BP oil rig legal costs worry investors
Sign outside of BP headquarters in London
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Bob Moon: Oil from that destroyed offshore well in the Gulf of Mexico may have reached the Louisiana coastline overnight. The Coast Guard plans a flyover this morning to confirm that. Sludge is now leaking from that BP well at an estimated rate of 5,000 barrels a day, and the region is bracing for an ecological disaster. As Marketplace's Stephen Beard reports from London, the British owner of the well is bracing, too -- for a gusher of lawsuits.
Stephen Beard: Investors are worried about the potential cost of legal claims. The fear is that with its environment in jeopardy and many livelihoods at stake, the state of Louisiana will sue BP.
Commercial and charter fishermen have already filed at least six class action lawsuits. Many more are thought to be in the pipeline. BP will be especially nervous, says Chris Skrebowski of Peak Oil Consulting, because of the American legal system:
Chris Skrebowski: It opens up a sort of Pandora's Box of legal action. You have this concept of punitive damages. You have this well-established tradition of class actions. And you can get very large settlements under those.
Punitive damages of $5 billion were initially awarded against Exxon after the Exxon-Valdez disaster in 1989. Those damages were later much reduced on appeal. Nevertheless, Exxon's total bill was more than $3 billion. The worry is that BP could be facing an even bigger tab.
In London, this is Stephen Beard for Marketplace.