06-25-08 by dugan
Today’s big win by Exxon in the U.S. Supreme Court might make Americans think twice about letting Exxon and friends resume drilling for oil off the Atlantic and Pacific coasts. If the idea of court-ordered punitive damages is to prevent and punish corporate wrongdoing, ExxonMobil just got a green light for negligence. The cost of a coastal blowout would be pocket change.
The high court today reduced what had once been a $5 billion punitive damages award against ExxonMobil to about $500 million. Alaskan fishermen, businesses and others harmed by the 1989 oil spill from the tanker Exxon Valdez will get about $15,000 each instead of the original jury award of $150,000 each. The reduced award comes to a little over 1% of Exxon’s 2007 profits, and the decision sets a precedent for future cases.
If punishment for the vast Exxon Valdez disaster is pegged at $500 million, a major drilling platform blowout off of Southern California would merit much less, no matter how many dolphins, seals and pelicans died or how many tourism dollars were lost. Here’s the math: the Exxon Valdez dumped 11 million gallons of crude oil into Alaskan waters; the big Santa Barbara spill of 1969 was "only" 200,000 gallons. Gallon-for-gallon, the offshore spill would merit punitive damages of about $9 million, 1.8% of the Valdez award–and less than the price of a Malibu mansion within the budget of any oil CEO.