Ships battle the blaze after the Deepwater Horizon oil rig exploded. Photo by: U.S. Coast Guard.
Last week the U.S. federal government fined BP $4.5 billion for the Deepwater Horizon disaster in 2010, which killed 11 workers and leaked nearly 5 million barrels of oil into the Gulf of Mexico. The oil giant also plead guilt to 12 felonies and two misdemeanors. However, even this fine—the largest in U.S. history—failed to dampen shareholder support of BP: stocks actually rose one percent following the announcement. Meanwhile, according to the Sunday Times, BP plans to spend $5.9 billion (over a billion more than the fine) buying back its own shares in order to boost stock prices.
The fine will be spread across various agencies and paid out over five years. The bulk of it, $2.4 billion, will go to the U.S. National Fish and Wildlife Foundation for restoration and conservation work in the Gulf of Mexico. Over one billion will be paid out to the Coast Guard’s Oil Spill Liability Trust Fund for future oil spill cleanup. The National Academy of Science is set to receive $350 million for oil spill prevention, education, research, and training. Finally, the company will also pay $525 million to the Securities and Exchange Commissions for misleading investors regarding the size of the spill.
Still, the historic fine is not being seen as a critical blow to BP. The company made $5.5 billion in the third quarter of this year alone, meaning it can pay off the total fine, which will be spread over five years, with just one quarter’s profit.
More fines, and bigger ones, may yet come. Oil spill fines under the clean water act could end up as large as $21 billion, although BP has only set aside $3 billion for this. In addition, more penalties could come from private civil claims and impacted states.
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