Cost of personnel and their expenses during cleanup
Cost of contractors and other direct cleanup
Reimbursed cost for USCG and USCG fines.
Fees and fines from state agencies.
Cost of litigation and litigation defense
Cost Of an Oil Spill Back
Introduction
It
is important to be able to estimate the cost of an oil spill, as it is necessary
for the insurance company, corporate administration to allocate funds for the
oil spill.
Expenses
related to the cost of the spill are as follows:
Direct Expenses
|
Cost of personnel and their expenses during cleanup |
|
Cost of contractors and other direct cleanup |
|
Reimbursed cost for USCG and USCG fines. |
|
Fees and fines from state agencies. |
|
Cost of litigation and litigation defense |
· Costs associated with residual damages
|
Economic Losses |
|
Environmental damages |
|
Mitigation Expense |
Indirect
Expenses2:
|
Increased attention by regulators |
|
Permit for new activities cost more and take longer |
|
More drills and exercises |
|
Increased cost of new equipment and other preparation cost |
|
New local, state and federal laws |
|
New local, state and federal taxes and fees |
|
Business cost by diverting key personnel to spill control |
|
Stock price and stockholder pressure |
|
Higher insurance costs |
|
Loss of sale of products |
There
are three methods that are followed in the estimation of an oil spill. They are
|
Ratio to the value of oil |
|
Clean up cost per barrel |
|
Manpower and equipment basis |
It
is important to know that the precise estimation of cost analysis is impossible
for any oil spill.
Cost Ratio compared to the cost of oil
This
estimate is based on factors such as type of oil, cleanup cost depending upon
location of spill and price of crude oil.
The equation is given by
2Cost
of Cleanup Response =K1 Value K2 K3
Where
|
K1 is a multiplier from 10 to 20 |
|
Value is the price of crude oil |
|
K2 is a coefficient based on type of oil with heavy fuel
oil |
|
K3 is a measure of level of clean up required. Ex: 1 in
Texas and around 4 in California. |
Cost
of cleanup per barrel of oil
This cost estimate is the most common parameter used in the
US. Costs range from under 1 dollar a barrel for local spills to over 10,000
dollars for highly visible and large spills in the coastal areas.
For example based on the earlier estimate for a 30 dollar per barrel, the range would be around 300 to 600 dollars per barrel for a crude oil in a state with relatively low standards. In a state like California the cost would however be from 1200 to 2400 per barrel for the same conditions.
Personnel
and Equipment basis
This kind of estimation is more detailed study depending on a lot of factors and variables, which are related to the direct expenses and indirect expenses for an oil spill. It takes into account the expenses involving the cost of Personnel and the cost of equipment usage for the duration of the entire spill.