The BP Story

BP- or “British Petroleum” (the US government insisted on referring to the multinational by its defunct predecessor’s name)- endured so many problems as a result of the Deepwater Horizon disaster in the Gulf of Mexico in 2012 that some began to question its viability as an independent business. The worst oil spill in history killed 11 people, closed numerous tourism destinations, and destroyed the livelihoods of thousands. Custom from the firm’s filling stations dropped on both sides of the Atlantic, which, together with estimates of $42 billion of liabilities, heavily depressed its share price.

When approaching one billion litres of crude oil leaks into a marine environment that is home to dozens of endangered species, there are some costs to wildlife that dollars can never repay. BP’s lawyers deem that even the fines which they should pay are too high, saying that “a few billion dollars” is the most they should have to pay. In pursuing this aim, they have succeeded in achieving the first step. The US Justice Department, which one would assume would be eager to pursue BP for every single penny they can, has agreed not to charge them $3.5 billion for the ‘collected oil’ which was prevented from coming into contact with seawater.

This reduces the estimated payout to $17 billion, though BP will attempt to slash this further. No doubt we will once again see a western government cosying up to “Big Oil”, as has happened with oil spill after oil spill, with elected representatives forgiving shocking technical negligence with remarkable ease. It is thoroughly disappointing to watch the same pattern followed through with little sign of real action being taken to protect our shores.

By the nature of the oil industry, it is impossible for a genuinely environmentalist approach to be adopted by firms within it. BP has no incentive to ensure its products are friendly to the environment, and is unlikely to do so until is draws considerable profit from renewable technology. So clearly the only means governments have to ensure oil extraction is carried out safely are to either directly own and control the companies, as is done with Norway’s Statoil or IndianOil (remember that British Petroleum was a nationalised firm until 1980; or to present such a grave threat with a severe, enforced fines regime that multinationals conclude that regulations are in fact worth following.

Though a number of Tea Party members are no doubt convinced that President Obama will begin his comprehensive nationalisation of the American economy any day now, there is little appetite in the US for taking BP’s American operations into public ownership. Therefore it would be advisable for the Government to adopt a much harsher approach if it wants to avoid another disaster.

Of course, there is a further fundamental lesson to be learned from the spill: our global dependence on this toxic compound is going to hurt us all through multiple routes, in ways other than climate change. The sooner we can reduce our dependency on dwindling, harder-to-access reserves the better. And it is the American public who have the furthest to go: if European efficiency standards were a legal requirement for American vehicles (which might happen in the future, if the EU-US Free Trade Zone becomes a reality) the public’ petrol consumption could be virtually halved. Public transport provision in most areas is famously dismal- even worse than in Britain. If President Obama is serious about his inauguration speech promise to lead the most green government to date, he must persuade his capitalist-orientated country that some regulation is an essential part of the future, and not the product of some supposed aimless anti-business mentality.

BY: Jack Darrant