BP Oil Spill: Why Size Matters

| Wed May 26, 2010 11:10 AM EDT

Initially it seemed that arguing over how much oil was gushing into the Gulf of Mexico thanks to the BP disaster was mostly an academic exercise. BP said about 5,000 barrels a day; others put the figure at perhaps ten times that much. But the critical issue was how to stop the damn leak, whatever the amount.

Yet the size of the leak, it turns out, may matter a lot. Reuters reports:

Just how many barrels of oil are gushing into the Gulf of Mexico from the Deepwater Horizon spill is a billion dollar question with implications that go beyond the environment. It could also help determine how much BP and others end up paying for the disaster.

A clause buried deep in the U.S. Clean Water Act may expose BP and others to civil fines that aren't limited to any finite cap -- unlike a $75 million limit on compensation for economic damages. The Act allows the government to seek civil penalties in court for every drop of oil that spills into U.S. navigable waters, including the area of BP's leaking well.

As a result, the U.S. government could seek to fine BP or others up to $4,300 for every barrel leaked into the U.S. Gulf, according to legal experts and official documents.

Do the math. At $4,300 a barrel, the difference between 5,000 barrels a day and, say, 20,000 could be $64 million per day in civil fines. And such a fine would be on top of any liability payments. So BP does have a rather direct interest in how the spill is measured. Which also means it has an interest in what information—such as video feeds of the leak—is released.

After the Reuters report came out, the office of Sen. Bill Nelson (D-Fla.) emailed it to reporters with a succinct explanation: "here's one of the big reasons why Sen. Nelson and others push so hard to get the video of the leaking oil from BP." Indeed.

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