Estimates from at least two sources have determined the cost of cleanup for the BP oil disaster at up to $100 billion, while Moody’s on Friday lowered BP’s credit rating amidst concerns that the initial $20 billon escrow account to be funded by BP would only be a fraction of what is needed for the cleanup. Standard and Poor’s lowered BP’s credit rating on Thursday citing numerous “challenges and uncertainties.”
Reuters reported on Thursday that Louisiana Treasurer John Kennedy stated that the total cost of the oil spill could be anywhere from $40 billion to $100 billion.
Kennedy also had concerns on how the BP escrow fund for claims would work, and remarked to Reuters, “We're still trying to find out the terms, frankly, of the escrow agreement. I particularly want to know whether the money can be called back into the registry of the court in the event of a BP bankruptcy.”
In addition, according to the Telegraph, David Wilton of the firm BTG Mesirow estimated BP’s cost at 63 billion pounds (approximately $93.2 billion), though he added that this cost would be stretched out over time.
On Thursday, Standard and Poor’s had already downgraded BP’s (British Petroleum) credit rating due to the U.S. government’s increase of the oil spill estimate to an upward rate of 60,000 barrels or 2.52 million gallons each day.
In a statement, S&P said, “The downgrade reflects our opinion of the challenges and uncertainties that BP continues to face in the aftermath of the explosion on the Deepwater Horizon rig. These challenges and uncertainties include the difficulties BP is experiencing in containing the spill as well as the ultimate extent of the pollution, the consequences for BP of ongoing official investigations and the implications of these investigations for the magnitude and timing of further cash payments by BP.”
The Moody’s Investors Service downgrade of BP’s credit rating was its second downgrade of BP in June according to the Wall Street Journal.
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