Oil Spills: Cost of Doing Business or Bad Business?
Press Release Date: January 31, 2012
Oceana, the largest international advocacy group working solely to protect the world’s oceans, applauded Representative Alcee Hastings (D-FL) today for introducing important new legislation that would stop oil companies from writing-off the costs of oil spill cleanup. Currently, companies can pass along much of their cleanup costs to the American Treasury, which ultimately hurts taxpayers. Recent figures show that BP’s estimated cleanup-related costs and settlements for the Gulf of Mexico oil disaster (over a multi-year period) will total $32 billion, resulting in a $10 billion tax write-off for the company.
“Unlike other regular expenses, oil spills are simply not part of the ‘cost of doing business.’ BP needs to fully compensate Americans for what we lost as a result of its wreckless pursuit of profits – and not cut corners by abusing tax loopholes,” said Jacqueline Savitz, senior campaign director at Oceana. “Taking the lives of 11 people, injuring many more, destroying tourism and fisheries industries, spilling 200 million gallons of oil and killing hundreds of turtles, dolphins and other ocean life is not, and should never be, considered a normal cost of doing business. It is bad business, and not what was intended when the tax write-off was established. Congressman Hastings is doing us all a great service by clarifying that. ”
“The IRS defines an ‘ordinary business expense’ as a cost that is both ordinary and necessary to a company. Through clever accounting, a big oil company can deduct from its tax liability the money it spends cleaning up after an oil spill as an ‘ordinary cost of doing business.’ What this means is that a big oil company can treat the costs of an oil spill as if it was the same as purchasing a stapler or paying a phone bill. I believe that an oil spill should not be considered ‘ordinary.’ From a fiscal standpoint, from a policy standpoint, and from a moral standpoint, even a small oil spill is an extraordinary and terrible mistake with far-reaching consequences. Furthermore, oil and gas corporations should not be allowed to benefit from their own mistakes at the expense of the American taxpayer. My bill will put an end to this practice and help get our country back on the right track,” said Congressman Hastings.
It is only fitting that this news comes on the same day that one of the big five oil and gas companies – Exxon Mobile – announces its staggering annual profits of $41.1 billion. “It is clear that Exxon, BP and others are not paying their fair share,” said Savitz. “It’s bad enough that we continue to subsidize the richest companies, while others struggle to compete, but at the very least, we should not have to foot the bill to fix Big Oil’s mistakes.”
Offshore drilling remains unsafe and is a leading threat to the health of our oceans. Developing clean energy – including offshore wind – is more cost effective, more beneficial in job creation and better for the environment.
Congressman Hastings’ legislation is a companion bill to S. 983, which was introduced by Senator Bill Nelson (D-FL) last May.
For more information about Oceana’s campaign to stop new offshore drilling, please visit www.oceana.org/stopthedrill.