Lexington Herald Leader: Let BP Bear True Costs Of Oil Spill. I Agree.

Let BP bear true costs of oil spill
Congress should remove the cap on liability protecting oil firms

Should BP and other oil companies be required to pay for economic damage caused when their rigs and tankers spring giant leaks?

Most people would say yes, that businesses that take the risk of drilling five miles under the ocean should pay the consequences when things go wrong.

That's the discipline of the marketplace, after all.

Yet three times in recent weeks, Republicans in the U.S. Senate have blocked attempts to change a law that caps oil companies' economic liability at $75 million.

That amount doesn't begin to compensate for the economic damage that's already been done to fisheries, tourism, tax revenues and other drilling operations which have been halted until more is known about the cause of the BP blowout.

It's less than half of the $169 million that the oil and gas industry spent lobbying Congress last year. And it's pocket change to BP, which earned $6 billion in just the first three months of this year.

Senate Republican Leader Mitch McConnell of Kentucky is among those cautioning against lifting the $75 million cap. He has said the danger would be raising the cap too high which he said would limit competition among drillers, leaving only giants such as BP able to afford to drill in the Gulf. Without Gulf oil, McConnell also cautioned, "you'd have $14 gasoline."

Which raises an interesting question: What is the true cost of gasoline?

We know what we pay at the pump. But who else is paying and how much? How many of the costs have been externalized by the industry?

Wikipedia defines external costs as those not transmitted through prices and incurred by a party who did not agree to the action causing the cost.

Count the gooey tar that started washing up on the white sand beaches of Alabama and Florida last week as an external cost of gasoline.

Also, the clean-up workers sickened by breathing fumes from the spill and the chemicals used to disperse it.

The long-term costs of the BP spill are still incalculable, including the harm to human health from the infiltration of wetlands by oil.

Federal law already requires companies to pay all the cleanup costs, which will be huge. The oil industry also pays 8 cents a barrel into a fund from which $1 billion will be available to compensate for economic damages from the BP spill.

Economic victims can also try suing in state courts. It only took 20 years for Alaskans to wring economic damages out of Exxon for the Valdez disaster.

BP has promised to compensate those who have been harmed economically.

That promise would carry more weight if the $75 million cap were lifted, which Democrats in both chambers of Congress are trying to accomplish.

The full cost of this spill will be borne by someone. If it's not the oil industry, it will be individuals and businesses whose livelihoods and health have been damaged, taxpayers or both.

Leaving the $75 million cap in place buffers the oil industry from the economic consequences of its own actions, which sounds an awful lot like a perpetual bailout for Big Oil.

Read more: http://www.kentucky.com/2010/06/06/1294635/let-bp-bear-true-costs-of-oil.html#ixzz0qCkGcc98