Full Title: The True Value of BP’s $18.7 Billion Settlement
Author(s): Michael Conathan
Publisher(s): Center for American Progress
Publication Date: 07/2015
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On July 2, the U.S. Department of Justice and BP—one of the world’s largest oil and gas companies—announced that they had come to terms on a historic $18.7 billion settlement over damages from the 2010 Deepwater Horizon oil disaster. By any metric, this is an enormous sum of cash; for example, it is more than the gross domestic product of 83 countries, according to the World Bank. U.S. Attorney General Loretta Lynch announced in a statement that, if ultimately approved, this restitution “would be the largest settlement with a single entity in American history”—appropriate considering that the spill was one of the worst environmental disasters to ever occur in the United States.
But what does this amount—$18.7 billion—mean to one of the wealthiest, most profitable corporations on the planet? A couple of clues came soon after the settlement was announced: That afternoon, BP’s stock price jumped 4.2 percent. The Financial Times, meanwhile, quoted an unnamed BP source who detailed the wave of relief that swept over his colleagues as they learned of the agreement: “I could see it in the eyes of the executive team. [The settlement] liberates us.”
Yet, is almost $19 billion enough to liberate the Gulf of Mexico’s economy and environment after BP’s “gross negligence” led to the dumping of more than 3 million barrels of oil into its waters and onto its shores? Where will the money go? And, at the end of the day, is it a good deal for Gulf Coast residents and American taxpayers? The answer is not simple. However, this brief provides a breakdown of the key points of the settlement: the good, the bad, and the convoluted.