69 © 2018 Wiley Periodicals, Inc. Published online in Wiley Online Library (wileyonlinelibrary.com). DOI 10.1002/jcaf.22306 f e a t u r e a r t i c l e Ultimate Costs of the Disaster: Seven Years After the Deepwater Horizon Oil Spill Yong Gyo Lee, Xavier Garza-Gomez, and Rose M. Lee T his study assesses the ulti- mate costs asso- ciated with America’s largest disaster in the oil and gas industry, the 2010 Deepwater Horizon oil spill. On April 10, 2010, the Macondo Oil Well— located 45 miles from the Louisiana coast and owned by Trans- ocean—exploded, and the subsequent fire destroyed the Deepwater Horizon drilling rig, killed 11 people working aboard, and spilled approximately 3.19 million barrels of crude oil into the Gulf of Mexico over the next four months before finally being sealed in August 2010. The oil spilled contaminated about 400 square miles of the sea floor and 1,300 miles of shoreline of the Gulf of Mexico. The spill damaged fisheries, beaches, and coastal wetlands. It also harmed an unknown number of birds, sea turtles, marine mammals, fishes, oysters, and other sea life. Imme- diately after the explosion, BP and the federal govern- ment struggled to contain the spill and coordinate a massive response effort to clean up the coastlines. The costs asso- ciated with the oil spill cleaning efforts started to get larger and larger as time progressed. As a response to respon- sibility under the Oil Pollution Act (OPA), BP promised to pay all the neces- sary expenses in May 2010 without seeking the reimbursement of payments above the $75 mil- lion limit of liability. In June Seven years after the Deepwater Horizon oil spill, this study measures the “ultimate” cost of the disaster. This study compiles all the costs to be borne by BP, which include charges and expenses directly related to the spill, the various fines and penalties to be paid, reimbursements and recover- ies from other parties, securities-related charges, and hidden costs. This study documents an ulti- mate cost to BP of $144.89 billion in the United States, which is more than two times larger than the $62.59 billion BP reported in its income state- ment. This study provides details on the computa- tion. The sharp increase is due to the inclusion of other categories of costs related to the oil spill, including the $19.33 billion committed by BP in a global settlement in April 2016; the contingent liabilities of $700 million, the settlements of $175 million with the Securities and Exchange Commis- sion; legal fees of $680 million, and the hidden costs of $61.41 billion that was not reportable under the current accounting system. This figure will eventually become higher once we learn about costs related to litigations in Mexico. © 2018 Wiley Periodicals, Inc. Refereed (Double-Blind Peer Reviewed)