BP Ties Compensation Fund to Gulf Coast Drilling Revenues

BP Ties Compensation Fund to Gulf Coast Drilling Revenues

The Huffington Post is reporting the oil giant BP appears to have structured its $20 billion compensation fund so that it will only be solvent if the company continues profiting from oil drilling in the Gulf of Mexico. The US government’s agreement establishing the fund isn’t with BP or even BP America, but with a subsidiary called BP Exploration & Production, or BPEC, which operates BP’s Gulf oil leases. Vested with BPEC, the compensation fund could presumably fold in the event BPEC stops generating revenue from its Gulf operations. The structuring also could increase BP’s leverage in ensuring a continued Gulf presence, should it come under challenge. In a statement, the watchdog group Public Citizen called the arrangement "wildly inappropriate," adding, "It will give the government a financial incentive to become an even bigger booster of offshore oil drilling in the Gulf—the fatal flaw of the Minerals Management Service at the time of the BP disaster."

Gulf Coast Workers to Have Cleanup Pay Deducted from Claims

Earlier today, BP said the oil spill cleanup has cost nearly $4 billion so far, including $207 million to settle damage claims. Gulf Coast residents meanwhile are voicing outrage over news the government-administered claim fund will subtract any money they earn by working for the cleanup effort from any future claims. Fund administrator Kenneth Feinberg says the ruling will apply to anyone who participates in the Vessels of Opportunity program, which has employed hundreds of Gulf Coast residents left out of work because of the spill. A group of fishermen walked out of a public meeting on Friday after Feinberg announced the decision.

THE GULF COAST VS. BIG OIL

 The Obama administration, concerned that BP may try to avoid giving full, prompt compensation to all the people its oil disaster hurt, negotiated a $20 billion escrow fund that the company will set up to compensate Gulf Coast residents. Yet instead of supporting the administration's efforts to hold BP accountable, Barton, the top Republican on the Energy Committee, apologized to Hayward during the CEO's testimony, saying, "I'm ashamed of what happened in the White House yesterday. I think it is a tragedy of the first proportion that a private corporation can be subjected to what I would characterize as a shakedown. ... I apologize." Nowhere in his complaints about the supposed "shakedown" does Barton ever ask Hayward or BP to formally apologize for the thousands of livelihoods ruined, the workers killed, or the massive environmental disaster caused by the company's oil spill. Of course, Barton, who was employed by BP subsidiary Arco before becoming a congressman, may simply be paying the oil industry back for its generous support. He has taken $1.4 million from the oil and gas industry, including $27,350 from BP.