"Judge's Ruling May Encourage BP to Settle"
According to the Wall Street Journal, U.S. District Judge Carl Barbier found that BP took irresponsible drilling risks and did not recognize danger signs before the 2010 oil spill occurred. The court has ruled the act as ''gross negligence" as opposed to just "negligence", which means BP will owe a lot more money. BP is not planning on confessing to gross negligence though. According to BP's oil spill estimates, they would only owe $10.5 billion. On the other hand, according to the prosecutors oil estimates, BP will owe $18 billion. Because of this situation, BP is heavily considering settling to avoid the top range of possible fines and lingering uncertainty. They also have already paid $43 billion in cleanup, criminal civil settlements, and other costs related to the accident in 2010.
There is also another problem for BP while this whole situation is occurring. U.S. and European union sanctions have targeted a state owned Russian company called Rosneft. They are threatening Rosneft's ability to replace the reserve it pumps. The problem for BP is that it owns almost 20% of Rosneft. These sanctions that have been brought up can cut into BP's income from Rosneft and make it difficult for BP to team with Rosneft to develop new Russian resources.
This whole situation made me develop some questions. First, Should BP have settled in the beginning of the whole situation and take the uncertainty of what is going to happen away from investors? Secondly, how do you guys think the case will pan out? lastly, do you think BP's Rosneft situation will cause BP to lose income?
It seems BP will settle to avoid larger fees, especially if BP's income is going to be affected by the sanctions against Rosneft. This is probably the smart course of BP as a firm but it may call their ethics into question. The explosion and spill killed eleven people, and polluted the Gulf of Mexico. BP opposition may not feel that settling is just punishment for the large of damage the spilled caused.
ReplyDeleteBP is settling out of court to save money undoubtedly, but I also believe they are settling to avoid more bad publicity. The oil spill gave the company a very negative image and news of them losing another court case regarding the spill will only pour salt into the wound.
ReplyDeleteBP settling will definitely cause bad publicity, but I believe they would receive bad publicity in either case. Settling will allow them to avoid higher fines, even though it is a ethically risky decision. Personally, I'd like to see a full report of how BP plans to restore the environments of the places it has destroyed in the past, not just through monetary support, but through a full plan of action to change the way they handle oil.
ReplyDeleteBP shouldn't have settle right away because they did knock down the price for the clean up of the oil spill and it was for the investors too. I agree that if the case went on longer it would have saved the company more money, but also hurt the name of the company in people's eyes.
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