What happens when a multi-billion dollar oil company accidentally unleashes thousands of barrels of oil into the Atlantic ocean? Well, in Brazil at least, they receive the financial equivalent of a slap on the wrist. As a consequence for Chevron's triggering of the latest environmental disaster off the coast of Rio de Janeiro, the Brazilian environmental protection agency, IBAMA, has put forth a fine of -- wait for it -- $28 million. Yes, that's million with an 'm'. While that may seem like a lot of money to you and me, it amounts just about half of what Chevron nets in profit each and every day.
So why such a relatively small fine for Brazil's worst oil spill in over a decade? According to a Brazilian law, government agencies, like IBAMA, are limited to imposing fines not greater than R$50 million ($28 million USD) per infraction, of which only one has been cited. But as the Brazilian authorities continue to investigate the incident, which Chevron has already admitted responsibility for, additional fines may be levied by IBAMA and Brazil's National Petroleum Agency (APN).
Izabella Teixeira, Brazil's Environment Minister, told Globo News that as reports of the events leading up to and immediately following the leak are made clear, fines may be upwards of $165 million.
Perhaps taking a lesson from BP's failed response to the recent Gulf oil spill, Chevron's quick claim of culpability and prioritizing containment seems to have quelled stockholders' jitters. In fact, Forbes has even suggested that Chevron stock is a good buy even now.
The leak is Brazil's first major incident since drilling began along the oil-rich fields discovered within the last decades several hundred miles off the coast of Rio. Exploring new and often more impactfully acquired energy sources has become a keystone of Brazil's future development, but not without stoking the ire environmentalists. Over the next ten years, Brazil aims to be among the world's leading oil exporters, despite plans to focus on renewable energy sources for use domestically.
Given the shared interest between foreign oil companies, like Chevron, and Brazil's energy administration, it is entirely possible that this $28 million is merely a token fine, not intended to serve as a real deterrent against future leaks.
Regardless of what exactly causes a spill, the oil company responsible should be deathly afraid of the financial consequences of it -- particularly when the environmental consequences seem to phase them so little.