The federal government doubled its estimate of oil leaking into the Gulf yet again, dramatically raising the amount of total oil in the Gulf, which is the measure of what BP will owe under the Clean Water Act.
Every time scientists have measured the flow rate they have raised their estimates. Josh Nelson has a chart showing the gradual increase over time:
This is the 4th major adjustment to the estimate, representing a 100-fold to 200-fold increase over the original estimate of 200 barrels per day.
Assuming 20,000 barrels per day, the total leak in 52 days would be 1,040,000 barrels, or 43,680,000 gallons.
Assuming 40,000 barrels per day, the total leak in 52 days would be 2,080,000 barrels, or 87,360,000 gallons.
NYT: This is “equivalent to an Exxon-Valdez disaster every 8-10 days.”
With relief wells not expected to be complete until August, we would probably see a doubling of those numbers before it’s all done. And if you go by the $4,300 a barrel amount for negligent spills under the Clean Water Act, you’re already talking about $4.45-$8.9 billion dollars in liability at this moment, and as much as $17.8 billion before we’re all done (though you have to take into account the containment dome taking in some of the oil, meaning the spill is more like 4,000-25,000 barrels a day at this point).
That’s only the Clean Water Act violation. And Eric Holder has vowed to make BP pay for the cleanup and the spill. The total numbers would basically wipe out all of BP’s cash reserves.
You can see, then, why John Boehner would float the idea of a government rescue to help pay for the spill. He walked back those comments and accused the reporter of “mumbling” almost immediately, but he understands that BP basically has no future without government involvement.
If anything, the Administration has been MORE aggressive, calling on BP to not only pay for all damages related to the spill but also the salaries of workers affected by the six-month moratorium on deepwater drilling. As these damages add up, the base bill for BP will become too much to bear. Investors pulling out of the company don’t need sophisticated analysis to get this.
President Obama meets with BP executives next week.
UPDATE: Yves Smith has more on the “full externalities precedent” from the White House.
UPDATE II: The “conservative estimate” put forward by Bank of America for the total cost of the spill is $28 billion dollars. That’s based on a non-negligent fine under the Clean Water Act, and a spill rate of half of what is now known to be reality (they account for only one million barrels spilled). So the real number is probably much higher. $60 billion is not out of the realm of possibility.