BP has agreed to pay $20 billion into an escrow account to cover claims of people and businesses affected by the oil spill in the Gulf of Mexico. President Obama emphasized that this amount is not a cap.
To avoid bankrupting BP, or creating other financial problems, a payment plan has been set up that will allow the oil company to pay the amount over a four year period. The escrow account will be managed by Kenneth Feinberg, who also administered a fund for those affected by the September 11 terrorist attacks.
Obama addressed the importance of having Feinberg administer the escrow fund, as opposed to it being controlled by BP or the federal government.
“If you or your business has suffered an economic loss as a result of this spill, you’ll be eligible to file a claim for part of this $20 billion. This fund does not supersede either individuals’ rights or states’ rights to present claims in court,” said the president.
After BP’s Deepwater Horizon rig exploded on April 20, a moratorium on deepwater drilling in the gulf was announced. As a result, the Louisiana Mid-Continent Oil and Gas Association (LMOGA) estimates 33 rigs will be out of service, and the workers on them out of jobs.
According to the LMOGA, the moratorium on deepwater drilling could affect 1,400 jobs for each of the 33 idled rigs. LMOGA also estimated that lost wages for employees of the 33 rigs could reach $330 million per month.
BP agreed to voluntarily contribute $100 million to a foundation for oil industry workers who are unemployed as a result of the oil spill and the current moratorium on deepwater drilling.
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