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May 26, 2021

How much should BP's penalty be?

As BP’s oil spill clean-up efforts reached Operation “Top Kill” today, one thing is becoming clear: people want justice.

And there has been a lot of speculation over how much accountability the energy giant should have for its spill last month, the explosion that’s already spewed an estimated 1.4 million barrels of oil into the Gulf of Mexico.

Some say BP is totally negligible, others (well, BP itself) say it’s not. But everyone wants to know, once and for all, how much the British multinational should have to pay for its mess.

There are a myriad of government loopholes, wads of red tape and sticky legislation in this whole scandal, but there are three legitimate penalty scenarios I can see here:

1. The "Slap On The Wrist": This repayment is the clear-cut favourite for BP because pre-existing liability rules for oil spills top out at $75 million. That would mean, if BP is found not  to have exhibited gross negligence in the spill, it would only be on the hook for $75 million, no matter the total clean-up/fallout costs.

2. The "Stocks": Since the spill, legislation has been introduced inside U.S. courts to raise the aforementioned liability cap by more than 100 times. “I believe that we have a system in dire need of repair,” said one Democratic politician opposed to the $75 million cap. The U.S. Justice Department admitted yesterday that Congress could retroactively impose a $10 billion liability cap on BP for damages from the growing oil spill, and that the oil corporation would “likely lose if it challenged the higher cap in court,” according to Reuters.

3. The "Full Monty": A bit of a stretch, but something entirely plausible. Based on a clause within the U.S. Clean Water Act, BP could – in theory – be fined a huge sum for every barrel of oil spilled into the Gulf. How huge? Try $4,300 per barrel. By that calculation, BP would already owe about $6.2 trillion in fines so far from its spill, according to estimates Wednesday. Such a penalty might have little chance of catching on, but you can’t say for sure it’s out of the cards.

Of the three listed penalties for BP, which do you think is fair? How much should the corporation be forced to pay?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...