Then came Hurricane Isaac, which stirred the deep Gulf; the oil and tar that had settled below the surface washed up to remind people that nasty things are still out there.
If that was not enough to call attention, once again, to the impact the oil spill had on the Coast, U.S. Department of Justice laid out a case that in “aggressive language” accuses BP of “gross negligence” in the operation of the Macondo deep-water well. The DOJ effort happened at roughly the same time that Isaac was troubling the waters.
This tough approach has dashed hopes among BP shareholders that they can get an early out of a court settlement that would have the company paying $15 billion or less to cover outstanding liabilities. The DOJ had been pushing for $25 billion. Now it looks as if the government is going after that figure.
While this may be a strategy designed to get BP to settle closer to $25 billion, the “gross negligence” charge, if proven, would lead to fines that might result in BP being forced to “demerger” and free up assets that can be used to cover the settlement.
All of this can be very confusing, but the bottom line appears to be that there is not much chance for a settlement before the presidential election in November or even the trial date set for January 2013.
However, there is a downside to BP holding out. If the company decides to continue to litigate, uncertainty will linger and the value of the company’s stock will decline. Analysts contend that in light of the DOJ charges, a settlement at $20 billion or less would be “a positive” for the petroleum giant.
How bad has all this been for the company?
According to Investec analyst Stuart Joyner, “BP died when it failed to cap the Macondo spill in the first few days.” While the company was saved from forced liquidation, it is apparent that BP will pay a heavy price before it can recover.
However, the human and natural environment of the Gulf Coast has already paid a heavy price for what BP did and did not do. From what Hurricane Isaac stirred up, the Coast will be paying that price for years to come.
The settlement that is finally reached should send a message to BP and others who seek to exploit deepwater resources. If they are not prepared to deal with disasters, they should not be drilling. If they drill anyway and a disaster occurs, they must assume the responsibility and the penalties.