BP (NYSE:BP), Halliburton (NYSE:HAL) and Transocean (NYSE:RIG) all stand to lose into the billions of dollars in the explosion on the Deepwater Horizon oil rig which resulted in the oil spill stretching across the Gulf of Mexico.
The majority of the responsibility will land on BP in the incident, which in the short-term alone could end up costing them anywhere from $2 billion to $8 billion by those analyzing the situation, and could even rise higher.
Until the actual cause of the explosion is determined, the cost related to Transocean and Halliburton are impossible to even guess at, but over the long term it could be plenty.
Where it gets tricky is over the long term, where the cost of doing business in the Gulf will no doubt increase, and the addition of more safety measures and lower production could also lead into losses into the billions over time, although this would be spread across all companies doing business in the Gulf, not those only associated with this particular accident.
The other factor is of course the damage to reputation to these companies and the industry, which in general had been improving in safety measure in general, which had somewhat turned the tide of public opinion more positive toward them.
While this won’t destroy the oil industry by any stretch of the imagination, it will increase the costs for companies and consumers, and we’ll all end up paying more our fuel and gas.
The cost of the oil spill will reach far beyond the oil companies to all of us, and the real costs probably will never be known, but we all will be paying for it for some time.
