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Gov't balances BP punishment, clean up

Pelicans take flight near an oil-covered shoreline in Brush Island, La.

TEXT OF STORY

Kai Ryssdal:Funny things can happen 5,000 feet underwater, so nobody really knows yet whether forcing heavy drilling mud into the well is actually going to plug it up. Everybody from the CEO of BP to President Obama has their fingers crossed, because patience is running out.

Marketplace's Jeff Tyler reports.


Jeff Tyler:Politicians, environmentalists and the public are mad at BP. And the government is under pressure to get tough -- but it has one arm tied behind its back.

Michael Lynch: How do you punish the company while they're driving the fire truck, in essence. They're right in the middle of trying to deal with the catastrophe.

That's Michael Lynch, president of the consultancy Strategic Energy and Economic Research.

Lynch: Essentially, nobody can really run the attempts to stop the well-spill except BP at this point. It would be disastrous to pull them out.

Obviously, the government will impose fines. But how much? Lynch says the Feds have a tricky task.

Lynch: Especially the wildlife death is very hard to quantify. So coming up with a number that you can attach to it by saying, "We're going to charge you X dollars for every barrel" would be one way of just trying to round-out all the uncertainty. But I'm sure it's going to be years of lawsuits involved.

The government also needs to consider the signals that BP's punishment will send to other energy companies. Severin Borenstein is co-director of the Energy Institute at U.C. Berkeley.

Severin Borenstein: They need those firms to be taking into account the risks they impose on the rest of society. But they don't want to overstate them so much that the firms are discouraged from engaging in any economic activity at all.

Tomorrow, Interior Secretary Ken Salazar will share the results of a 30-day review of offshore drilling safety. President Obama is expected to use the event to call for tougher oversight of oil rigs and drilling permits.

I'm Jeff Tyler for Marketplace.

About the author

Jeff Tyler is a reporter for Marketplace’s Los Angeles bureau, where he reports on issues related to immigration and Latin America.
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It's fascinating how BP and Big Oil reiterate the same arguments that Wall Street has:

Borenstein: "But they don't want to overstate them so much that the firms are discouraged from engaging in any economic activity at all." It's like your teenage son telling you after he wrecked the family car, "Now I know I shouldn't have done that, but you don't want to ground me TOO long, do you?"

How about if BP use lecture notes from the Chicago School Nobel to soak up that oil spill?

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