Thursday, July 02, 2015

Cutting the cake

BP Cake

Louisiana's slice:
BP has agreed to pay $18.7  billion to Louisiana, four other states, and the federal government to settle lawsuits filed in the aftermath of the Deepwater Horizon disaster, which killed 11 and unleashed one of the largest oil spills ever in 2010.

Louisiana Attorney General Buddy Caldwell announced Thursday (July 2) that the state will receive more than $6.8 billion from the settlement, including $5 billion for natural resource damages and $1 billion for state economic damage.
The settlement comes after the US Supreme Court refused BP's appeal of a ruling back in January which was, itself, already favorable to BP.
Edward F. Sherman, a professor at Tulane University Law School, told the New York Times that, even though Judge Barbier didn’t explain clearly how he came to the 4.0-million-barrel estimate, his choice to take the middle road between the two group’s estimates was smart. 

“At times we claim precision,” he said, but “there’s no way to precisely find the numbers, so why not pick a number as he did, reasonably between the two numbers provided by the parties?”

Still, the ruling is good news for BP, as it lowers the amount of fines it faces from $18 billion to $13.7 billion.

“Today’s ruling is a major victory for BP and reduces by billions their potential liability,” David Uhlmann, a law professor at the University of Michigan, told Bloomberg.

After the appeal confirmed BP's "major victory" wasn't going to get any more major, they went ahead and settled for it. They're still coming out pretty well anyway.

But how did we do?  Well, relative to everyone else, not so great
Under the settlement, Florida gets $3.25 billion, Alabama gets $2.3 billion, Mississippi gets $2.2 billion and Texas gets about $1 billion.
Yes, Louisiana gets the biggest settlement.  But, given the unique fragility of the Louisiana coastline and the fact that it took the brunt of the damage from the Macaondo event, it doesn't look like the state's share of the settlement is of the appropriate portion.

Probably good news for Alabama football fans, I'm sure.

Others will point out that $5 billion over 18 years is more than zero.  But that's hardly the point.  This is a story about BP's ability to mitigate its own financial losses and, so far, they're doing pretty well at that. Check back with us in 18 years to see how much of this settlement is ever actually paid.

Of course, we'll take what we can get. We need it to launch our "moon shot" coastal restoration project. According to the, likely conservative, estimate provided through the state's coastal master plan, we'll need at least $50 billion to make that happen.  BP is giving us about a tenth of that.

Yesterday, NOLA.com published some blurbs from various local luminaries asked to ruminate on "the future of New Orleans."  By far, the most relevant responses were this one from Tulane geologist,  Torbjörn Törnqvist.
For me, there are two ways of looking at the future of New Orleans. Without any action, 50 years from now the city will increasingly have evolved into a 'peninsula' sticking out into the Gulf of Mexico. I would expect the city will still be livable, but the end will be in sight. Without any action, by that time it will also be clear that catastrophic sea-level rise is unavoidable and planning for abandoning and/or relocating the city will have started.

If serious action is taken, however, the positive effects of large river diversions will have started to be noticed. These effects may not be noticeable in the first few decades after diversions have been put in place; this is a slow process aimed at the longer term.

While the rate of sea-level rise will continue to accelerate even with global efforts to curb greenhouse gas emissions, it will follow a more manageable trajectory (perhaps less than a foot of global sea-level rise within the next 50 years). Still, things will be worse in coastal Louisiana due to the high subsidence rates. Nevertheless, the future of the city will be brighter and it is less likely, under this scenario, that we will seriously discuss relocating the city 50 years from now.
And this even stronger one from John Barry.
The question isn't what kind of future New Orleans has. It's whether New Orleans has a future.

Right now there's a lot of complacency because we have so-called "100-year protection" against hurricanes. That's an Orwellian phrase. Sounds great, but it's the lowest standard in the civilized world.

New Orleans will only have a future for one of two reasons: either because of dumb luck, and I do mean dumb, or because the people of New Orleans get as active as they were right after Katrina and do whatever it takes to get that higher standard of protection.

So far I haven't seen that demand. The business community has sat on its hands, afraid of offending one of the biggest causes of our increased vulnerability: the oil industry. And the elected officials have done the same thing. Everybody points fingers at the federal government and keeps their mouth shut about the big guy down the block.

When the physician heals thyself, that's when I'll know people are serious, and that's when we can start talking about the future of New Orleans.

Until then, it's just a roll of the dice every time there's a storm in the Gulf.
Barry is fresh off a long losing fight to sue the oil and gas industry for the staggering destruction it wrought upon the Louisiana coast beginning long before the Macondo well was ever drilled. Bobby Jindal put an end to that and now he is off to run for President.

Meanwhile, the "business community" has largely moved on.  After all, there's too much money to be made buying and selling dirt in New Orleans in the short term to worry about this existential question of whether there will even be any dirt left here in 50 years.  Better to squeeze what value you can out of it while you can, right?

1 comment:

Tim said...

I love you John Barry!