Feb 1, 2011: Markey to BP: Drop Challenge to Size of Spill, Or Drop Dividend Restart
WASHINGTON (February 1, 2011) – With BP’s announcement today that they intend to restart dividend payments to shareholders, despite losing money in 2010 and tens of billions still outstanding from their company’s spill, Rep. Edward J. Markey (D-Mass.) called on the company to cease their challenge of the size of the spill or cease handing out dividends. BP has challenged the flow rate and total spill numbers reached by the U.S. government’s scientific team, which will be critical in determining the amount BP will have to pay in fines.
“BP was apparently quick to agree to pay out more than a billion dollars in shareholder dividends but still refuses to agree on the size of their own spill,” said Rep. Markey, who is the top Democrat on the House Natural Resources Committee. “If BP wants to start increasing dividends to their shareholders, they should stop lowballing the size of the spill and own up to their responsibilities to the people of the Gulf of Mexico. The people of the Gulf need to have as much certainty as BP’s investors that they will be fully compensated for the impacts of this spill.”
BP has challenged the flow rate -- and therefore the total spill volume numbers -- reached by the Flow Rate Technical Group, saying that it is 20-50 percent lower than the 4.1 million barrels spilled into the Gulf (800,000 barrels were collected, bringing total volume of spill to 4.9 mb). According to the top-level fines that can be assessed under the Clean Water Act, as amended by the Oil Pollution Act of 1990, the mid-range of the discrepancy between the government’s figures and BP’s challenge is about $6 billion. This figure is amazingly close to what they now want to pay in dividends for 2011 according to this new quarterly payment of $1.25 billion. As BP resumes dividend payments, even the company acknowledges that the final cost of the spill “is subject to significant uncertainty.”
Background information on fines:
4.1 million barrels spilled into Gulf.
4.1 million barrels times $4300/barrel (top-level fine under Clean Water Act) = $17.63 billion
BP is claiming flow rate was 20-50% lower.
--20% lower: 4.1 million times 0.8 times $4300/barrel = $14.1 billion DIFFERENCE: $3.53 billion
--35% lower (mid-range): 4.1 million times 0.65 times $4300/barrel = $11.459 billion DIFFERENCE $6.1 billion
--50% lower: 4.1 million times 0.5 times $4300/barrel = $8.815 billion DIFFERENCE: $8.815 billion
# # #