Wednesday, June 16, 2010

"Gulf Oil Disaster: A Trillion-Dollar Corporate Crime" -- World Socialist Website

The oil disaster in the Gulf of Mexico is a corporate crime whose magnitude almost defies comprehension. The eventual cost—combining damage to complex Gulf and coastal ecosystems, wiping out of the fishing and tourism industries, and long-term health consequences for the population of the region—is likely to total over $1 trillion.

The explosion that destroyed the Deepwater Horizon drilling rig, killed 11 workers and began the massive and continuing flow of oil was not an “accident,” but the product of willful corporate cost-cutting and negligence. Further evidence of this fact was provided Monday in documents released by the House Energy and Commerce Committee. One document was an email from a BP engineer, Brian Morel, on April 14, six days before the explosion, in which he described the rig as a “nightmare well which has everyone all over the place.”

An accompanying letter from the committee detailed decisions made by BP officials during the days leading up to the disaster. “The common feature of these five decisions is that they posed a trade-off between cost and well safety,” the letter said. “Time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense.”

In this context, the much-publicized demand by the Obama administration and congressional Democrats, that BP establish an escrow fund of about $20 billion from which compensation would be paid to fishermen, seafood processors and others robbed of their livelihood by the disaster, is a fraud.
The $20 billion fund would represent only two years of dividend payments for BP. This is likely to be portrayed as a “compromise,” in which the oil company agrees to suspend dividend payments, partially or wholly, for a few months, as a public relations gesture while the Gulf crisis dominates the headlines.
This amounts to an effective amnesty to the giant oil company, and a back-door bailout, since any compensation above the escrow fund amount would become the responsibility of local, state and federal governments, i.e., like the cost of the Wall Street bailout, it would come at the expense of the working class.

The scale of the Gulf oil disaster is so enormous that for any serious estimate of the real costs in terms of cleanup, compensation and long-term repair of damage, the bidding starts at a trillion dollars and rises rapidly upwards.

An estimate published by Earth Economics, an environmental group, found that the Mississippi River Delta in Louisiana alone had an economic value of between $330 billion and $1.3 trillion, based on benefits provided like water supply, water flow regulation, hurricane protection, food production, raw materials production, recreational value, carbon sequestration, atmospheric composition regulation, waste treatment, aesthetic value and habitat value.

Besides Louisiana, however, oil from the BP spill is now washing ashore on the coastline of Mississippi, Alabama and the Florida panhandle. Vast plumes of undersea oil have been detected in the deep waters of the Gulf of Mexico, beyond the continental shelf, where the destructive impact on ocean ecosystems and the food chain is incalculable.

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