The recent move of the U.S. administration to hike the cap on oil spill liabilities has been criticized by many oil and gas operators. However, given the serious implications of oil spills and its harmful effect on the environment, this hike is justified. Congress previously introduced the cap on oil spills in 1990. The increase in inflation over the years necessitates a new look at the cap for oil spill liability. This article provides good reasons why this hike is truly justified.
The Hike In Oil Spill Liabilities To Serve As A Deterrent
The move of the U.S. government to increase the cap on oil spill liabilities is intended to serve as a deterrent for oil and gas companies. It is expected to encourage oil and gas companies to take adequate safety precautions to prevent oil spills from taking place. Oil spills not only contaminate the environment, but have an adversely impact on plant and animal life. Oil and gas companies must be motivated to invest in suitable safety equipment and training to prevent such disasters from taking place.
Jennifer Dlouhy reported in a recent article:
“Under the Bureau of Ocean Energy Management’s proposal, the government would boost the current ceiling on economic damages from oil spills from $75 million to $134 million.”
The Move Is Intended To Dissuade Unsafe Practices
The hike is intended to dissuade unsafe practices in oil exploration and production activities. Oil and gas companies will likely analyse the safety procedures and precautions that are in place and do away with unsafe practices that endanger life and property.
Jennifer Larino said in a recent news article:
“Calls to raise the cap began in the wake of the massive Gulf of Mexico oil spill in 2010. The National Commission on the BP Deepwater Horizon Oil Spill reiterated those calls, asking federal regulators to consider a higher limit to dissuade unsafe practices.”
Although the U.S. government’s recent decision to hike the cap on oil spill liabilities received a lot of criticism, this move is justified for a number of reasons. The article explains in detail about why this hike is justified in spite of opposition from many quarters.