With the news that a tentative $7.8 billion settlement was reached being announced in the past week, it’s worth taking a deeper look at the financial situation behind the BP oil spill that occurred nearly two years ago.
The settlement takes care of 100,000 people, who either fell ill cleaning up the spill or were fishermen directly affected by the spill. Many fishermen have not yet filed claims and while the reaction to the settlement has been mixed (one-third goes to the seafood industry), it is expected to be approved.
The company has set aside $37 billion in total to deal with all claims, many of which remain unsettled. The U.S. government, states and other companies all still have suits against BP. This article outlines the different ways BP violated federal law and notes that the government could seek up to $90 billion from BP, although a settlement is expected to be closer to $20-$25 billion.
Save your tears for BP, however. They’re doing just fine …
The fourth-quarter replacement cost profit, which is the industry’s preferred measure of profitability as it strips out the volatile value of oil inventories, came in at $7.6bn, up from $4.61bn in the fourth quarter of 2010. Full-year profit on this measure was $21.7bn, up from $20.5bn in 2010.