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