Peltier column: BP says spill effects over for most

MICHAEL PELTIER

While U.S. Sen. Marco Rubio heads to Pensacola for an update today on the BP Deepwater Horizon oil spill a year after the well was finally capped, many questions remain surrounding the fallout from the worst oil spill in U.S. history.

Left unanswered are questions over the long-term environmental effects of the spill and drilling in general in the eastern Gulf. Still unresolved are issues of compensation as Panhandle residents make their case to the federal agency set up to handle claims.

Rubio wants to speak with local business leaders who have spent much of the past year battling with the company over reimbursements and more than half a million claims. Among its participants, the discussion will include Florida Agriculture Commissioner Adam Putnam, Capt. Bob Sales, president of the National Association of Charterboat Operators, and Collier Merrill, chairman of the Pensacola Area Chamber of Commerce.

What is no longer in doubt, however, is that BP thinks it’s time to shift gears. After paying more than $4.6 billion to private citizens and businesses since the April 20, 2010, spill, BP officials have told federal overseers that the Gulf coast economy is mostly back on its feet and therefore the company should not have to pay for most new losses going forward.

In a letter sent last week to the Gulf Coast Claims Facility, which has been set up to reimburse people and businesses for spill-related costs, BP says claims for continuing damage should be limited to a small minority of applicants whose businesses have yet to rebound.

“Multiple lines of evidence show that, to the extent certain portions of the Gulf economy were impacted by the Deepwater Horizon oil spill, the Gulf economy experienced a robust recovery in the fall of 2010, and that economic performance remains strong in 2011,” the company wrote in a letter to the GCCF dated Thursday.

Further, the company says some of the payments already made go outside the boundaries for which it is required to pay under the federal Oil Pollution Act that governs the industry.

Florida’s cities and counties meanwhile have collected more than $31 million from BP for efforts to respond to and clean up the worst oil spill in U.S. history, according to the latest figures tracked by the company, which has set aside $20 billion to pay for the damage.

Late Thursday, the company released its latest round of government payouts that indicates it may also be winding up its payments to cities, counties and the state. Thursday’s figures were identical to those released on June 23, and just $1.4 million higher than they were on June 9.

Private companies are required to go through Ken Feinberg and the GCCF, which as of Thursday had distributed more than $4.6 billion on 196,524 claims. Overall, the facility has received 502,177 claims. The private sector payout is running more slowly than the government paybacks, a lag likely caused by the sheer number of claims and the lack, in many cases, of corroborating documentation.

Since the spill, the Panhandle tourism market has rebounded well, thanks to good weather and marketing campaigns paid, in part, by the company that has lured tourists back to the region. Such a rebound, the company claims, is evidence that the spill is no longer affecting the economy in many sectors. If true, it’s time to close the purse.

“The current economic data do not suggest that individual and business claimants face a material risk of future loss caused by the Deepwater Horizon oil spill,” the company concludes.

Email Michael Peltier at mpeltier1234@comcast.net

© 2011 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Comments » 1

mputnal3 writes:

I wish the Florida Attorney General was as concerned about the fraud and abuse within the GCCF as the Mississipp AG. There is deception, inconsistency, inaccuracy and unbelievable lack of transparency. If our federal government does not become involved it will be the same thing as a “bailout” for another negligent an abusive megacorporation. There is only one guideline that Mr. Feinberg is concerned with and that is to save BP 15 billion dollars. When the oil was gushing out in historical quantities of pollution and BP was adding toxic dispersants in historical quantities there was support from every American citizen to pass an emergency amendment to increase the limits in OPA. BP deceptively sidestepped this political involvement by committing to a 20 billion dollar fund. That number did not just appear out of the blue. The economic damages caused by this disaster will easily exceed that amount when it is all said and done by BP will not foot that bill unless they are forced to. Most claims have no ability to appeal a blatantly flawed damage claim methodology:

Projected revenue: GCCF is using the lowest year of historical gross revenue for projected revenue. The common practice is 4 or 5 years of revenue throwing out the highest and lowest years and averaging the others. This is not rocket science.

LOI%. This is the factor that is applied to lost revenue to determine income loss. GCCF does not take into account damages to cash flows, unit cost, volume purchasing, volume sales, underutilization of land, underutilization of buildings, underutilization of equipment, investments made toward expansion and future growth. The smaller the business the longer it takes to overcome these damages. This is more complicated but basicly it calculates to the average gross profit for the last 4-5 years plus the percentage damage to gross revenue.

Full Recovery factor. There is only one way to calculate a full recovery but you must first have 5 or 6 months of some recovery. Many businesses as of June 30th have not shown any recovery despite what Mr. Feinberg is telling us. A recovery begins when actual revenue exceeds 2010 post spill revenue. It will be the end of this year before anyone can accurately predict a full recovery. A full recovery is simply when actual revenue intersects with projected revenue. Once recovery begins you can calculate a rate of recovery that will eventually intersect with projected revenue. This is simple forensic accounting utilizing simple math. Mr. Feinberg/GCCF/BP uses some sort of voodoo economics.

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