British Petroleum is a worldwide energy corporation. It is actually the fourth largest company in the world.
The corporation is headquartered in London. In America, the company’s main office is in Houston. The company is listed on the London Stock Exchange. Since the beginning of the Gulf oil spill, BP stock has lost over 40% of its value. The stock was worth $60 shortly before the rig exploded, and as this is being written, it is quoted at $35 per share. I’m actually surprised it’s not down more than that.
BP traces its corporate history back to1909 and the Anglo-Persian Oil Company which was formed to drill for oil in Iran. In 1923, the company hired future Prime Minister Winston Churchill to successfully lobby the British government for monopoly rights to the Persian oil resources. Several name changes were made during the following decades, evolving into the corporation we know today as British Petroleum.
In 1998, British Petroleum merged with Amoco (formerly Standard Oil of Indiana). Then in 2000, BP Amoco acquired Arco (Atlantic Richfield Co.). Most Amoco stations in the United States were converted to BP’s brand. However in some states, BP continued to sell Amoco branded gasoline even in service stations with the BP identity, as Amoco was rated the best petroleum brand by consumers for 16 consecutive years. In 2008 the Amoco name was mostly phased out, but the highest grade of BP gasoline available in the United States was still called Amoco Ultimate.
The recently resigned CEO of BP is Tony Hayward. He was in the CEO position since May of 2007 when his predecessor, Lord Browne, abruptly resigned as certain details of his private life were about to be reported in the British press.
Ex-CEO Tony Hayward will become a text book case study in college level curriculums in public relations. His recent PR performance will be taught as one of the worst possible examples of a corporate executive’s response to a crisis situation. Looking obviously tired and haggard, Hayward complained on television that “I want my life back.” Although inadvertent, the comment was taken by most folks as a callous disregard for the eleven BP employees who were killed in the explosion. The families of the deceased were outraged. Full page ads by BP in hundreds of newspapers will not erase the memory of this one statement.
BP has had safety issues in the past. In September 1999, the company agreed to settle charges related to illegal dumping in Alaska for $22 million. The settlement included the maximum $500,000 criminal fine, $6.5 million in civil penalties, and BP’s establishment of a $15 million environmental management system at all of BP facilities in the US and Gulf of Mexico.
In March 2005, a BP refinery in Texas exploded killing 15 employees and injuring 180 people. Investigators determined that maintenance and safety at the plant had been cut as a cost-saving measure. The company pleaded guilty to a felony violation of the Clean Air Act, was fined $50 million, and sentenced to three years probation.
Following up on the Texas explosion in 2009, the US Occupational Safety and Health Administration (OSHA) inspectors found 270 safety violations that had been previously cited but not fixed and 439 new violations. OSHA fined BP an additional $87 million — the largest fine in OSHA history — for failing to correct safety hazards previously cited. BP is appealing that fine.
This blog is not written as a wholesale indictment of BP. Drilling for and refining of oil and gas is inherently dangerous. And it’s especially dangerous out on the frontiers (deep oceans, the Arctic) where current reserves are being developed to feed the word’s dependence on fossil fuels. However, it does appear that BP has been generally lax concerning safety issues.
No doubt, the process can be made safer. And everyone is all for that. However, I hope this tragedy, as horrible as it is, does not scare the government and the oil industry from future exploration and production. Rather, I would hope that the result might be better enforcement of the laws that are already on the books and new safety requirements where necessary. It’s no consolation to the families of the folks killed on the rig, but proper enforcement by government inspectors of the laws already on the books probably would mean those guys would still be living today.
The horrendous mess might also serve as a cattle prod to world leaders to get to work, pronto, on the lagging development of alternative energy sources. The clock is ticking.
Let’s all remember, too, that BP store owners are local business persons who had nothing — absolutely nothing — to do with the oil spill in the Gulf. They are between the classic rock and a hard place. Let’s show them some neighborly compassion.