Rough Costs: Gulf Spill vs. Exxon Valdez

 

Well, there are yet more numbers out there describing the Gulf oil “spew.” Now, the experts are mumbling numbers like 60,000 barrels/day of oil loosed upon the wave and shore. A bit of quick math (42 gal/barrel) says that we’re looking at something like 145 million gallons total so far, or 13 times that of the Exxon Valdez.

Of course, there are so many unknowns… We don’t really know how much oil has been lost; we don’t know what nearly a million gallons of dispersants are going to do to the area; we don’t know what happens to such a deep ecosystem given the 5,000′ depth of the blow-out; we don’t know how much crude will reach the shoreline and the wetlands… But even if we simply use the 1989 Exxon Valdez spill as a rough estimate, that was still a $4.5 billion cleanup–but Pricne William Sound is still feeling the effects. Using just that yardstick today ($654/gal), we’re looking at $95 billion, though that may in fact be just a fraction of the final amount.

And truth be told, the cleanup will no doubt reach a point of diminishing returns… For example (and this is just an example), BP might be able to remediate 75% of the damage at a cost of $40 billion, 80% at a cost of $50 billion, 83% at a cost of $75 billion, and 84% at a cost of $150 billion. Put another way, there will come a time when there just isn’t enough ecological bang for the (available) cleanup buck.

Obviously, that begs a nasty question… Just how many bucks does BP have? Try about $80 billion with their oil reserves. Uh oh. But as Reuters reported:

“The company generated cash of $7.7 billion from operating activities in the first quarter. Even after capital investment of $3.8 billion, it had $3.9 billion of free cash and the company says it has arranged significant credit lines…

“The upper end of analysts’ forecasts of total costs is around $30-$35 billion, with potential extra costs for lost fisheries business in years to come.

“Analysts say BP may not be able to cover such costs, and pay its dividend, out of cashflow alone, forcing additional borrowing.

However, the oil giant is believed to be able to do so without bringing its gearing levels above its targeted 20-30 percent range.”

My over-priced $.02 concerning the final cost of the cleanup? I’m guessing at best $50 billion—$100 billion if we’re lucky. (Who knows what it will amount to if the relief wells flop.) As the summer slogs by watch the shenanigans, follow the money, and watch out for PetroChina. Oh goody.

Alan Speakman

4 Responses to Rough Costs: Gulf Spill vs. Exxon Valdez

  1. Merle Savage says:

    How about, Bottom Line…supply respirators for workers!! Please learn from my experience and do not end this spill cleanup with BP Collateral Damaged.

    My letter to Gulf residents.
    http://www.urbanconservancy.org/letters/gulf-coast-cleanup-caution-urged

    The crude oil is toxic, and anyone who cleans the oily Gulf beaches needs to know the danger. Don’t allow the workers to become BP’s Collateral Damaged, like Exxon.
    http://www.lvrj.com/news/exxon-valdez-oil-risks-spur-warning-for-gulf-cleanup-crews-93258964.html

    My name is Merle Savage, a female general foreman during the Exxon Valdez oil spill (EVOS) beach cleanup in 1989. I am one of the 11,000+ cleanup workers from the Exxon Valdez oil spill (EVOS), who is suffering from health issues from that toxic cleanup, without compensation from Exxon.

    Dr. Riki Ott visited me in 2007 to explain about the toxic spraying on the beaches, and informed me that Exxon’s medical records that surfaced in litigation by sick workers in 1994, had been sealed from the public, making it impossible to hold Exxon responsible for their actions. http://video.google.com/videoplay?docid=5632208859935499100

    Beach crews breathed in crude oil that splashed off the rocks and into the air — the toxic exposure turned into chronic breathing conditions, central nervous system problems, neurological impairment, chronic respiratory disease, leukemia, lymphoma, brain tumors, liver damage, and blood disease. http://www.silenceinthesound.com/stories.shtml

    My web site is devoted to searching for EVOS cleanup workers who were exposed to the toxic spraying, and are suffering from the same illnesses that I have. There is an on going Longshoreman’s claim for workers with medical problems from the oil cleanup. Our summer employment turned into a death sentence for many — and a life of unending medical conditions for the rest of Exxon’s Collateral Damaged.

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  4. We need a comment from the Coast Guard Rear Admiral Mary Landry. Landry’s done this before—she oversaw the 2003 spill in Buzzards Bay, Massachussets . Then, as now, her initial reports of the spill total were way off. Landry, a Coast Guard rear admiral, has gone from taking reporters’ questions at the White House to giving reporters tours of the damage, but there are also reports that the Coast Guard is keeping reporters and photographers from getting a full picture – and doing so at the behest of BP. (The Coast Guard says they are accommodating as many media requests as they can; Landry hasn’t commented). We have got to ask how the response to the Gulf of Mexico spill compares to the 2003 Bouchard B 120 oil spill in Buzzards Bay,Massaacusetts? Two things come to mind. First the U.S.Court of appeals never allowed the state of Massachusetts to enforce the Massachusetts Oil Spill Prevention Act of 2004. The Coast Guard appealed the rules because of an intercoastal turf war leaving the state with no new laws to protect the bay. Second the residential property claims of thousands of residents have been tied up in the Massachusetts court system for the past eight years. How will residential property owners around the gulf have to wait? On April 27, 2003, eight years ago the Bouchard Barge B-120 hit an obstacle in Buzzards Bay, Massachusetts creating a 12-foot rupture in its hull and discharging an estimated 100,000 gallons of No. 6 oil.

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