Alaska's Murkowski blocks Senate on higher oil spill liability

At first glance, I don't much like the sound of this. It sounds like taxpayers are going to get stuck footing the bill for cleaning up after companies who make a huge mess. This get-out-of-responsibility cap will certainly be considered by actuaries when they balance the costs of safeguards against their profit and maximum liability. I'd be interested to know what others think.

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WASHINGTON — Senate Democrats Thursday lost a bid to raise the liability cap for oil companies to $10 billion when Alaska Republican Lisa Murkowski raised objections. They vowed to try again.

Murkowski said she supports lifting the cap from $75 million, but contends the $10 billion figure would prevent smaller, independent companies from drilling along the Outer Continental Shelf.

More: http://www.miamiherald.com/2010/05/13/1628188/alaskas-murkowski-blo...

Tags: Murkowski, cleanup, environment, insurance, liability, oil

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Permalink Reply by leonard l peterson on May 14, 2010 at 10:49am

the higher you place the liability cap the easier it would be for the government to put out of business or take over a company,,,this government will do anything to get control of energy

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Permalink Reply by Peter Springer on May 14, 2010 at 11:04am

Why should there even be a liability cap? Doesn't it make sense that the people who make a mess should be responsible for the costs of cleaning up the mess? Isn't that the fiscally responsible way to handle it? As a taxpayer, why should it ever be made into my responsibility?

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Permalink Reply by Kevin Zelhart on May 14, 2010 at 11:47am

There should be no cap on actual damages. Where there should be a cap, and this applies to all lawsuits, not simply this class, is punative damages. These are the thing that drives up costs. Actual damages should be 100% of costs. Punative damages are those that are meant to "discourage" bad behavior, but instead have become the "trial lawyer lotto". Juries are convinced that the corporation or their insurance comany has "deep pockets", so you can make that punitive jusgement as big as you want. The effect is that these corporations and insurance companies are going to recoup that cost by higer prices on product and premiums. In the case of judgements covered by insurance companies, they have staffs of actuaries who try to predict how much the company can expect to pay each year based on the risks it has at hand. Without a cap on punative judgements, they have to make a statistical judgement of what they will have to pay. This is part of what constitutes your premiums and why premiums for things like healthcare rise out of kilter with the rate of inflation. Cap the punitive judgements, even as a precentage of gross revenues, and you will see price increases start to plateau, or at least more closely match the rate of inflation. In healthcare there are other factors that add to the rising cost, such as indigent care (Illegals fall into this catagory),

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Permalink Reply by Kevin Zelhart on May 14, 2010 at 11:50am

"....but contends the $10 billion figure would prevent smaller, independent companies from drilling along the Outer Continental Shelf.
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This has been one contention of regulation of corporations is that it tends to create larger corporations in that they are the only ones who can support the burden of regulation. In this event, if you can't afford to clean up your mess, get out of the business