BP (NYSE:BP) Surpasses $500 Million in Gulf Oil Spill Costs

According to reports from congressional auditors, BP Plc (NYSE:BP) has now paid out over $500 million for costs related to the cleanup of the Gulf of Mexico after the oil spill starting from the explosion on the Deepwater Horizon oil rig.

This shouldn't be confused with the Gulf Coast Claims Facility, which is the one run by Kenneth Feinberg and has paid out far more than the over $500 million paid from the federal oil spill fund. The Gulf Coast Claims Facility is the $20 billion fund BP has promised to pay claims out of over a four-year period.

The fund is question is called the Oil Spill Liability Trust Fund, where capital is raised through a tax of 8 cents a barrel of oil.

The Government Accountability Office said that fund is running out of money, and as it stands, can't extract more than $1 billion from any one company over any one incident.

As of the end of September, over $1.6 billion was still in the fund, but concerns are it'll very soon reach the $1 billion limit, and no more funds will be able to be dispersed.

This is the existing rule even if a company reimburses the government fund and there are funds available to pay out.

At this time Congress is thinking about removing the $1 billion cap and introducing legislation which would offer a more flexible cap where the money paid by an oil company over an accident wouldn't be included in the limits now constraining the fund.

BP (NYSE:BP) Pays $18.7 Million to Omega Protein (NYSE:OME) for Gulf Damages

BP (NYSE:BP) paid out via its Gulf Coast Claims Facility $18.7 Million to Omega Protein (NYSE:OME), and Omega said the should get paid more as the claims process works its way out.

Omega Protein sells fish meal and fish oil products in the United States which it derives from menhaden, a wild herring species found in the Gulf of Mexico, as well as on the Atlantic coast.

They filed their claim against BP based on a smaller catch of fish in the Gulf and the resultant loss of revenue and earnings.

Omega closed Wednesday at $6.13, gaining $0.24, or 4.07 percent.

Feinberg Say $10 Million Paid in BP (NYSE:BP) Claims

In the first week since launching the BP (NYSE:BP) compensation fund, claims administrator Kenneth Feinberg said almost $10 million was paid out in emergency payments to residents of the Gulf Coast region.

So far, 1,935 emergency claims have been made, primarily for lost profits or earnings to individuals and businesses. The majority of payments were no higher than $5,000, and some dropping as low as a penny.

For those wanting to finalize their claims and bypass litigation, there are over a 1,000 people, according to the Gulf Coast Claims Facility, where the individuals or businesses will have to waive the right to sue BP if they are to receive the payment. At this time no final claims have been paid.

Over 29,000 claims are now under review, and the agency said only one has been denied so far.

Louisiana residents are leading the list for emergency claims, as they took the heaviest hit from the oil spill. They collectively have received close to $4 million, while Florida is next with $2.4 million.

BP (NYSE:BP) Compensation Fund Launches Today, Feinberg Ready

The new compensation or escrow fund, now officially named the Gulf Coast Claims Facility, has launched today, and parameters are in place for claimants to make a decision on whether to accept or decline what is offered them.

Fund administrator Kenneth Feinberg said, "These guidelines are the result of many town hall meetings throughout the Gulf, listening to the people affected by this disaster."

The only ones really making any significant noise about the fund going forward are trial lawyers who see their 30 percent of the money going to the claimants instead of them.

President of the American Association for Justice, Gibson Vance said on Friday, "...it would be detrimental to claimants if they are forced to accept final payments before the full impact of the spill is realized."

In reality, they would come out ahead. Take away the 30 percent the lawyers would get, and why would claimants extend things out to make BP pay the utmost (assuming that even happens) when they can get their payment now when they need it.

The only people it would really be detrimental to would be the lawyers who have had their greedy eyes lowered because the majority of businesses and people will realize it makes little sense to wait longer to get a higher payment that will only benefit the lawyers and not them.

There could possibly be a few cases which that would be different, but it would have to be unique for it to overcome the 30 percent fee the lawyers will enjoy.

Feinberg has already said he's going to be generous with the fund, and probably will be, so there's very little incentive for victims of the oil spill to wait for a bigger pay day that in the vast majority of cases will never come, and if it does, will make the wallets of the lawyers fatter, not theirs.