The size of the BP oil spill in the Gulf of Mexico has been the topic of much attention, as the estimate climbed slowly from 1,000 barrels to 5,000 barrels and on up to as many as 25,000 barrels of oil at the last estimate. (Already the largest oil spill in U.S. history larger than the Exxon Valdez the spill could grow by 20% as BP attempts yet another method for shutting off the underwater spigot, after the failures of the top hat, the big straw, the junk shot and the top kill.)
But how much does it cost to clean up the Gulf oil spill? That figure will be huge, as claims for everything from the obvious (economic loss to fishermen) to the not-so-obvious (natural resources damages claims for birds threatened by the oil slick) are filed. For now, the only quantifiable cost to BP is the cost of the containment and cleanup efforts, which are approaching $1 billion, according to recent reports.
So how much is $1 billion, in the world of BP, the largest company in Britain and one of the world's largest?
Big, surely, because 1 billion is a big number, particularly when it measures dollars (as opposed to, say, ants). But not so big when compared to BP profits.
Companies typically report their earnings quarterly, and BP's last statement for the first quarter of 2010, before the Deepwater Horizon rig explosion April 20 and the spill April 22 revealed profits of $6.1 billion.
In the last four years (including the first quarter of 2010), BP has made a total of $82 billion, according to Google Finance putting the cost of the cleanup so far at just 1.2% of profits. If you assume BP would have made about as much as it has averaged over the past four years, the cost of the Gulf oil spill so far amounts to just under 5% of BP annual profits.
Of course, time marches on, and investors wiped out $67 billion in value from BP in the first six weeks after the spill, according to Reuters.
How much is that? Well, a lot if an individual counts dollars. And certainly to BP bean counters and stock holders. Or, roughly what BP made since January 2007 ($64.7 billion).
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