I’ve been following the BP oil spill situation with some interest, and I think that America has gotten it all wrong. The anti-corporation, anti-business sentiment is nothing new. Neither is the anti-big oil sentiment. But on closer inspection, this kind of attitude makes very little sense, and the way that the media is feeding into it (in some cases) just serves to increase the confusion.
We all hate that toxic, disgusting oil is pouring into our gulf, washing up on our beaches, and killing wildlife. We hate that fishermen and other business (such as hotels in Florida), through no fault of their own, will be financially hurt by the spill. They do need help in order to survive, and we as a nation should support them.
However, it makes very little sense to blame “BP”. What I’m asking is: What does it mean to blame BP, and what are the consequences of punishing it?
BP is a corporation made up of and built by over 90,000 employees worldwide. Since the spill, its share price has been halved, wiping out $84 billion dollars in market capitalization. Analysts have quoted a wide range for the potential cost of cleanup, claims, and legal fees, from $30 billion to $50 billion. Yesterday, as shares plunged another 15%, rumors started to fly that BP would soon either go bankrupt or be taken over by another oil company like Exxon or Shell. The probability of either of these happening depends on the size of the fine that the US government levies on BP, which in part depends on the political response to the anger and frustration of the American people.
But if we insist on putting the blame on “BP” broadly, who actually gets hurt? If the company goes bankrupt, thousands of people who work for BP in the US may lose their jobs. A secretary, accountant, or engineer who is just doing his or her job cannot be said to have any responsibility for the spill. Yes, get rid of Hayward and figure out whose ass to kick, but be specific about it. The top management should go, and punish those responsible for criminal violations of safety regulations lower down the chain as well. But there’s no reason for Americans to ask their politicians to destroy the company through legal damages and by forcing the company to pay the wages of workers who have been laid off due to the moratorium on deep-water drilling.
If the company is charged a huge fine (say, $20 billion), its stock loses all value, and it’s taken over by Exxon or Petrochina, who gets hurt? The employees who are laid off for “cost cutting” during the merger will be hurt. All the people in the US who own shares of BP will be hurt. These are not necessarily the Wall Street tycoons that we all love to hate, but regular Americans who have BP stock in the mutual funds of their IRAs and 401(k)s. $84 billion has already been lost in the past two months due to BP’s misfortunes. The Brits are desperate about the damage that BP’s stock bust has done to the pension funds of the middle class. What about the owners and employees of the 11,000 BP gas and service stations around the country? In the enraged excitement over ocean and wildlife, no one has spoken up (and in general, in these situations, ever speaks up) for these other potential blameless victims.
I realize that sometimes you need to punish severely in order to deter others from repeating the same mistake. We don’t want to exact such a small fine on BP that other big oil companies think it’s okay to scrimp on safety and cause more environmental disasters. Exxon was probably let off too easily (ending up with a $2.5 billion fine); BP perhaps thought it could win a reprieve just as Exxon did. However, there’s no reason to let oil-covered pelicans outweigh all other considerations in making a judicious, pragmatic decision. Ultimately, we want to punish the corporation enough to warn others to be careful, extract the necessary resources from the company to pay for the cleanup, and let loose America’s fury only upon the specific decision-makers who were responsible for the oil spill.
My last point concerns the way that demonizing BP overlooks the positive story here. Who are the engineers who work tirelessly day and night to come up with innovative and technically challenging solutions to contain the spill? As much as we like to make fun of “Top Kill” and “Junk Shot,” shouldn’t those engineers get credit for preventing the country’s worst oil spill from becoming even worse? I think it would be a far more productive and uplifting media story to celebrate the (BP!) engineering heroes who have already made so much progress.
Image Credit: Flickr (US Coast Guard)