Exxon Mobil’s puny punitive damages

We know it’s only June, but Christmas came early for Exxon Mobil yesterday. The Supreme Court slashed an award of $5 billion in punitive damages against the company for the 1989 Exxon Valdez accident that spilled 11 million gallons of crude oil into Prince William Sound. Exxon Mobil will now have to pony up $500 million, which will amount to about $15,000 for each of the 32,000 plaintiffs. The decision was the last step in the 14-year legal battle.

The punitive damages (designed to deter and punish) are about equal to the compensatory damages Exxon Mobil has already paid Alaskans; the court said the one-to-one ratio was appropriate in maritime cases. It seems doubtful that $500 million―the profit of about 12 hours of sales for the oil giant that raked in a record-breaking $41-billion last year―will hurt or discourage the company.

It’s particularly worrisome considering the call last week by President Bush and presidential candidate John McCain last week to lift the offshore drilling ban, saying it would help reduce our dependence on foreign oil and solve the $4-a-gallon gas problem.

More drilling means more spills. And who knows what kind of precedent the Supreme Court’s decision will set.

One thing we do know is that, no matter what politicians say, offshore drilling is not going to make a dent in today’s gas prices. Take a look at this report from the Energy Information Administration, provider of official energy statistics from the US government. The document, the 2007 “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf”, concludes:

The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.

2030. Just one more reason to invest in renewable energy.


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