BP Oil Spill: Ripple Effects
How much responsibility should oil companies take in an oil spill?
A sticking point in Congress's energy bill is how much responsibility a company that causes an oil spill should take. John Dimsdale reports.
Workers contracted to clean the beach at the BP oil spill patrol the coastline in Grand Isle, La. (Win McNamee/Getty Images)
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Kai Ryssdal: The Senate's energy bill was originally supposed to be a climate change bill, with a cap-and-trade clause in it -- that's limits on carbon pollution -- and renewable energy targets for utility companies. Today, Majority Leader Harry Reid said there just aren't the votes for that. There are votes for some energy efficiency incentives. The bill beefs up government oversight of oil companies and gets rid of liability limits for oil spills.
Although Marketplace's John Dimsdale reports that last part is still subject to negotiation.
John Dimsdale: One thing everybody does agree on is the current $75 million liability cap is too low.
Daniel Weiss: It's like applying an aspirin to somebody who's got tuberculosis.
Daniel Weiss directs climate issues at the Center for American Progress. He says the only way to make oil companies more careful is to make them responsible for all the consequences.
Weiss: They'll do better training, have better equipment, more redundant backup systems, to make sure they don't get stuck with a $20 or $30 billion tab.
But Republicans and some Democrats from energy producing states say unlimited liability will leave only the biggest oil companies able to afford the insurance for offshore drilling. Jack Gerard is president of the American Petroleum Institute.
Jack Gerard: It would force all the small and midsized companies out of the Gulf leaving only the large firms as well as national companies owned by foreign governments able to operate in the Gulf.
Gerard says it would also cut domestic oil production by 27 percent. A small group of Democrats from coastal states is trying to find an alternative. Alaska Senator Mark Begich has an amendment to make the entire oil industry responsible.
Mark Begich: It's a joint risk, meaning not only will the regulatory people from the federal government be watching over the shoulders of the industry, but now you have industry watching over each other because one person makes a mistake everyone pays.
Begich says he will not vote for an energy bill that includes unlimited liability for individual oil companies.
In Washington, I'm John Dimsdale for Marketplace.
Comments
Comment | Refresh
07/29/2010
Limiting the liability of producers is fine, as long as you tax petroleum products to make up the difference and internalize the cost of potential damages so that the consumer pays the full cost of the product.
From NC, 07/29/2010
Comment below is correct. Senator Begich may have a laudable goal of encouraging more companies to participate, but including a liability limit results in passing it to the taxpayers.
From Brooklyn, NY, 07/29/2010
I'm shocked that after the financial disaster of 2008 Mr. Begich has not learned the lessons of moral hazards. Insulating reward seekers from the full brunt of their actions incentivizes undue risk taking because someone else is on the hook for the clean up. We learned this the hard way in financial services industry. It's time to end private profits and socialized risks in all its forms.
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