GOP Leader Boehner: Taxpayers Should Pay For This BP Oil Mess

The Business Insider ^ | 6-10-2010

[MortMan]

Why shouldn’t the fund established by law for such cleanups be used? Why would opposing a post-facto change in law be considered a facepalm?

[Repeal The 17th]

There has been a “cents per barrel” fee that has already been collected
on every drop of oil extracted for a number of years
that was to be put in a fund to pay for potential clean ups.
I suppose that money sits in a vault somewhere
alongside the social security “lock box”.

[Nephi]

I asked Boehner where the government would get the money to pay for the cleanup:

“I don’t know, it’s stash...you know, the government stash.”

[GonzoGOP]

There has been a “cents per barrel” fee that has already been collected on every drop of oil extracted for a number of years

OK here is my proposal. We know how much has been collected over the years, and it should be possible to determine how much of the fund has been paid out. Lets call the difference Pre-paid oil cleanup.

* First $75 Million = BP under the existing cap
* $75 - Pre-paid oil cleanup = US Government
* Anything over that = BP if they want to do business here again.

And I'm willing to work out a payment plan if they can't do it all up front. I'm not trying to drive BP bankrupt, I just want the mess cleaned up.

[muawiyah]

Not actually. When BP goes bankrupt Obama intends to stick the taxpaying public with all the clean-up costs, and he clearly intends for them to go bankrupt.

[muawiyah]

The environmental groups and EPA ~ anyone who ever filed a friend of the court brief in a regulatory hearing or case at law where the issue concerned proper use and disposal of “brown mud”. Those are the people who should pay even if we have to take those old ladies out and knock them down and rifle through their purses!

[SaraJohnson]

“So they have to decide if doing business in the US is worth the price of the cleanup.”

---

-------------------------------------- I would have a conniption if we permitted BP to drill for oil or run rigs here ever again. One strike and you are out in a case of such carelessness, incompetence and damage. BP has caused, by some estimates, a couple of billion dollars worth of damages.

[AzaleaCity5691]

Pretty much.

Better yet, we should turn the juries of Alabama, Mississippi, Louisiana and Florida lose.

Florida has had strict tort reform and Mississippi has had some, Alabama has had very little and Louisiana has had none.

There ain’t a civil jury in these four states that will rule with BP and after this oil spill the elected Supreme Courts of MS, AL and LA won’t overturn any verdict against BP no matter how large.

[GonzoGOP]

According to another thread estimated cost of the cleanup is $60 billion. BP annual Operating Revenue for 2009 was 246.138 billion. BP's Operating Profit before Depreciation for 2009 was 33.393 billion, down from 42.158 billion in 2008. They can pay for a 60 billion cleanup either taking a loss in one year, or if they spread the payments over a couple of years they could do so without even encountering a loss. They would have no problem coming up with 60 billion in cash flow, not when their annual revenues are more than four times that amount.

I don't see a bankruptcy coming out of this unless it is used as a legal dodge.

[muawiyah]

Looking at the narrow issue of the corporation itself, your computation necessarily forgets two things ~ MARKET VALUE of the stock held by myriads of pensioners and pension funds, and DIVIDENDS anticipated to be paid out by the pensioners and pension funds.

Sure, they can write off a loss, but they still have to pay that "loss".

BP bankruptcy holds with it the promise that Americans will no longer be able to visit the United Kingdom nor its dependencies abroad without fear of death or maiming.

[mikeus_maximus]

The Stupid Party opens its mouth yet again.

[muawiyah]

On the other hand, the negligence appears to have occurred while engaged in performing what amounts to a very unsafe act AS recommended by our own Environmental Protection Agency (and a host of rabid environmentalists).

It is not clear in this case that BP was the lead actor, and it would make more sense to begin rounding up Sierra Club members and holding them accountable.

[GonzoGOP]

MARKET VALUE of the stock held by myriads of pensioners and pension funds, and DIVIDENDS anticipated to be paid out by the pensioners and pension funds.

Irrelevant.
Bankruptcy is a legal term used to describe when a corporation or individual seeks legal protection because it cannot pay its bills. BP has sufficient cash flow to pay for a 60 billion dollar cleanup. Bankruptcy is simply not an option for them.

Put it this way. Lets posit a person that has an income of $100,000 dollars a year, a paid off $500,000 home and bank assets worth another $100,000. They get into a car accident and it requires a settlement of $50,000 more than their insurance can cover. No judge is going to let them avoid payment of the bill by declaring bankruptcy since their income and assets more than cover the bill. If BP spreads the costs over 2 years (and they will likely be spread over much more than that as claims are settled one at a time) they will still have profits and dividends every year. A company posting billions of dollars in profits, and still paying dividends will never be allowed to seek bankruptcy protection.

[muawiyah]

Two things ~ there's BP, and there's BP American, a wholly owned subsidiary responsible for the operations in question.

Yup, they'll be going bankrupt.

Now, "no judge" ~ except judges in Florida are required by law to EXEMPT someone's domicile or home even if it is worth millions of bucks.

That has precipitated a mini-industry where very wealthy people buy exceedingly expensive homes in Florida (which, after a bankruptcy, they can sell).

Oh, yeah, and back to the "cost" side of the equation, BP American will be paying those costs up to the point where they exhaust the networth of the assets.

The greatest part of the BP American assets are the leases for oil sites ~ all on federal or state property at the bottom of the ocean.

[paul51]

I’d like someone to explain what happened to the money the feds have been collecting all along for exactly this situation

The same thing that happened to the ss money in the lock box.

[Puddleglum]

how about we follow the law whatever direction it leads?

[dila813]

When I saw this, it was said in the context of the Obama Administration saying they have to pay for all lost wages due to the Moratorium on Drilling Off-Shore for the next 6 months.

It is outrageous to expect any company to pay for their bad decisions.

There is a cap on some expenses, there aren’t caps on others, and in some cases there is a oil spill fund that is supposed to pay for some expenses that gets funded from the industry.

Yes, Dems want to remove caps retroactively on all expenses.

Without this cap, there would be no drilling in the US. The cap protects companies against frivolous claims.

[dila813]

I don’t think it was Obama that said it, it was his administration back pedaling due to the prediction of 10ks of jobs that will be lost due to the Moratorium on drilling.

[blam]

"My preference is for this to happen. I just wait for the day that oil begins to seep in my yard. If we could get a hold of British flags easily I’d probably have a bonfire where we burned the Union Jack and a poster with the BP logo. It wouldn’t accomplish anything but would probably make a lot of people feel better."

The UK Is Now Freaking Out About The U.S. Reaction To BP

[GonzoGOP]

BP's US operations alone pulled in a profit of $16.7 billion. That isn't cash flow that is after all expenses and depreciation of assets profit. So simply by breaking even for a period of 3.6 years they could pay off the entire cleanup without having to sell off any assets or impact the non us earnings of BP Plc.

And some assets of the BP Plc would certainly be well spent cleaning up the spill rather than simply letting the cleanup to its BP America subsidiary. BP Plc spends over a billion dollars a year on marketing. Can you think of any TV commercial or newspaper add that they could do that would undo the PR damage of refusing to pay for the cleanup of the oil spill? So the best possible use of those marketing funds for them would simply be to clean up the beaches.

Since a stock price factors in the discounted profits for the next 7-10 years this will not drop the stock price to 0. And since they could pay it simply out of profits, without sale of assets or default on any other liability payments, they can't file for bankruptcy. BP America is going to have a few of lean years. Or one bad year if they use the resources of the entire company. Hardly end of the world bankruptcy unless the spill gets several times worse than the current worst case scenario.