As crude oil gushes from British Petroleum's blown-out oil well in the Gulf of Mexico and anger at the uncontrolled spill increased, BP essentially is deploying truckloads of lawyers to mitigate the damages to their corporate bottom line. Not long ago, BP began an effort to cap their financial liability for the spill at $27 million.
Believe it or not, $27 million is not a lot of money these days. Let me put a little perspective on that figure.
If someone wins the Powerball lottery drawing on Saturday, they'll have the option of accepting a prize of about $114 million if they take a lump-sum payout. If they opt for an annuity, they'll get a total of about $220 million in annual payments spread out over 30 years.
So a Powerball winner would be pocketing more than four to eight times more than what BP wants to pay in liabilities for the negligence that led to one of the worst environmental disasters in our time. In other words, BP wants to limit their liability to the amount a winner receives in a mediocre lottery payout.
Here's a little more perspective. Nicholas Graham, writing today for the Huffington Post, reports that the spill is costing BP about $16 million a day. But there's no reason to worry about BP's solvency. In the first quarter of 2010, BP made a profit of about $66 million per day, Graham reported. And for 2009, BP's profits were $14 billion.
If you take that figure of $66 million per day in profits and divide it by 24, the result is $2.75 million. So if BP succeeds in capping their liability at $27 million, their penalty for a catastrophe that will cause untold billions of dollars in damages that someone will still be tabulating years from now will cost them less 10 hours worth of profit.
It would be the equivalent of someone dropping a dollar bill in the grocery store. BP is not even going to notice a $27 million fine.
So, as I said yesterday, boycott these people. They don't need any more of your money.
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