My sensation watching the coverage of the BP oil spill has been that everyone is just overwhelmed with fatalism. There's a giant oil leak, there's nothing we can do to fix it, and there's nothing we can do to hold BP or any other party financially responsible. I mean, just look at the Exxon Valdez spill. Other than the salmon and herring fishermen, who settled separately in the mid-1990s, XOM didn't give a dime to anyone other than lawyers and witnesses until two years ago
, at which point plaintiffs were awarded damages that were 90% less than the original judgment. The total award will work out to roughly $16,500 per member of the class action lawsuit, plus interest (now that XOM has lost its petitions to have the settlement reduced by their $70M in attorney's fees). And of course, the $500 million-with-an-m judgment is a drop in the bucket for a company who's quarterly profit is roughly $6 billion-with-a-b. BP is similarly situated.
Given that the legal system appears unequipped to handle the fact that large oil spills do in fact happen, and that the impact on people's livelihoods is enormous, one wonders if the thing to do is pre-fund these cleanup and compensation efforts through a
tax insurance fee
increase in royalty payments on domestic drilling. Surely in the wake of a giant oil spill that's likely to cost the taxpayers dearly, Congress can work up the gumption to ensure that those most directly responsible for the oil spill bear its costs.
Prefunding a cleanup fund is weak. How about this: you screw up even just one time and we wipe out your investors and debtors 100%.
Can we revisit a windfall profits tax now?
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