Oil Spill Could Cost BP (NYSE:BP) Billions in the Short Term


Monday, May 3rd, 2010

The oil spill from the explosion on the oil rig Deepwater Horizon could end up costing BP (NYSE:BP) into the high single-digit billions, or possibly into the low double-digit billions before it's all over.

That could be the good news for the company, as the costs over the long term associated with higher prices of doing business and lower production could cost them billions more.

When including the public relations and political scrutiny following incidents like these, where there is always a scapegoat looked for to pin the blame on, BP will be under pressure for some time to come, and the cost of doing business in the Gulf of Mexico will increase for all companies drilling in the region.

As for short-term costs, it'll depend on how long it takes the company to stop the flow of oil, so it's a wide range at this time, which could go higher or lower, increasing the uncertainty and lack of predictability for shareholders and traders.

BP said that they are spending anywhere from $6 million to $7 million a day to attack the oil flow and hopefully decrease the amount of damage done.



Article by Gary B

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



Tags: bp , deepwater horizon , oil spill

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Comments:

E.K. Bogard (May 13, 2010 11:51 PM)
BP has caused a disaster the magnitude of which we have never experienced before. The damage resulting from this violation may take centuries to correct. This spill cannot be fixed with big or small containment domes, burns, relief wells, 1.5 million feet of boom, 450,000 gallons of dispersant, 13,000 personnel, 500 vessels, the DOD, Alaska, NASA, C-17 aircraft, OHSA, MMS, NOAA, U.S.Disaster Response, DOI, USDA, Coast Guard, U.S.Navy, U.S. Geological Survey, MASS, USDA’s Food and Nutrition Service, EPA, Dept. of Labor, Agency for Toxic Substance and Disease Registry, CDC, Fish & Wildlife Service, NIEHS, NASA Satellite Assets ER-2 Aircraft, National Guard, Gulf Coast State Governors,Senior Cabinet Officials, DoD Assets, and the President of the United States. I hope it bankrupts BP and causes America to seriously consider halting all off-shore drilling.
U.S. Citizen (May 4, 2010 7:18 AM)
Sell your car and think of all the gas and oil you will save let alone the ENVIRONMENT! Its easy to attack the big guy when he falls. So if you are against big oil then quit driving! Stoo kicking the a company who produces your gasoline, propane and diesel.
Oily Joe (May 3, 2010 1:43 PM)
Get a glass of water. Put in ONE DROP of oil. Drink it. Imagine FIVE THOUSAND BARRELS PER DAY. (200,000 gallons)
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