BP Trying to Reduce Oil Spill Bill: AP

BP claims the government grossly overestimated the amount of oil spilled into the Gulf of Mexico.
By Eric Rosenbaum ,

WASHINGTON D.C. (

TheStreet

) --

BP

(BP) - Get Report

is making the claim that the U.S. government's oil-spill flow estimate is as much as 50% higher than the actual amount of oil spilled, according to an

AP

report.

It's an argument that's far from academic. BP's claims could save the oil company billions of dollars in potential fines that BP would owe the U.S. based on the Clean Water Act. The

AP

estimates that the difference between the existing government estimate and BP's claim would work out to $2.7 billion in reduced fines.

The Clean Water Act employs a per-gallon-of-oil-spilled formula to generate fine amounts.

The base fine is $1,100 per barrel spilled, though it can rise to $4,300 a barrel if gross negligence is proven in court.

The federal government has estimated that about 2.6 million gallons of oil a day spewed from the well, declining to about 2.2 million gallons daily before the well was capped in mid-July.

The 2.6 million gallons per day works out to roughly 221 million barrels of oil during the three-month oil spill, or 5.2 million barrels of oil. The 5.2 million barrels of oil fined at the rate of $1,100 per gallon would result in a fine of nearly $6 billion.

BP shares were close to flat in trading on Friday.

-- Written by Eric Rosenbaum from New York.

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