Arkansas oil spill: Exxon reacts to tax ‘loophole,’ pledges ‘to cover all costs’

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The central Arkansas spill caused by Exxon’s aging Pegasus pipeline has reportedly unleashed 10,000 barrels of Canadian heavy crude – but a technicality says it’s not oil, letting the energy giant off the hook from paying into a national cleanup fund.

Legally speaking, diluted bitumen like the heavy crude that’s overrun Mayflower, Arkansas, is not classified as ‘oil’. And it’s that very distinction that exempts Exxon from contributing to the government’s oil spillage cleanup fund.

ExxonMobil has already confirmed that the compromised pipeline was transporting “low-quality Wabasca Heavy crude” from Canada’s Alberta region. That particular form of crude contains large quantities of bitumen – a “thick, sticky, black semi-solid form of petroleum which is transported in a diluted form (dilbit) as it makes its way from Canada to US refineries,” explains Oil Change International, which has brought attention on the strange legal exemption.

Companies that transport oil are required to pay $.08 per barrel into the Oil Spill Liability Trust Fund. The cash is used by the US government to respond to oil spills. But there’s a catch – Exxon is exempt from paying into the fund for its Pegasus pipeline, because it carries tar sands oil, not “conventional oil.”

“The IRS has classified tar sands as different from conventional oil, and thus the tax levied to fill the liability trust fund is not levied on tar sands crude. It’s a loophole that should be closed, as it doesn’t line up with the actual intent of the tax or the fund,” campaigns director for Oil Change International, David Turnbull, told RT.

Answering RT’s detailed questions, ExxonMobil stated they are paying for all costs related to the spill. However, the company didn’t reveal how much it contributes to the Oil Spill Liability Trust Fund, or the value of the company’s crude which is not taxed by the law.

Exxon media relations manager Alan Jeffers told RT that teams are working directly with residents of Mayflower and are “paying all valid claims relating to the spill and providing interim housing for people from the homes which the city of Mayflower recommended be evacuated following Friday’s spill.”

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