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Exxon: You’ve Come a Long Way, Baby!

Jeff Siegel | Wednesday March 25th, 2009 | 6 Comments

exxon valdez
Yesterday marked the 20th anniversary of the nation’s worst oil spill. It was on March 24, 1989 when the Exxon Valdez dumped 11 million gallons of crude into the fishing waters of Prince William Sound. It was a tragic day, indeed.
I know, I know. It’s not popular these days to “bring everyone down” with reminders of those pesky oil spills. With energy security a major issue, and years of mocking those who think it’s a good idea to consider the loss of natural capital associated with the production and burning of fossil fuels, we’ve almost become immune to oil spills – writing them off as simply “the cost of doing business.”
So let’s examine that cost, shall we?


Since 1967, more than 18.7 million barrels of oil have spilled out into our oceans and waterways, resulting in massive cleanup costs. Exact amounts, however, aren’t easy to come by, since these costs do not fit into a “one-size-fits-all” category.
Cleanup costs vary on the basis of oil type, country, proximity to the shoreline, spill size, degree of shoreline oiling, and cleanup methodology. For instance, according to a 1999 analysis from biologist and oil spill expert, Dr. Dagmar Schmidt Etkin, cleanup for near-shore spills and in-port spills are about four to five times more expensive than offshore spills. And responses to spills of heavy fuels cost ten times more than responses for lighter crudes and diesel.
Now Dr. Etkin developed a model that does take into account all the variables in oil spill cleanup costs, using data she collected from case studies of more than 300 spills in 40 countries. What she found was a $25,614.63 price tag per ton in the U.S. (where cleanup was found to be one of the most expensive for spill cleanup responses), and an overall global average of $27,495.83 per ton. This is an average per-unit marine oil spill cleanup cost based on 1999 dollars.
So, accounting for inflation, here’s a quick calculation of the cleanup costs associated with 21 of the largest oil spills since 1967…

The total cleanup costs, adjusting for inflation, come to $41,142,623,500.
Of course, this still isn’t completely accurate, considering any adjustments that would have to be made in order to reflect more efficient cleanup methods used today in comparison with those used 30 years ago. In fact, at a National Oceanic and Atmospheric Administration event on March 13, attendees actually learned about the progress we have made in oil spill preparedness, response, and restoration.
I tell ya, these guys can spin anything!
Boasting progress in oil spill preparedness, response, and restoration is like boasting about finding a better way to deal with heroin addicts who overdose.
Regardless, around the same time these guys sat around a room, patting themselves on the back, a less-than-stellar report on Exxon’s tanker fleet was released. Apparently, Exxon continues to hire single-hull vessels, like the Valdez, at a time when 151 countries have agreed that double-hull vessels are better when it comes to the prevention of oil spills. Sunoco, Chevron, and Conoco Phillips don’t even hire single-hull vessels anymore.
Since the Valdez disaster, 79 percent of the world supertanker fleet has been replaced with double-hull vessels. And by 2010, single-hull tankers greater than 5,000 gross tons will be excluded from U.S. waters unless they are equipped with a double bottom or double sides. Yet Exxon continues to use the single-hull. Incidentally, the company’s 21-year-old single-hull SeaRiver Long Beach carrier started leaking from a hairline fracture back in 2000. That ship had to return to Valdez to unload its cargo. About 10 gallons of crude were spilled.
There is one silver lining though. The single-hull vessels are about 20 percent cheaper to hire than the double-hull vessels. So, according to Bloomberg calculations, Exxon’s estimated savings by hiring the single-hull tankers comes to just under a penny a share.


▼▼▼      6 Comments     ▼▼▼

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  • Rob Young

    As an ExxonMobil employee I can say without any reservation that the 1989 Valdez accident was one of the lowest points in ExxonMobil’s 125-year. However we took full responsibility for the accident and in the aftermath made a number of critical and important improvements to marine safety. Most importantly we undertook significant operational reforms and implemented an exceptionally thorough operational management system to prevent future incidents. Today the screening process for the selection of vessels is comprehensive and robust and is performed by experts in technical departments that are not part of the commercial function. We are particularly proud of the spill prevention performance of our global marine transportation affiliates since the Valdez spill. With approximately 650 vessels in service each day there were in fact no spills in 2008 from ExxonMobil marine affiliate owned/operated tank ships or from those on long-term lease. We consider this strong performance encouraging and it serves as a solid platform for continuous improvement.

  • Nick Aster

    Rob, great to hear from Exxon on this and happy that you can speak openly about Exxon’s mistakes of the past. I would, however be curious to hear someone’s response to the double hull issue mentioned above, and more importantly the fact that (as widely reported) Exxon continues to tie up lawsuits in the courts to avoid paying many of the costs associated with the spill. I’m still troubled by that!

  • http://www.care2.com/c2c/share/detail/1092322 ES
  • Anonymous

    Nick, as you would expect we have been asked a lot about these issues lately. On the issue of compensation we have spent over $3.8 billion as a result of the accident, including compensatory payments, cleanup payments, settlements and fines. This includes – Voluntary payment of $300 million to 11,000 Alaskans and businesses affected by the spill;$383 million paid to plaintiffs in punitive damages case; $2.2 billion spent on the cleanup; and $1 billion in settlements with the state and federal governments.
    On your second question our view is that safe marine transportation goes beyond hull design. Each component (people, procedures, equipment) plays a vital role to ensure the integrity of the transportation system. Safety, security, reliability and quality are the governing principles on which a sound marine transportation system must operate. We view our record since the Valdez as supporting our disciplined and systematic approach to marine safety.

  • KAREN

    Rob,
    Interesting that what you’re really saying is (pardon my shouting)
    OUR SAFETY STANDARDS ARE UNQUESTIONABLE, AND WE’RE NOT GOING TO USE DOUBLE HULL VESSELS BECAUSE WE SPEND THE MONEY ON COMPENSATING UNGRATEFUL WHINERS WHO CLAIM THAT THE SHORELINES STILL CAN’T BE USED FOR YEARS TO COME EVEN AFTER WE CLEAN IT UP. WHAT’S A FEW ANIMAL POPULATIONS TO ANYONE? SO A FEW MORE ACCIDENTS WILL, I MEAN, MAY HAPPEN – EVERYONE EXPECTS THAT. WHAT DO YOU HAVE TO COMPLAIN ABOUT?! WE MAKE SURE OIL IS EXPENSIVE – YOU’LL GET IT FOR FREE!

  • KAREN

    Rob,
    Interesting that what you’re really saying is (pardon my shouting)
    EXXON’S SAFETY STANDARDS ARE UNQUESTIONABLE, AND WE’RE NOT GOING TO USE DOUBLE HULL VESSELS BECAUSE WE SPEND THE MONEY ON COMPENSATING UNGRATEFUL WHINERS WHO CLAIM THAT THE SHORELINES STILL CAN’T BE USED FOR YEARS TO COME EVEN AFTER WE CLEAN IT UP. WHAT’S A FEW ANIMAL POPULATIONS TO ANYONE? SO A FEW MORE ACCIDENTS WILL, I MEAN, MAY HAPPEN – EVERYONE EXPECTS THAT. WHAT DO YOU HAVE TO COMPLAIN ABOUT?! WE MAKE SURE OIL IS EXPENSIVE – YOU’LL GET IT FOR FREE!