BP Pipeline - Essay Example

Download file to see previous pages... Micro economics involves policies for enhancing equity and efficiency in the economy via the judicial and the regulatory mechanism. Opportunity Cost Opportunity cost is one of the mostly used concepts in economics. The opportunity cost is the highest valued alternative of something that must be forgone when making a choice. Thus it can be defined as the cost paid when something is given up in order to get something else. Assessing opportunity cost of any event is important in establishing the real cost of any action. BP pipeline should consider the opportunity cost of constructing a pipeline in order to reduce shipping through road transport as suggested by Mankiw (2011). As the company sets its various routes on the table it has to consider the concept of opportunity cost thus assessing why a given route is preferred over the other. Budget Deficit Budget deficit refers to the amount by which a company or government expenses exceed its income for a given period of time as suggested by Dyker (1992). Budget deficit is major point of controversy in BP Pipeline Company given the various expenses the company has suffered due to oil spills. As a result, Congressional republicans are against the tougher oil and gas pipeline safety standards as they are bound to hinder economic growth. This is following the frequent budget deficits that the BP pipeline company has suffered. For instance BP’s latest incidences of oil spills have left the republicans devastated as their contra regulation arguments have been curtailed. This has resulted in the incurrence of huge budget deficits and the republicans and the house representatives have proposed bills to reduce the budget deficits faced by EPA due to such oil pollution. This will lead to a situation where BP pipeline will compensate EPA (Environmental Protection Agency) in case they experience oil spills Leading to a higher budget deficit for BP pipeline . Although BP has proofed successful in stalking the waste, the increasing spending in compensation of damages caused by the spills largely increases its budget deficit. In addition BP is bound to suffer cost of repair and clean-up operations liabilities thus increasing the company’s deficit spending. However BP has promised that everyone affected by spills will be compensated. The Company has thus signed several agreements with local municipalities and shrimpers following the spill effect. It is no doubt thus BP pipeline has suffered huge budget deficits which are affecting the countries economy to a great extend. National Debt National debt is also referred to as government or public debt and it is the money owed by the central government. In the United States national debt can also refer to a municipal or local government debt. National debt reflects on all government liabilities such as pension payment as well as payment for goods and services received and not yet paid according to Cavanaugh (1996). In many cases government tend to borrow funds in a currency with strong command for debt security. National debt can be caused by various aspects such government spending on disaster like the BP oil spill. Following the Alaska oil spill by the Bp pipeline company, the government has suffered great losses which have led to national debt. As a result, the central gover ...Download file to see next pagesRead More