Remembering Exxon Valdez
Today’s Supreme Court decision, allowing punitive damages in a lawsuit brought by fishermen and others whose earnings had been cut or eliminated when Exxon’s Valdez supertanker dumped 258,000 barrels of oil into Prince William Sound nineteen years ago, should be a stark reminder that massive oil spills can have disastrous economic, as well as environmental, consequences. It should also remind us how long it takes for courts to award damages when oil companies like Exxon Mobil fight them. In this case, almost twenty percent of the plaintiffs who brought the suit have died in the interim. After a lengthy trial, a jury awarded those who had been harmed by the spill $287 billion in damages to compensate them for their losses, plus $5 billion in punitive damages, because of Exxon’s negligence. Exxon immediately appealed the award, arguing, among other things, that the Clean Water Act as well as maritime law doesn’t allow punitive damages.
Most importantly, the ruling should remind us that oil spills do occur, and that there are genuine costs associated with offshore drilling. At a time when Republicans and John McCain argue that more drilling is the answer to $4 a gallon gas – despite the fact that, as the government reports, any oil found offshore won’t affect gas prices for more than a decade, and that in a global market the benefits of any such drilling will be shared equally between Americans, Chinese, and every other user of oil around the world – we should remember Exxon Valdez.
Postcript: Some proponents of drilling argue that, despite the fact that any oil found offshore won’t directly affect prices for many years, it will reduce the price of oil in futures markets, which indirectly affects current oil and gas prices. This is a spurious argument, for the simple reason that the development of alternative energy sources – wind, solar, biomass – over the next few years would also reduce oil futures’ prices, since they would reduce the demand for oil. Given the environmental risks inherent in offshore drilling, then, it would seem to make far more sense to invest in these proven alternatives, which, when even slightly scaled up, will offer energy at lower costs than oil.