Would an oil-company-funded disaster fund make any sense?

[Blackjack200]

Just a thought I had. There's lots of oil revenue, so maybe let oil companies contribute a fixed percentage of revenues to a fund until it hits, say, $10 billion. In the event of a disaster, maybe the contribution rate goes up until the the disaster is resolved.

When a disaster hits, you could have the EPA (or whatever the appropriate regulatory agency is) immediately start awarding contracts against the fund to whatever oil companies (or non oil companies) propose solutions.

Would this make sense?

 

[her209]

There already is a fund.

http://www.epa.gov/oem/content/lawsregs/opaover.htm
http://www.epa.gov/oem/content/learning/oilfund.htm

 

[Infohawk]

I think the regular laws should apply here. BP and its agents should have to pay everyone that was affected by its negligence. Punitives only if applicable.

 

[spidey07]

There is already a fund. And they just raised taxes 400% to cover it.

 

[rudder]

Better to raise the oil tax saying it was for cleanup. Then when the cleanup is done... the oil tax stays.

 

[MotF Bane]

let oil companies contribute a fixed percentage of revenues

Obviously, you mean make not let. Nitpick aside, let's say Exxon does 90% of its drilling in USA resource zones, and BP does 15%. Does Exxon pay more? Alternatively, let's say Exxon and BP do about the same about of drilling in USA resource zones, but Exxon has zero prior incidents, BP has a dozen. Why should Exxon pay the same rate as BP? Disclaimer: I'm picking names, the numbers are completely made up.

immediately start awarding contracts against the fund

A government agency awarding contracts. They'll have to be studies, hearings, other companies will file motions against, et cetera, et cetera. It won't be a fast enough method to handle this.

Still, I think your concept has some merit, and I can see where you're coming from.

 

[lothar]

Just a thought I had. There's lots of oil revenue, so maybe let oil companies contribute a fixed percentage of revenues to a fund until it hits, say, $10 billion. In the event of a disaster, maybe the contribution rate goes up until the the disaster is resolved.

When a disaster hits, you could have the EPA (or whatever the appropriate regulatory agency is) immediately start awarding contracts against the fund to whatever oil companies (or non oil companies) propose solutions.

Would this make sense?

Nothing but foolishness.
The notion that oil companies run perfectly fine should have to pay a "national" or "global" tax to cleanup the mess of other companies is idiotic.
Makes about as much sense as a "global" tax on banks and insurance companies which already makes absolutely no sense.

If an oil company that doesn't have any accident paid the tax, do they get a refund on tax paid once they finish drilling oil from all their wells?

 

[lothar]

Obviously, you mean make not let. Nitpick aside, let's say Exxon does 90% of its drilling in USA resource zones, and BP does 15%. Does Exxon pay more? Alternatively, let's say Exxon and BP do about the same about of drilling in USA resource zones, but Exxon has zero prior incidents, BP has a dozen. Why should Exxon pay the same rate as BP? Disclaimer: I'm picking names, the numbers are completely made up.

You're beginning to make too much sense.
What about the Ixtoc I oil well spill caused by Mexico's government-owned oil company PEMEX (Petróleos Mexicanos)?

The US government paid the entire cleanup costs, and PEMEX avoided paying any compensation for damage or cleanup by asserting sovereign immunity.

Why should Exxon, Chevron, Conocophilips, Texaco, Shell have to pay for a spill that was never caused by them through a tax? Why hasn't the US government tried getting the payments from Mexico by other means necessary such as stopping remittances from the US to Mexico, and others etc...?

 

[Patranus]

What difference does it make if BP is liable for all cleanup efforts?

 

[alphatarget1]

What difference does it make if BP is liable for all cleanup efforts?

I think it would. I don't know who the hell runs/makes their decision. If there is a non-zero probability that a disaster like this would occur, and they'll be on the hook for damages, they would make damn sure that they'll spend a few more bucks making the wells safer.

I'm sure BP shareholders are pissed off that some retarded engineer at BP decided to cut corners in a deep water well. They must be bleeding millions of dollars in lost oil revenue and the aftermath lawsuits that will follow for sure.

 

[Genx87]

There already is a law on the books that taxes oil companies a few cents per barrel to cover costs of the cleanup. The fund is capped at 10 billion right now. Might make sense to increase that fund to 20 billion in the future.

 

[lothar]

I think it would. I don't know who the hell runs/makes their decision. If there is a non-zero probability that a disaster like this would occur, and they'll be on the hook for damages, they would make damn sure that they'll spend a few more bucks making the wells safer.

I'm sure BP shareholders are pissed off that some retarded engineer at BP decided to cut corners in a deep water well. They must be bleeding millions of dollars in lost oil revenue and the aftermath lawsuits that will follow for sure.

What cost BP was that they decided to insure the rig themselves rather than have an outside insurance agency do so.

It certainly would have been an interesting case if BP had insurance for that oil rig through AIG. What would have happened if taxpayers had to pay the entire cleanup costs and compensation for just a few million(say $50 million) in premiums BP's pocket as insurance?

 

[werepossum]

I think it would. I don't know who the hell runs/makes their decision. If there is a non-zero probability that a disaster like this would occur, and they'll be on the hook for damages, they would make damn sure that they'll spend a few more bucks making the wells safer.

I'm sure BP shareholders are pissed off that some retarded engineer at BP decided to cut corners in a deep water well. They must be bleeding millions of dollars in lost oil revenue and the aftermath lawsuits that will follow for sure.

Any industry-funded fund and organization needs to have some third party in charge of making mobilization decisions, else the natural tendency will be to delay subsequent measures until the current one fails. Other than that it might make a lot of sense, as the oil companies have (or lease) the actual expertise in this work and can doubtless make better decisions than some government bureaucrats, the head of which will undoubtedly be a political appointment. Where a government bureaucracy may have a big advantage is in mobilization; since they are by definition spending someone else's money, a government entity might be more likely to jump in with both feet, starting two or three backup plans while the primary plan is being implemented. Obviously this isn't happening in this case, but it's possible it could happen in the future. Government is sometimes good at learning from catastrophes.

 

[alphatarget1]

What cost BP was that they decided to insure the rig themselves rather than have an outside insurance agency do so.

It certainly would have been an interesting case if BP had insurance for that oil rig through AIG. What would have happened if taxpayers had to pay the entire cleanup costs and compensation for just a few million(say $50 million) in premiums BP's pocket as insurance?

Does insurance cover negligence?

 

[Daedalus685]

We don't need a large tax to make a fund for them... We simply need obvious, clear, and concise rules for holding them 100% liable for any and all damages.

Make a mess? Clean it the fuck up or pack up the rest of your gear and gtfo..

 

[Daedalus685]

What difference does it make if BP is liable for all cleanup efforts?

Umm... a really really big one?

Lets see, how likely do you think they would be to do things safely if there was no penalty associated with the 1 in a million disaster?

Obviously it is bad for business in other ways but if you make a mess (regardless of how big) you damn well clean it up.

Do you seriously want them to not have to clean up what they spill? To be able to do whatever they want at no cost at all? I don't want my tax dollars going to cleaning up after a lazy company that is for damn sure.. someone has to pay for it.

 

[Patranus]

Umm... a really really big one?

Lets see, how likely do you think they would be to do things safely if there was no penalty associated with the 1 in a million disaster?

Obviously it is bad for business in other ways but if you make a mess (regardless of how big) you damn well clean it up.

Do you seriously want them to not have to clean up what they spill? To be able to do whatever they want at no cost at all? I don't want my tax dollars going to cleaning up after a lazy company that is for damn sure.. someone has to pay for it.

BP is liable for 100% of the cleanup costs. 100%.
If the taxpayer end up footing the bill for cleanup only government is to blame for it.

 

[Blackjack200]

Nothing but foolishness.
The notion that oil companies run perfectly fine should have to pay a "national" or "global" tax to cleanup the mess of other companies is idiotic.
Makes about as much sense as a "global" tax on banks and insurance companies which already makes absolutely no sense.

http://en.wikipedia.org/wiki/PBGC
http://en.wikipedia.org/wiki/FDIC
http://en.wikipedia.org/wiki/FINRA

If an oil company that doesn't have any accident paid the tax, do they get a refund on tax paid once they finish drilling oil from all their wells?

No. Do you get a refund from your insurance company when you don't burn your house down?

 

[Daedalus685]

BP is liable for 100% of the cleanup costs. 100%.
If the taxpayer end up footing the bill for cleanup only government is to blame for it.

Yes they are... but you asked what difference would it make if they are or not.. well it would be a huge difference to tax payers...

 

[lothar]

Does insurance cover negligence?

Was negligence caused by BP themselves or Haliburton, which did a cementing operation 12 hours before the accident?
Was negligence caused by BP themselves or Cameron International Corp., maker of a fail-safe device on the well intended to prevent spills?
Was negligence caused by BP themselves or Transocean Ltd., which built and operated the Deepwater Horizon rig?

I have yet to see any evidence of negligence on BP's part at least.

Interesting fact: 18 of 39 deepwater drilling accidents have been attributed to cementing operations alone.
http://www.cbsnews.com/stories/2010/05/24/national/main6513934.shtml

The government should have all 4 companies involved put money in an escrow account, investigate the cause of the accident, and then payback/release money to those not involved after the investigation has been concluded.

 

[werepossum]

Yes they are... but you asked what difference would it make if they are or not.. well it would be a huge difference to tax payers...

What difference does it make if there is an oil company funded disaster fund. His point is obviously that if BP is liable for 100% of cleanup costs, it makes no difference to us whether it's from BP's pocket or from a shared risk pool.

 

[Daedalus685]

Was negligence caused by BP themselves or Haliburton, which did a cementing operation 12 hours before the accident?
Was negligence caused by BP themselves or Cameron International Corp., maker of a fail-safe device on the well intended to prevent spills?
Was negligence caused by BP themselves or Transocean Ltd., which built and operated the Deepwater Horizon rig?

I have yet to see any evidence of negligence on BP's part at least.

Interesting fact: 18 of 39 deepwater drilling accidents have been attributed to cementing operations.
http://www.cbsnews.com/stories/2010/05/24/national/main6513934.shtml

The government should have all 4 companies involved put money in an escrow account, investigate the cause of the accident, and then payback/release money to those not involved after the investigation has been concluded.

This is a key reason that there needs to be one liable party for a well. No finger pointing.. If your name is on the paper then get the clean up done. Sue whoever you want for compensation after the fact. Not saying this isn't what is happening currently, just that it needs to be conducted in such a way in the future and continuously here.

 

[lothar]

http://en.wikipedia.org/wiki/PBGC
http://en.wikipedia.org/wiki/FDIC
http://en.wikipedia.org/wiki/FINRA

No. Do you get a refund from your insurance company when you don't burn your house down?

Interesting you used those examples.

1.) PBGC is probably the most successful of the three you listed.
2.) FDIC's fund has almost drained out that they are having banks prepay for their 2011-2013 years I read somewhere.
3.) You mean FINRA's insurance fund hasn't been drained by the Maddoff and Sanford Ponzi investment scams yet?

Does one have to signup for mandatory fire insurance in a home? When you have to, you can bring up that argument.
The car insurance example would have been what you should have used. :sneaky:

 

[Blackjack200]

Interesting you used those examples.

1.) PBGC is probably the most successful of the three you listed.
2.) FDIC's fund has almost drained out that they are having banks prepay for their 2011-2013 years I read somewhere.
3.) You mean FINRA's insurance fund hasn't been drained by the Maddoff and Sanford Ponzi investment scams yet?

Does one have to signup for mandatory fire insurance in a home? When you have to, you can bring up that argument.
The car insurance example would have been what you should have used. :sneaky:

FDIC survived the S&L Crisis in the 80's, and the finacial collapse in 2008. I would say it's been pretty successful. FINRA provides a minimal level of protection to investors, who are expected to shoulder risk. Still, it's industry supported, and does provide relief when one of it's members is found to be defrauding investors.

 

[paperfist]

Nothing but foolishness.
The notion that oil companies run perfectly fine should have to pay a "national" or "global" tax to cleanup the mess of other companies is idiotic.
Makes about as much sense as a "global" tax on banks and insurance companies which already makes absolutely no sense.

If an oil company that doesn't have any accident paid the tax, do they get a refund on tax paid once they finish drilling oil from all their wells?

Do you get a refund on your insurance if you don't have an accident?

From what I can tell the US Government has been doing most of the work.