For BP, Multimillion-Dollar Fines Amount to a Day’s Worth of Profit
A reader wrote in to point out that too often, the fines that BP has faced for safety and environmental violations over the years are rarely put into proper context: in proportion with profits.
We’ve noted some particularly small penalties paid to offshore drilling regulators specifically, but it’s certainly worth pointing out that even the fines that are touted as being larger—such as the commonly cited $87 million fine from the Occupational Safety and Health Administration—hardly make a dent in the company when compared with profits.
In the first three months of 2010, for instance, BP reported a profit of more than $6 billion—that’s $2.8 million an hour. A quick calculation shows that OSHA’s $87 million fine for safety violations at BP’s Texas City refinery would take the company a little more than a day—31 hours, to be exact—to pay off.
Still, BP hasn’t paid that fine yet, even though it was announced last fall with some fanfare, given that it was the largest fine ever handed out by the agency. According to Greenwire, BP is still in settlement talks with OSHA, but as we’ve pointed out, OSHA penalties have a pattern of shrinking significantly—often by more than half—during negotiations.
Here are a few penalties BP has paid in the last decade:
- $21 million to OSHA, settled upon after the 2005 Texas City explosion, which killed 15 people. (The $87 million fine last year was for problems left uncorrected, as well as new violations.)
- $50 million to the Environmental Protection Agency for violating the Clean Air Act, also in relation to the 2005 disaster.
- More than $300 million to the Justice Department and others for manipulating the price of propane in 2004.
OSHA chief David Michaels doesn't seem to think his agency's fines are sufficient either. Here's what he told Greenwire:
"We're talking about companies whose profits are billions of dollars a year," Michaels said, for which "the costs of an OSHA fine are part of the cost of doing business."
Michaels added that a narrow focus on worker injuries or illnesses at oil rigs, refineries and chemical plants is unlikely to provide the level of protection required to monitor complex energy facilities.
If harder-hitting penalties are really what the government's after, as we've noted, it has other measures at its disposal.