsoble!

Adam Smith says all wealth id created bu labor.

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