The public only hears about shipping when there is a major oil spill. So they assume such spills are common. In fact they are rare and getting rarer. The total volume of oil spilled from ships in this decade is only one sixth of that spilled in the same period of the last decade.
What is going up rapidly is the number of people who are filing claims for compensation where there is a spill.
Rise in oil spill compensation claims
Over the last 35 years the International Oil Pollution Convention Funds have paid out compensation for almost 150 spills. Early spills such as the Amoco Cadiz and Exxon Valdez produced around 1,000 claimants each. That shot up to 7,000 claims in 1999 when the tanker Erika broke up in the Bay of Biscay after being refused a port of refuge. It spilt about 30,000 tonnes of oil.
Then in 2002 the similar-sized tanker Prestige broke up off North Spain, again after being refused a port of refuge. That spilt about 60,000 tonnes of oil and produced almost 20,000 claims.
In 2007 the Hebei Spirit spilt about 11,000 tonnes oil after a local vessel collided with it when at anchor off South Korea. That produced 128,000 claims.
When a rig operated by Transocean on behalf of BP spilt oil in the US Gulf in 2101, the Deepwater Horizon incident, claims numbers topped over one million. About US$20bn has been paid out already.
Who benefits from oil spill claims?
The criteria under which people feel able to claim, and get paid, is widening continually. At first it was only people who could show actual damage from the spill. Then it was widened to include people and businesses with consequential damages, such as a hotel which may see a drop in bookings as a result of polluted beaches. BP is dealing with a regime which stretches that to cover a wide range of businesses not connected in any way with the spill.
In addition courts often hand down penal damages, which are usually dedicated to research. In the case of the Sea Empress, which spilt 72,000 tonnes of oil in West Wales in 1996, around £2m was spent on research after the event. In 2013 Transocean alone was ordered by a US court to pay $1.4bn civil fines, with $1bn to be spent on research and education.
Who pays for oil spills?
Typically local governments mobilise response resources and pay out for those, claiming back from the shipowner’s liability insurance, known as P&I cover. Other claimants who claim for loss of business or other impact also claim from the P&I Club, up to a limit of around $130m in total.
After that, depending on in which country the spill takes place, an international fund paid into by oil companies, the IOPC Fund, pays out up to around $1.1 bn. Legal regimes and compensation arrangements vary depending on the international agreement signed by the country involved.
However, when a high profile oil company is involved, as with Total for the Erika and BP for the Deepwater Horizon, pay-outs are often made by them in a bid to protect reputation, rather than because of specific legal requirements.