NYT: BP's Oil Spill Fines Could Hit $63 Billion

BP Chairman Carl-Henric Svanberg, left, speaks to reporters outside the White House in Washington, June 16, 2010, after attending a meeting with President Barack Obama. Standing behind Svanberg is BP Chief Executive Officer Tony Hayward, third from right, BP Managing Director Bob Dudley, second from right, and BP America Chief Executive Officer Lamar McKay, right. AP Photo

Environmental law experts tell The New York Times that the total cost of the oil spill for BP could hit almost $63 billion, as expected criminal law suits mount up in the coming months and years.

BP executives, who met Wednesday at the White House with President Obama, agreed to set up a $20 billion escrow fund to pay compensation claims from Gulf residents and businesses affected by the largest U.S. environmental disaster ever.

Special Section: Disaster in the Gulf

David M. Uhlmann, a law professor and former boss at the Justice Department's environmental crimes division, told The Times that the fund could pale in comparison to the expected legal costs of the spill. He said the civil penalty alone for the oil gushing into the Gulf could amount to $289 million per day.

Legal analyst Pavel Molchanov told the newspaper the cost of the expected myriad criminal suits will likely bring BP's total bill to $62.9 billion, according to his estimates.

The terms agreed between the U.S. government and BP to set up the escrow fund do not preclude any criminal law suits.

However, a veteran energy analyst and economist in London tells CBSNews.com the cost estimates being bandied about by figures such as Uhlmann and Molchanov are "highly unlikely" to become reality.

"As mad as the American people may be, they've got to be calm," said Dr. Leo Drollas, the chief economist and deputy director of the Center for Global Energy Studies.

Drollas predicts that America's own financial interests will eventually temper the fury and prevent massive fines from being imposed on BP - fines which could potentially put the brakes on deep-sea oil exploration in the Gulf.

This "backlash in the local economy," according to Drollas, could render the entire U.S. Gulf coast a dead economy if big oil companies were to back out, fearful of lawsuits.

"Successive U.S. governments don't want to tax the demand side of the equation," says Drollas.

To the contrary, Drollas suggests the massive gush of crude from the Gulf seabed is indicative of a "huge success, in terms of exploration, for the American people." Though highly skeptical of the estimated flow rate recently give by scientists working for the U.S. government, Drollas said the oil field discovered by BP's now-sunken Deapwater Horizon rig could be a reserve holding as much as 10 billion barrels of oil. That would be on a level comparable to some of the largest fields ever tapped in Saudi Arabia.

Meanwhile, BP CEO Tony Hayward is expected to face an even tougher grilling Thursday on Capitol Hill than he got the day before at the White House.

The company released a preview of his opening remarks to lawmakers, in which he says the initial explosion on the BP-run Deepsea Horizon rig, and the death of 11 rig workers, left him "personally devastated."

CBS News correspondent Anthony Mason reports that if the $20 billion fund was the only major penalty cost incurred by BP for the spill, the massive global oil company could probably survive the financial storm without too much difficulty.

If the numbers reported Thursday by the New York Times are accurate, even a giant like BP may find the costs a severe burden to bare - and with rumors of bankruptcy filings flying wild, that could have drastic implications for thousands of Brits and Americans with retirement funds tied up in BP stock.

More oil spill coverage:

BP "Small People" Comment Angers Gulf Residents
Who is BP Chairman Carl-Henric Svanberg?
Oil Spill's Global Impact
BP Stops Dividend Payments During Oil Spill
Obama's Oil Spill "Battle" Metaphor Runs Into Problems
Obama: We Will Fight Oil Spill With Everything We Got
Fact Check: Gaps in Obama's Oil Spill Speech
Lawmakers Berate Oil Execs over Response Plans
When Oil and Coral Collide
  • CBSNews

Comments

CBSN Live

pop-out
Live Video

Watch CBSN Live

Watch CBS News anytime, anywhere with the new 24/7 digital news network. Stream CBSN live or on demand for FREE on your TV, computer, tablet, or smartphone.