This Sunday, while Federal officials were talking about the Deepwater Horizon oil spill on the Sunday shows, one of their big talking points was that it would be BP (BP) that would be on the hook for the entire cleanup, and so despite all the devastation, American taxpayers could feel good about the fact that they themselves were not going to get the bill.
This is true narrowly. The cleanup is on BP’s dime. However cleaning up is only part of it.
As NYT notes, the company is insulated from all kinds of legal liability thanks to a fund set up by the government by the government in the 80s.
Under the law that established the reserve, called the Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government, although they are responsible for the cost of containing and cleaning up the spill.
$75 million? That’s nothing.
So how has it been funded? There’s been a tax of 8 cents per barrel pulled out of the ground in the US — a tax that nominally gets paid by the oil companies (self-funding bailout mechanism!) but which easily gets passed on to anyone who consumes oil, which is all of us.
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