BP said the $32.2 billion charge for the cost of the spill led it to record a loss of $17 billion for the second quarter, compared with a profit of $4.39 billion a year earlier. It is the first time in 18 years that the company has been in the red. The charge includes the $20 billion compensation fund the company set up following pressure from President Barack Obama as well as costs to date of $2.9 billion.
But here is my question about this reported loss…
BP reports a 32 billion dollar charge according to the spill, 20 billion of which is the escrow account that will be run by Kenneth Feinberg. This seems to imply that British Petroleum is stocking this escrow account with the full 20 billion dollars straight away, but according to an article in Forbes, this is not the case:
BP will build up the fund over 3.5 years. The first payment will be $3 billion in the third quarter and $2 billion in the fourth quarter. After that BP will pay $1.25 billion each quarter until the $20 billion is met.
So, according to my math…BP reports a 17 billion dollar loss, but to get this loss they figure 20 billion into an escrow account, when this quarter they are actually putting in only $3 billion…which means they are actually breaking even in the second quarter.
A PR stunt geared towards empathy to neatly coincide with the announced ouster of Tony Hayward?
Perhaps…or maybe I’m too cynical.
Read the article:
Have a nice day.