Exxon Mobil's sordid past in Alaska
How many of us remember the Exxon Valdez oil spill in Alaska's Prince William Sound in 1989? I remember the pictures of the devastation. All the aquatic life covered in crude oil. It was an abomination what happened to the Alaskan ecosystem there. I know anyone who made their living from salmon fishing, or the canneries saw their business come to an abrupt stop. For those of you who don't remember what happened, here's a synopsis from Online Wikipedia :
"Beginning 3 days after the vessel grounded, a storm pushed large quantities of fresh oil onto the rocky shores of many of the beaches in the Knight Island chain. In this photograph, pooled oil is shown stranded in the rocks.
In the aftermath of the Exxon Valdez incident U.S. Congress passed the Oil Pollution Act of 1990, including a clause banning the Exxon Valdez from Alaskan waters. Exxon spent some 2 billion dollars cleaning up the spill with 11,000 workers, and a further 1 billion to settle civil and criminal charges related to the case. A lawsuit brought by fishermen, property owners, businesses and communities who claimed they were harmed by the spill is still in progress as of 2002. An award of $287 million for actual damage and $5 billion for punitive damages was awarded by an Anchorage jury in 1994. Exxon appealed against the ruling and the 9th U.S. Circuit Court of Appeals ordered the original judge Russel Holland to reduce the amount. On December 6, 2002 the judge announced that he had reduced the damages to $4 billion, which he concluded was justified by the facts of the case and not grossly excessive.
Exxon's company position is that no punitive damages are justified because the spill was an accident. However in court it was argued that allowing a "known drunk" to captain the ship was reprehensible. Exxon sent it back to court, to be considered in regards to a recent Supreme Court ruling in a similar case, resulting in Judge Holland actually upping the punitive damages to $4.5 billion, plus interest. Exxon is again appealing, some fifteen years after the incident. The case currently sits in the 9th Circuit appellate court. The Exxon Valdez damages assessment is also important in that it was the first, which assessed the existence value of the environmental resource in question an assessment which was done through the use of contingent valuation techniques.
…. On January 29, 1990 the trial of captain Joseph Hazelwood began in Anchorage, Alaska. Then on March 13, 1991 the United States Justice Department announced that Exxon had agreed to pay $1 billion for the clean up of the spill. In fact, Exxon spent approximately $2 billion cleaning up the spill, paid in large part by insurance. Exxon has also paid damages of $50 million from an insurance fund.
According to reports from the Survivors of the Valdez Oil Spill, Exxon has earned approximately 800 million dollars a year on the money set aside to pay the punitive damages fine, which as of 2001, equaled $6 billion dollars, more than enough to pay the damage award without impacting the financial standing of the company."
The most disturbing thing is that as of last year Exxon Mobil is the most valuable company in the US, with a market capitalization of $388 billion as of 2/19/05. Exxon Mobil also enjoyed a banner year of revenue to the tune of a record setting $298 billion. Exxon Mobil also had a profit of $25.3 billion, which is believed to be a record for a U.S. company after excluding windfalls from selling assets. So then Exxon Mobil in the interim decade of bill dodging had the opportunity to spend money to influence policy decisions. According to the Washington Post "Exxon Mobil, was the largest campaign contributor among energy companies in 2004. They gave $5.2 million to Republicans in the past decade. Bush personally received $2.5 million from oil and gas companies for his reelection bid alone. Exxon Mobil is a leading contributor to Arctic Power, a lobbying group formed to promote drilling in Alaska."
It has been estimated by the government that the new oil fields in the Alaska Arctic National Wildlife Refuge could produce nearly 1 million barrels of crude oil a day by 2025. It is sad to me that Exxon Mobil gets to pander to drill more Alaskan oilfields in a wildlife refuge after killing so much wildlife in the first place. Exxon Mobil has the means to repay the citizens of Alaska, and repair the goodwill lost and they continue to put it off. Let's do a little math here. Imagine investing $4.5 billion in a modest return account for 11 years. Let's also say you believe the Survivors of the Valdez Oil Spill, who claim Exxon Mobil has earned approximately $800 million dollars a year off that investment. With a modest 17.78% return over the last 11 years Exxon Mobil has now made 195.56% on money they owe. Which means the interest on the original investment now totals $8.8 billion in addition to the $4.5 billion principal, and Exxon Mobil doesn't want to pay what is originally owed to the businesses of Alaska harmed by the spill. How does our government reward a company like that with any future drilling opportunities? What if they have another spill? Does anyone else outside Alaska care? I know I do.
"Beginning 3 days after the vessel grounded, a storm pushed large quantities of fresh oil onto the rocky shores of many of the beaches in the Knight Island chain. In this photograph, pooled oil is shown stranded in the rocks.
In the aftermath of the Exxon Valdez incident U.S. Congress passed the Oil Pollution Act of 1990, including a clause banning the Exxon Valdez from Alaskan waters. Exxon spent some 2 billion dollars cleaning up the spill with 11,000 workers, and a further 1 billion to settle civil and criminal charges related to the case. A lawsuit brought by fishermen, property owners, businesses and communities who claimed they were harmed by the spill is still in progress as of 2002. An award of $287 million for actual damage and $5 billion for punitive damages was awarded by an Anchorage jury in 1994. Exxon appealed against the ruling and the 9th U.S. Circuit Court of Appeals ordered the original judge Russel Holland to reduce the amount. On December 6, 2002 the judge announced that he had reduced the damages to $4 billion, which he concluded was justified by the facts of the case and not grossly excessive.
Exxon's company position is that no punitive damages are justified because the spill was an accident. However in court it was argued that allowing a "known drunk" to captain the ship was reprehensible. Exxon sent it back to court, to be considered in regards to a recent Supreme Court ruling in a similar case, resulting in Judge Holland actually upping the punitive damages to $4.5 billion, plus interest. Exxon is again appealing, some fifteen years after the incident. The case currently sits in the 9th Circuit appellate court. The Exxon Valdez damages assessment is also important in that it was the first, which assessed the existence value of the environmental resource in question an assessment which was done through the use of contingent valuation techniques.
…. On January 29, 1990 the trial of captain Joseph Hazelwood began in Anchorage, Alaska. Then on March 13, 1991 the United States Justice Department announced that Exxon had agreed to pay $1 billion for the clean up of the spill. In fact, Exxon spent approximately $2 billion cleaning up the spill, paid in large part by insurance. Exxon has also paid damages of $50 million from an insurance fund.
According to reports from the Survivors of the Valdez Oil Spill, Exxon has earned approximately 800 million dollars a year on the money set aside to pay the punitive damages fine, which as of 2001, equaled $6 billion dollars, more than enough to pay the damage award without impacting the financial standing of the company."
The most disturbing thing is that as of last year Exxon Mobil is the most valuable company in the US, with a market capitalization of $388 billion as of 2/19/05. Exxon Mobil also enjoyed a banner year of revenue to the tune of a record setting $298 billion. Exxon Mobil also had a profit of $25.3 billion, which is believed to be a record for a U.S. company after excluding windfalls from selling assets. So then Exxon Mobil in the interim decade of bill dodging had the opportunity to spend money to influence policy decisions. According to the Washington Post "Exxon Mobil, was the largest campaign contributor among energy companies in 2004. They gave $5.2 million to Republicans in the past decade. Bush personally received $2.5 million from oil and gas companies for his reelection bid alone. Exxon Mobil is a leading contributor to Arctic Power, a lobbying group formed to promote drilling in Alaska."
It has been estimated by the government that the new oil fields in the Alaska Arctic National Wildlife Refuge could produce nearly 1 million barrels of crude oil a day by 2025. It is sad to me that Exxon Mobil gets to pander to drill more Alaskan oilfields in a wildlife refuge after killing so much wildlife in the first place. Exxon Mobil has the means to repay the citizens of Alaska, and repair the goodwill lost and they continue to put it off. Let's do a little math here. Imagine investing $4.5 billion in a modest return account for 11 years. Let's also say you believe the Survivors of the Valdez Oil Spill, who claim Exxon Mobil has earned approximately $800 million dollars a year off that investment. With a modest 17.78% return over the last 11 years Exxon Mobil has now made 195.56% on money they owe. Which means the interest on the original investment now totals $8.8 billion in addition to the $4.5 billion principal, and Exxon Mobil doesn't want to pay what is originally owed to the businesses of Alaska harmed by the spill. How does our government reward a company like that with any future drilling opportunities? What if they have another spill? Does anyone else outside Alaska care? I know I do.
posted by Maverick at 1:08 PM
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