Don’t worry about BP; it’s going to be fine

By Philip Bump

BP’s logo is of an offshore rig exploding with money.

“BP” used to stand for “British Petroleum,” presumably until Britain got embarrassed. Well, not really — although British people weren’t very happy about people calling the company British Petroleum after its Gulf rig exploded and leaked and killed mammals of various types.

Anyway, here’s News About BP and Money and the Government, our new feature about BP and money and the government, part one in a series of one.

BP made a lot of money last year.

Big surprise. Annual profits for the company were $11.6 billion, only six or seven times what the average U.S. household makes (over the course of 33,000 years).

And of course we’ll bring back our favorite tool to make this figure hit home:

But not as much as states think it should pay for the Gulf spill.

BP doesn’t want to be rude or disrespectful, of course, but it thinks that the amount of money sought by state and local governments over the Deepwater Horizon disaster is a tad steep. From Reuters:

BP Plc has tallied up claims made by states and local governments on the U.S. Gulf Coast for economic and property damages from the Macondo oil spill, and come up with a figure of $34 billion, which it deems “substantially” overstated. …

The $34 billion total, provided for disclosure reasons with the company’s financial results on Tuesday, is based on claims made last month by Alabama, Mississippi and Florida as well as claims made by Louisiana and others from local governments, BP said.

Citing the Oil Pollution Act (OPA) underpinning the claims, the company said it considers the methods used to calculate them to be “seriously flawed, not supported by the legislation and to substantially overstate the claims.”

I am shocked and you are shocked and everyone is shocked that BP thinks this. But, really, how ungrateful can those states be? Have they already forgotten that the company ran this ad promoting Gulf Coast tourism over and over and over again? That’s like $30 billion worth of effort right there!

The government is doing its best to help BP pay its bills.

You may remember that the feds recently finalized a $4 billion penalty for BP for its role in the Gulf spill. But what the government taketh away, it also giveth, in spades.

From Bloomberg:

BP Plc’s Pentagon contracts have more than doubled since the year of the Gulf of Mexico oil spill, the biggest in U.S. history.

The company’s awards surged to $2.51 billion in the year ended Sept. 30 from $1.04 billion in fiscal 2010, the year of the oil rig explosion, according to data compiled by Bloomberg. BP’s share of the military’s petroleum market jumped to 12 percent from 8.5 percent during the period. …

The Pentagon “greatly rewarded the company for the oil spill,” said Charles Tiefer, a University of Baltimore law professor and former member of the U.S. Commission on Wartime Contracting. “This is alarming since the billions of dollars of environmental harm by BP make it the worst federal government contractor in history.”

Not sure “alarming” is the best word, but we’ll stick with it for now.

This past November, the EPA suspended BP’s ability to win new government contracts, but didn’t cancel the existing ones.  In fiscal years 2010 and 2011, BP got more than $3.5 billion from the Defense Department alone. It’s safe to assume that over the past year and up to now, the company’s existing government contracts brought in at least $500 million. So the company’s $4 billion fine from the feds will probably be completely covered by money the company got from the feds. The system works.

In summary.

BP should stand for “Bafflingly Profitable,” but only because “Bullshit Professionals” is rated R.

Philip Bump writes about the news for Gristmill. He also uses Twitter a whole lot.

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Don’t worry about BP; it’s going to be fine