BP Oil Spill Disaster: Fading Interest

Public perception of oil giant BP PLC has improved significantly.
BP Oil Spill Disaster: Fading Interest
Wade Bonvillain, who owns a seafood company, questions Kenneth Feinberg, administrator of the Gulf Coast Claims Facility. A public meeting was held on Aug. 18 in Houma, La., regarding independent claims processes related to the BP oil spill in the Gulf of Mexico. (Win McNamee/Getty Images )
8/24/2010
Updated:
10/1/2015

<a><img src="https://www.theepochtimes.com/assets/uploads/2015/09/bonvillain103433976.jpg" alt="Wade Bonvillain, who owns a seafood company, questions Kenneth Feinberg, administrator of the Gulf Coast Claims Facility. A public meeting was held on Aug. 18 in Houma, La., regarding independent claims processes related to the BP oil spill in the Gulf of Mexico. (Win McNamee/Getty Images )" title="Wade Bonvillain, who owns a seafood company, questions Kenneth Feinberg, administrator of the Gulf Coast Claims Facility. A public meeting was held on Aug. 18 in Houma, La., regarding independent claims processes related to the BP oil spill in the Gulf of Mexico. (Win McNamee/Getty Images )" width="320" class="size-medium wp-image-1815650"/></a>
Wade Bonvillain, who owns a seafood company, questions Kenneth Feinberg, administrator of the Gulf Coast Claims Facility. A public meeting was held on Aug. 18 in Houma, La., regarding independent claims processes related to the BP oil spill in the Gulf of Mexico. (Win McNamee/Getty Images )
Public perception of oil giant BP PLC has improved significantly since the company appeared to be successful in capping and sealing the oil well in the Gulf of Mexico, according to the Pew Research Center.

“The Gulf coast oil leak continues to be the public’s most closely followed story, but interest has declined,” according to the News Interest Index, recently published by the Pew Research Center.

Of course, it didn’t hurt that BP spent millions of dollars on positive PR and advertising surrounding its cleanup efforts.

Although the BP disaster is still among the major headliners, media interest is fading as the oil spill appears to be contained.

Cash Pledges

“We’ve ordered BP to pay economic injury claims, and we will make sure they deliver. ... And we will absolutely continue to hold BP and any other responsible parties accountable for financial losses borne by the people in the region,” President Obama said in a press release after meeting with the BP Oil Spill Commission.

Obama at the same time acknowledged that corruption within a U.S. Minerals and Management Services agency has been addressed since Ken Salazar, the Interior Secretary, assumed the post. But more work needs to be done. “For years, there’s been a far too cozy relationship between oil companies and the agencies that regulate them,” Obama said.

With a $3 billion payment on Aug. 9, BP appears to be making good on its promise to establish a $20 billion escrow account for future liabilities.

“Establishing this trust and making the initial deposit ahead of schedule further demonstrates our commitment to making it right in the Gulf Coast,” announced Robert Dudley, outgoing CEO of BP’s Gulf Coast Restoration Organization, in a statement. In October, Dudley will succeed Tony Hayward as BP’s CEO.

Additionally, BP said it would establish a $100 million charitable fund for rig workers who lost their jobs due to the six-month U.S. government moratorium on deepwater drilling.

In mid-August, BP pledged another $52 million to five federal and state health centers in the four states most affected by the disaster. The funds are earmarked to alleviate the stress and associated health problems of people affected by the oil spill.

Predicting Real Intent

BP CEO Tony Hayward guaranteed that all rightful claims that result from the oil spill disaster would be resolved equitably.

BP hired Philadelphia-based ESIS Inc., a risk management firm, to handle all claims arising out of the Deepwater Horizon disaster.

ESIS “has been providing superior recovery management services with the goal of reducing our clients’ loss dollar payouts. ... You can expect to receive highly flexible service delivery models that are aimed to reduce your loss costs,” according to ESIS’s website.

But the Institute for Southern Studies is skeptical of BP’s intent to help the victims, suggesting that its hiring of ESIS is an attempt to lessen its liabilities, “a goal Gulf advocates say is in direct contradiction to Washington and BP’s promises to fully compensate coastal residents.”

Already one victim has been shortchanged by misclassifying his job description, according to Southern Studies. Brian Sherman, a fishing guide, who earned about $3,916 a month in 2009, was reclassified as a deckhand by ESIS and his claim payment reduced to $2,500.

Responses to the Southern Studies article claim that ESIS claim adjusters sit on a revolving chair. For example, one respondent has already been reassigned to four different adjusters since June. “There is a large gap between BP’s public statements about claim handling and the reality,” writes one Southern Studies respondent.

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Troy King, Alabama’s attorney general, has filed a lawsuit against BP, claiming that ESIS is dealing in bad faith with the victims of the disaster, saying one thing in its media blitzes and doing another, as well as dragging its feet when it comes to claim payments.

King claims that BP put expert witnesses on its payroll, so they could not testify against them in court proceedings. Another accusation is that BP is putting its assets on the market so the U.S. courts can’t take them if BP should run out of funds to pay for the disaster.

“Obviously, BP’s ads are working—they have persuaded some newspapers and politicians to call for more delays. Shame on BP for running them, and shame on us if we believe them,” King said in a statement.

Most Costly Disaster

The final cost of the Deepwater catastrophe cannot be assessed at this time, according to testimony by Susan A. Fleming, director at the U.S. Government Accountability Office, before a U.S. Senate committee.

The Oil Pollution Act of 1990 (OPA) puts a limit on the amount a polluter pays for the cleanup cost. The OPA established a fund that will pay anything that the polluter cannot or is not willing to pay. As of date, the fund holds $1.6 billion, which may not be sufficient for the spill.

“Since the 1989 Exxon Valdez spill, which was the impetus for authorizing the Fund’s usage, no oil spill has come close to matching its costs—estimated at $2.2 billion for cleanup costs alone, according to the vessel’s owner,” testified Fleming.

Fleming continued, “However, as of early June, the response for the Deepwater Horizon spill had already totaled over $1 billion. ... As a result, the Gulf of Mexico spill could easily eclipse the Exxon Valdez, becoming the most costly offshore spill in U.S. history.”

Snapshot of Violations

Possible safety violations that led to the Deepwater Horizon catastrophe have not been officially identified. Justice Department press releases indicate that BP’s subsidiaries have been cited for safety violations for a number of years, as far back as 1999, when BP was fined $22 million for illegal dumping of hazardous waste in Alaska.

In 2005, BP’s Texas City refinery blew up, resulting in 15 deaths, many injuries, and relocation of many Texas residents. BP incurred a $50 million fine and a felony violation.

In February 2009, BP was fined $180 million for clean air violations at its Texas City refinery. In August 2010, the U.S. Occupational Safety and Health Administration settled with BP Products North America Inc. for $50.6 million to resolve 270 of 709 citations for failing to correct safety hazards from the Texas refinery incident.

Slipping Profits

BP’s profit slipped by 46 percent in 2009 over 2008, from $26 billion to $14 billion, much lower than the $20 billion profit recorded in 2005.

The company reported $150 billion in revenues during the first half of 2010, almost flat from the same time in 2009. Net loss was at $11 billion at the same time, given a $32.2 billion charge for the Gulf of Mexico oil spill.

To remain financially viable, BP will sell about $30 billion in assets by December 2011. In addition, BP has frozen dividend payments to its stockholders, which includes major retirement funds.

“By disposing of assets worth more to others than to BP we can better align our strategic footprint with our global strengths,” Hayward said.