Big Oil profits targeted to kill Spill Bill

Our guest bloggers are CAP’s Daniel J. Weiss and Rebecca Lefton.

The big five oil companies – BP, Chevron, ConocoPhillips, ExxonMobil, and Shell – reported their second quarter profits during the week of July 26th.   To the surprise of almost no one, these companies made a huge combined profit of $21.7 billion this quarter.[1] This is 50 percent more profit compared to the second quarter of 2009. Their total profit in the first half of 2010 is $50 billion – almost double compared to 2009.

Big oil companies are using part of their huge windfall to pressure Congress to defeat measures that would protect public health and the environment.  According to lobby reports, these five companies spent nearly $18 million in the second quarter to lobby on efforts to hold them more accountable for the damages from blowouts or disasters like BP’s Deepwater Horizon fiasco by removing the $75 million liability cap on damages from oil spills.  The American Petroleum Institute, big oil’s lobbying arm, leads the charge to block unlimited liability for companies’ oil disaster related economic damages.

Fortunately, a majority of voting representatives ignored big oil arm twisting, and voted to pass the Consolidated Land, Energy, and Aquatic Resources Act, H.R. 3534 on July 30th.  It passed by a vote of 209-193.  Among its many important reforms, it would make BP pay for the damages from the Deepwater Horizon blowout, and hold oil companies responsible for future spills. It would enhance safety requirements to prevent future blowouts or spills.  The Senate could vote on a similar measure as soon as Tuesday August 3rd.

Eliminating the existing $75 million liability cap for offshore oil spill damages would make oil companies liable for all economic losses to businesses, lost governmental revenues, and other damages. Establishing an unlimited liability cap would apply to the BP oil disaster. This would create a powerful economic deterrent to the kinds of reckless cost cutting and shortcuts that BP reportedly took on the Deepwater Horizon platform

The BP oil disaster was caused more than 180 million gallons of oil to flood from the ocean bottom into the Gulf of Mexico and on to American shores from Texas to Florida. This disaster is the largest ever, but it is no freak occurrence. A Washington Post analysis found “a steady stream of oil spills dumping 517,847 barrels of petroleum…into the Gulf of Mexico between 1964 and 2009…they poured twice as much as oil into U.S. waters as the Exxon Valdez tanker did when it ran aground in 1989.”

In addition to opposition to oil company responsibility for oil spill damages, the big five oil companies also spent money to lobby on:

  • the Blowout Prevention Act, H.R. 5626, to prevent future disasters
  • requirement that BP pay royalties to the federal government from oil capture from the Deepwater Horizon blow out, H.R. 5513;
  • Clean Air Act pollution reduction requirements;
  • efforts to cut global warming pollution, H.R. 2454;
  • proposals to close some tax loopholes that save oil companies billions of dollars;
  • efforts to require shale gas producers to publicly report on the toxic chemicals they use to “frack” rock to produce the gas, H.R. 2766;
  • restrictions on the use of highly polluting “tar sands” based fuel;
  • provisions to increase energy efficiency and the use of the wind, sun and other renewable resources; and,
  • other public health, job creation, oil reduction, and environmental safeguards.

These reforms are just some of the targets of big oil pressure, paid for with profits from Americans’ gasoline purchases.  Another benefit of reducing oil use would be to shrink the big five’s bank accounts so that they have fewer funds to oppose public health and safety protections like they are in this Congress.

[1] These figures reflect BP’s underlying profit, excluding special charge for Gulf oil disaster damages.

5 Responses to Big Oil profits targeted to kill Spill Bill

  1. _Flin_ says:

    So if you assume a damage of 16$/tCO2 (as in Tol 2005), you end up with 92 billion dollar. Damage US CO2 = Profit Big Oil. Who would have thought.

    Time to get the external costs into the calculation.

  2. And maybe time to stop giving big oil huge subsidies:

    “Every day, governments give away an estimated two billion dollars of taxpayer money to the fossil fuel industry. This unmatched largesse to a highly profitable sector by countries verging on bankruptcy or unable to feed large numbers of their own people is “complete madness”, according to many experts.”

  3. Edpeak says:

    You really do have a way with word Joe! It’s time for a new movie from Hollywood or independent producers somewhere, a new film that will expose the machinations of Big can co-star Daryl Hannah who herself cares about environmental issues.

    The film will be called Kill Spill Bill

    Thanks for the great line!

    Ok to a little graveyard humor to keep spirits up amidst the depressing reality. Until we put an end to the currently legal status of practically BUYING elections with corporate funding and lobbying, it’s all a steep uphill battle to get any sane things passed, and when there’s a step forward or two, so often a step backwards or more accompanies it. I fear nothing will be done until….let me re-phrase that…I fear far-too-little, far-too-late will be done until…until it reaches the point of gigantic short-term (as in, this year’s earnings) damage is done by climate to corporate America…but if we wait until that happens, it’ll be too late for the Earth. If planetary survival is at all compatible with corporate capitalism (which I doubt) it’s certainly not compatible with the current version of corporate capitalism..On that cheery note…

  4. _Flin_ says:

    @Edpeak: Earth itself wont have a problem. It can handle a few million years of regeneration. Mankind and animals on the other hand…

    And considering the damages: the whole problem is that the damage isn’t done to corporate America, but to all of the world. Be it private or public, corporations or citizens. The profit, however, is in the hands of few. Like communism, where few privileged people profit and the rest suffers.

    Other than that, you are right.

  5. catman306 says:

    To me the root cause of problems with the corporate world is the concept of ‘limited liability’. Do as much damage to the environment or people’s lives or property and only have to pay damages up to the amount of your investment. I say it was always, and continues to be, the greatest scam of our modern world.

    No, I don’t have a plan to remedy this problem, but if we ever get the chance to build another global economic system, I suggest we only allow for financially liable partnerships, no ‘stockholders’. I’ll bet every company would be managed in a much more environmentally friendly and sustainable way in that future world where corporations are no longer a threat to all we care about because if the management and owners really mess up, they lose everything they ever thought about owning.