The Year of the Spill
In the end, all of us will pay for this disaster.
- By Jerry Laws
- Aug 01, 2010
Surely we won't stop talking about the Gulf of Mexico oil spill after BP and its army of responders finally halt the flow of crude. At this writing, we have obsessed about who is at fault for the initial explosion, the spill's political impact, whether to slow down or speed up deepwater drilling, Louisiana's persistent bad luck, and even whether news coverage slighted the 11 people who died.
We haven't forgotten them or the spill's other victims, the fishing boat owners and crews, shipyards, coastal residents and businesses from Caillou Bay southwest of New Orleans to Pensacola and points south, oil workers kept idle by a drilling moratorium, the wildlife, and even BP shareholders and British pensioners watching its stock price collapse. Called on the carpet by the president June 16, top BP executives announced then that it is creating a $20 billion fund to pay all legitimate spill-related claims. That enormous sum is $10 billion less than the company's expected cash flow from operations for this year.
Willis Group Holdings plc, a global insurance broker, recently said this incident and the May 13 sinking of a gas drilling unit, the Aban Pearl, had shaken the market for upstream energy insurance. If a major hurricane blows through the gulf later this year or some other major loss occurs, Willis expects a significant withdrawal by upstream insurers from the market at year's end. Even if this doesn't happen, any company drilling in deep water will pay much more for insurance coverage, according to the analysis.
In the end, all of us will pay for this disaster.
If there is an upside, it's this: Hayward, who said BP employees are "heartbroken" about the spill and the 11 deaths, promised to be a leader in improving safety technology for offshore drilling. Vowing to "take existing standards to a completely new level," he said the industry "will carefully evaluate its business model to determine how we can work better with our contractors to reduce the various risks associated with drilling operations." ExxonMobil, Chevron, ConocoPhillips, and Shell soon announced they are initially investing $1 billion and working together to fashion spill control equipment that can be rapidly deployed in the deepwater Gulf of Mexico.
This article originally appeared in the August 2010 issue of Occupational Health & Safety.
About the Author
Jerry Laws is Editor of Occupational Health & Safety magazine, which is owned by 1105 Media Inc.