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BP fined $4.5 billion in Gulf oil spill. Is it enough?

BP reached a settlement with the US government Thursday to pay $4.5 billion in criminal fines and penalties for the 2010 oil spill in the Gulf of Mexico. Critics calls the BP settlement a slap on the wrist.

By Correspondent / November 16, 2012

This May 2010 file picture shows a plume of oil as a shrimp boat uses booms to collect oil in the waters of Chandeleur Sound, La. Is $4.5 billion settlement announced Thursday, Nov. 15, 2012, a fair price for BP to pay for the damage done and human lives lost in the Gulf of Mexico?

Eric Gay/AP/File

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Eleven lives lost. The world's largest accidental offshore oil spill, which poured 4.9 million barrels into the Gulf of Mexico and contaminated 150 miles of shoreline Tens of billions of dollars in cleanup costs, with billions more in losses to fishing and tourist businesses.

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How much should a company pay for that big of a crime?

On Thursday, BP and the US Department of Justice arrived at a figure for the 2010 Deepwater Horizon disaster. The British oil giant agreed to plead guilty to 14 criminal charges and pay a total $4.5 billion in criminal fines and penalties. That's a record amount. 

Is it fair?

"Unprecedented," US Attorney General Eric Holder called the settlement, which included separate criminal charged filed against three BP employees. 

Unacceptable, countered the spokeswoman for Florida Gov. Rick Scott, who complained that the deal doesn't adequately compensate his state for the damages it sustained.

Even environmental groups couldn't agree on how to characterize the US-BP deal.

“This settlement is an important step in holding BP accountable and it’s especially significant that BP is pleading guilty to felonies," Frances Beinecke, president of the Natural Resources Defense Council, said in a statement. "Still, no fine or admission of guilt can ever bring back the eleven lives lost.  Nor can it make the communities of the Gulf whole again." 

“This proposed settlement would not hold the guilty accountable for their actions," said Greenpeace senior investigator Mark Floegel in a statement. "This fine amounts to a rounding error for a corporation the size of BP."

BP reported third quarter net profit of $5.5 billion, offsetting the $1.34 billion loss it reported in the three months prior. In 2011, BP recorded revenue totaling $234.25 billion.

As of the end of September 2012, BP’s financial statements recorded a $38.1 billion charge taken against pre-tax income in relation to the accident and oil spill, according to the company.

If BP's stock price is any indication, the $4.5 billion charge didn't seem unreasonable. The company's US shares closed up 0.35 percent Thursday, and various media outlets reported some investors were happy just to have the BP settlement behind them.

While Thursday's settlement resolves BP's criminal liability vis a vis the federal government, it's by no means the end of civil suits against the oil company. BP has already spent about $14 billion on spill response and cleanup and paid out more than $9 billion in claims to affected businesses and individuals, according to The Wall Street Journal

BP faces additional civil claims from the US as well as state governments that could easily run into the billions of dollars. Fines under the Clean Water Act alone could add up to $21 billion, The New York Times reports. 

BP itself said Thursday's deal was a positive step.

“We believe this resolution is in the best interest of BP and its shareholders,” Chairman Carl-Henric Svanberg said in a statement. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”

For those who lost friends and family members in the accident, the debt is insurmountable. 

"It doesn't matter how much money anyone pays," Arleen Weise, the mother of a worker killed in the 2010 explosion, told CNN. "It doesn't nearly amount to what we've lost."

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