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U.S., China Trade War Puts A Lid On Oil

U.S., China Trade War Puts A Lid On Oil

Negative signs for demand have…

Finally, Good News For BP On The Gulf Oil Spill

The news for BP out of the Gulf of Mexico has been grim since April 10, 2010, when the Deepwater Horizon rig pumping oil off the coast of Louisiana exploded in flames, killing 11 workers and starting the worst offshore oil spill in U.S. history.

Since then, it has lost case after case in federal courts, from the trial level to the U.S. Supreme Court, in decisions that will cost the British oil major as much as $45 billion in cleanup costs, compensation to victims of the spill and fines for violating American pollution laws.

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An additional legal headache was that BP’s former vice president of exploration in the Gulf, David Rainey, was accused of lying about the quantity of oil that was spilled into the Gulf. Rainey could have faced up to five years in prison had he been convicted of making a fraudulent statement to agents from the FBI and the Environmental Protection Agency six weeks after the spill.

But on June 5, a jury in U.S. District Court in New Orleans acquitted Rainey, rejecting claims by Robert Zink, a Justice Department lawyer, who cited text messages and a witness testimony that he said showed Rainey had deliberately minimized the flow rate of oil from the leaking underwater oil well.

Zink said Rainey sent an estimate to Congress on May 24, 2010, estimating the leak at 5,000 barrels of crude oil per day. The prosecutor said the BP executive characterized this as BP’s “best scientific guess” about the volume of the flow. Later, though, government and independent scientists determined that the rate was over 12 times greater at more than 60,000 barrels per day.

During his closing argument, Reid Weingarten, Rainey’s lawyer, said he was baffled why the government should think Rainey had a motive to deliberately underestimate the rate of the flow from the blown-out well. “This charge never should have been brought,” he said.

David Uhlmann, an environmental lawyer at the University of Michigan, said Weingarten probably was correct, though not necessarily for the right reason.

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“Today’s verdict demonstrates how difficult it is to prosecute individuals when the primary culprit is a corporate culture run amok,” Uhlmann, the former chief of the Justice Department’s environmental crimes section, said in an e-mail to The Associated Press.

“In its case against David Rainey,” Uhlmann said, “the Justice Department also faced a significant evidentiary hurdle, which is that no one knows how much oil gushed into the Gulf of Mexico during the Gulf oil spill.”

Weingarten and other members of Rainey’s defense team had argued during the trial that in the early days of the spill, which lasted 87 days, no one could have given a credible estimate of how much oil was spewing from the well. Further, they said, estimates were irrelevant at that time because of the full-scale effort that was being made to stop the leak, regardless of its volume.

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Weingarten said that by demanding such an estimate from Rainey, federal agents were sending him on “a fool’s errand” predicated more on politics and public opinion than on sound law. “It was demanded by politicians and the press,” he said. “And [Rainey] reluctantly took up the cudgel and came up with his best response.”

By Andy Tully Of Oilprice.com

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