BP's Exploding Liabilities

With President Obama and Congressional Democrats lining up to remove the $75 million liability cap on BP's (NYSE: BP) gusher, the open question was whether Republicans would come to BP's rescue.

Senate Minority Leader Mitch McConnell recently argued that raising the cap would be dangerous, because it might discourage smaller drillers like Plains Exploration (NYSE: PXP) and Newfield Exploration (NYSE: NFX), who might not be able to afford to pay for a megaspill, from competing with offshore giants like ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP), and BP.

But now House Minority Leader John Boehner has said that we should "absolutely" lift the cap. David Dayen of FDL News calls this the "tipping point.... The cap is history."

That could mean the sky's the limit for BP's exploding liabilities. StreetInsider suggests that based on a Goldman Sachs estimate of $40,000 per barrel in costs, BP's liabilities could already be $80 billion... and rising.

It remains to be seen whether the lift could legally apply retroactively, but the White House says it will try to find a way.

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