A Taxonomy of Oil Spill Costs: What are the Likely Costs of the Deepwater Horizon Spill?

Many factors will affect the ultimate cost of a spill, including the type of oil, weather patterns at the time of the spill, and the proximity to industry, tourism, recreation, and environmentally sensitive areas. [...] The total cleanup and damage costs associated with the Ixtoc I are estimated to have been less than $7 per gallon.2 The Deepwater Horizon spill totaled over 200 million gallons of oil, and is the largest spill ever off the coast of the United States. [...] For example, as of the third quarter of 2010, BP estimates its costs associated with the spill to be nearly $40 billion—approximately $200 per gallon.3 It is too early to know whether or not the total damages from the Deepwater Horizon will be as high as the Exxon Valdez on a per gallon basis However, if the average social cost of the Deepwater Horizon approached that of the Exxon Valdez, the tota. [...] 3 Resources for the Future Cohen Appendix: Estimating the Total cost of the Exxon Valdez Oil Spill It is important to distinguish between the “social cost” of the Exxon Valdez oil spill, and the total cost paid by Exxon (or its insurers). [...] A contingent valuation study conducted around the time of the spill estimated that the lower-bound estimate of the public’s willingness to pay to avoid the loss of wildlife from the Valdez spill ranged between $2.8 and $7.2 billion—far in excess of the $1 billion paid in natural resource damages.