If BP is truly going to foot the bill to cover all the damages its inconceivably massive oil spill is causing, won’t that cost so much money that BP will go out of business?
I’m not an expert in economics, but the monetary liability here for BP is going to be gigantic. If they stay in business, it’s hard for me to envision them making a profit for decades, because their expenses will be so high from paying off the debt this disaster is going to incur for them.
It seems to me that there are three possible outcomes here for BP:
- BP attempts to pay for all the damage is has caused, and doing so puts BP out of business forever.
- BP pays for all of the damage it has caused by taking on a large loan, and doing so is so expensive that BP will not turn a profit for more than a decade.
- BP does not pay for all the damage it has caused.
I’m a betting man, and my money goes on outcome No. 3.
Am I being too cynical? Am I missing a possible outcome for BP?
Tell me how I’m wrong.