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Making Big Oil accountable
The $20 billion bucket for claims that would be funded by BP, but run by the US government is hardly going to dent the BP balance sheet and P&L.
As Bernard Condon and Michael Liedtke write in Associated Press, BP makes more money than Apple and Google combined and in the past three years the company generated $91 billion in cash flow from operations. Unlike the banks, BP has next to no debt which means it can raise billions more. Even in a worst case scenario, analysts say the company could wall of those liabilities.
But the big balance sheet test might be yet to come with the prospects of criminal charges. The New York Times reports that BP's costs could soar to $63 billion if there were criminal charges, and that's not even taking into account the lawsuits.
But then as Michael Corkery writes in The Wall Street Journal, BP is likely to survive this crisis in the same way that Union Carbide survived Bhopal. BP's greatest assets are 18 billion barrels of oil reserves. The value of these reserves, like Union Carbide's chemical technology, should see the company through.
In light of that, the challenge for the US government is to take steps to ensure this crisis does not happen again. Oil companies will continue to make massive profits but they need to be made more accountable.
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