Who bears the lion's share of a black pie of oil pollution costs?

Abstract

Liability generates incentives for responsible parties to reduce oil pollution risks and enables risk sharing in the oil production, transportation, refining, and consumption nexus. Limitation of liability in the oil supply chain, such as contained in the U.S. Oil Pollution Act of 1990, could make a difference in the incentive and risk-sharing effects between the sectors in the chain. It is the argument in this article that liability limits have led to a failure to generate a proper set of incentives for the reduction of oil pollution risks and to ensure efficient risk sharing among the U.S. public, the shipping sector, and the oil cargo sector. © Taylor & Francis Group, LLC.