What BP Could Pay — If It Had To

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The $20 billion victims’ fund amounts to a lifesaver for BP. The agreed-to payment plan is $5 billion each year (including 2010) for four years. According to my CPAs, that is just a fraction, roughly a quarter, of what BP could pay if it had to.

BP’s annual income before taxes is as follows:

2009 $25 billion

2008 $34 billion

2007 $31 billion

2006 $35 billion

And remember, the amounts BP pays to cleanup the spill and the amounts it pays to settle claims are tax deductible. So according to the numbers, BP could afford to pay roughly $20 billion a year to cover costs associated with this disaster – and remain solvent. The $20 billion a year would mean shareholders wouldn’t get paid dividends (approximately $10 billion annually) and many retirement plans count on the cash dividends BP pays, but the bottom line is the corporation could afford to pay $20 billion a year.

That makes $5 billion a year sound downright reasonable.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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