Below is my Paper 2….take a gander if you have an abundance of free time or if you’re weird.
This image is from a news source called The Guardian.
The Deepwater Horizon Spill: an Ethical Nightmare
Beyond Petroleum is a multinational gas and oil company based in the United Kingdom. Operating in over 80 countries and producing around 3.4 million barrels of oil a day, BP is the third-largest energy company in the world behind Exxon Mobil and Royal Dutch Shell. The company is involved in all aspects of the process including exploration, production, refining, and distribution. The largest division is BP America with 16 total refineries and the more leases on oil rigs in the Gulf of Mexico than any competitor (BP p.l.c). In 2010, an explosion occurred at BP’s Deepwater Horizon oil rig, forever changing their public image. The Obama administration created a commission to identify the cause of the spill and found that BP, its partners, and the government all made many mistakes that if avoided could have prevented the spill. In this essay I will detail the events the lead up to the Deepwater Horizon spill, examine the actions taken by involved parties after the spill, and explain the lasting effects of their actions. I will then use Thomas Donaldson’s theories on business ethics to analyze how involved parties failed to live up to the standards of corporate responsibility.
BP’s reputation over the past 10 years is far from sterling. A series of accidents over the years earned the company a position on Multinational Monitor’s list of ten worst corporations in both 2001 and 2005 based on their environmental and human rights reputation. One of many accidents occurred in 2005 at a refinery in Texas City, Texas where an explosion killed 15 workers and injured 180. An investigation later indicated that the company’s focus on cost-cutting and high production led to the serious deterioration of safety regulations at the refinery. A year later, 200,000 gallons of crude oil spilled into the Alaskan tundra from one of BP’s pipelines. The spill resulted from the company’s failure to properly inspect and clean the pipeline as required by United States law. These incidents of management failure and poor ethical decisions by BP executives caused the company to pay the largest fine in the history of the US Occupational Safety and Health Administration (Symington). Yet it would turn out that these events were only small mishaps that hinted at the larger problems at BP that would eventually lead to the disaster at Deepwater Horizon.
In order to have a better understanding of the environment in which a disaster of such magnitude could occur, it is important to look at the regulating bodies that control offshore drilling. The United States Interior Department Mineral Management Service (MMS) is largely responsible for the regulation of most aspects of offshore drilling (Juhasz). The agency focuses more on granting access to public lands for drilling rather than overseeing the actions of oil companies. Regulators only intervene after the industry had already misstepped which encourages oil companies to push the limits of what they can get away with. Furthermore, the regulations that the MMS are supposed to enforce are dated and no longer relevant to the significant technological improvements that occurred in the past 30 years (Juhasz). Oil companies are also partially exempt from 7 out of the 15 major federal environmental laws purposefully designed to keep hazardous chemicals out of the air and water. One of these exclusions frees oil companies from producing rigorous reports of potential environmental impacts (Lax Rules for the Natural Gas Industry). Oil companies are required to produce disaster preparedness plans in order to receive offshore operation permits but these plans are poorly crafted, nonspecific, and contain a lot of false information (Juhasz). Yet the state of the regulations on the oil industry is largely a result of the efforts of the industry itself. Any time a governmental body tries to enact change that is not beneficial to oil moguls, the industry lobbies against the government until the changes are so insignificant that they have no real effect on the industry (Juhasz).
The lack of both external and internal regulations as well as a management philosophy that encourages cost-cutting and risk-taking ultimately caused the Deepwater Horizon explosion and subsequent gas leak. On Aril 20th, 2010, an explosion occurred at BP’s Deepwater Horizon oil rig in the Gulf of Mexico. The explosion killed 11 workers and created a massive oil spill 5000 feet below the surface that continued for 87 days. The leak would grow to be the worst accidental marine oil spill in history invading 600 miles of coastline, killing thousands of birds, fish, and other marine animals, and invading wetlands and marshes (Gulf of Mexico Oil Spill). Estimates for how much oil was actually released vary but analysis by experts later indicated that approximately 53,000 barrels or 2.27 million gallons of oil leaked out per day. Although the oil rig was leased by BP, a company named Transocean owned and operated the Deepwater Horizon. A third party, Halliburton, performed the cementing procedure, which was cited as one of the two main causes of the explosion (Gulf of Mexico Oil Spill). Attempts at capping the leak failed many times but engineers finally succeeded on July 15 and officially sealed the well on September 19. Containment and cleanup efforts were arranged by BP and the Coast Guard. Incident Command Posts were created in Louisiana, Alabama, Mississippi, and Florida to oversee offshore containment and onshore response. Marine protection booms were installed, ships and aircrafts were used to stop the spread of oil and skim it, fire was set to some areas of oil, and oil dispersant chemicals were used. BP also launched a Vessels of Opportunity program which allowed anyone with a boat to help in the cleanup efforts after receiving some training (Juhasz). Overall, the containment and cleanup was a collaborative effort by BP, the Coast Guard, MMS, and many community groups and volunteers.
BP knew how much of a PR nightmare the spill at Deepwater Horizon was and how much it could change the future of their organization. Thus it is should be no surprise to us that the company did everything in its power to control the information being released so that they could spin it in a more favorable way. The company took advantage of press releases with titles that clearly depicted their motivations. One of the first press releases issued after the spill was “BP offers full support to Transocean After Drilling Rig Fire” (Press Releases). This title clearly places the blame on Transocean and tries to make BP appear as the friendly neighbor extending a kind hand. Many other press releases talked about the cleanup movement progress and the 25 million dollar grants given to the coastal states. Another tactic BP used to control the information printed was by forcing almost all workers and volunteers to sign confidentiality clauses (Juhasz). Despite the company’s best effort to control the kind of information that reached the public, American citizens were still outraged with the actions of BP. A Facebook page entitled ‘Boycott BP’ quickly garnered over 800,000 likes and is still very active today. Members of the Facebook community continue to post pictures and articles revealing the lasting effects of the oil spill and pledging to continue boycotting the company. It is unclear whether or not BP will be able to change their image but several factors make it seem unlikely. Their public image was already tarnished due to the explosion at their Texas City refinery in 2005 followed by the pipeline leak in Alaska a year later. BP has never been known for their exemplary safety regulations and transforming their public image completely might prove to be an impossible task for the company to accomplish.
Despite BP’s best cleanup effort, the negative effects of the oil spill can be seen everywhere. Even two years after the spill, new repercussions are continuing to emerge and scientists suggest that the true impact may not be seen for another 10 years. One of the most obvious results has been the impacts on wildlife. Only 6 months after the spill, more than 8,000 birds and marine animals were found dead. New reports even cite the existence of deformed seafood like fish with sores, mutated shrimp, and underdeveloped crabs (Kroh). Prior to the spill, the gulf provided one-third of all seafood consumed in the United States but when 40 percent of the water in the Gulf of Mexico was closed to all commercial and recreational fishing, the fishery industry took a huge hit (Rannals). Many local fisherman struggled to make even close to the revenue they had in the past. In fact, estimates suggests that “over seven years, the oil spill could have a $8.7 billion impact on the economy of the Gulf of Mexico including loses in revenue, profit, wages, and close to 22,000 jobs” (Kroh). The tourism industry, which was once a great source of economic stimulus for the region, saw a dramatic decrease after the spill. As of April 2012, Louisiana still has 200 miles of oiled coast, despite BP’s portrayal of spotless beaches in their latest advertisements (Kroh). Restaurant and property owners have also been personally affected by the spill, not to mention the 11 individuals who lost their lives in the explosion. The above mentioned consequences do not even begin to explain the devastation that the Deepwater Horizon oil spill caused. It will be many more years before we truly know the full extent of the damage.
Clearly the spill at Deepwater Horizon impacted the lives of many in the region. But who is ultimately responsible for the damages? Using Thomas Donaldson’s theories on corporate responsibility I will show how the BP, Transocean, Halliburton and the government failed to uphold their duties. In “Rights in the Global Market,” Donaldson explains fundamental international rights that all individuals deserve. These rights are governed by three conditions: “(1) the right protects something of extreme importance, that (2) it is subject to significant, recurring threats, and that (3) the obligations or burdens it imposes are economically affordable and fair with respect to the distribution of burdens generally” (Donaldson 146). Given this definition, a few fundamental international rights can be established: the right to ownership of property, the right to use and enjoy natural resources, and the right to subsistence. These fundamental international rights have all been violated by the Deepwater Horizon oil spill. Oil destroyed many waterfront properties and restaurants owned by individuals thus violating the right to own property. The spill also prevented individuals from using a large portion of the Gulf for recreation or as a resource and destroyed many beaches and wetlands which are natural resources that all individuals have a right to use. As a result of the spill many individuals lost their jobs or received significantly lower incomes thus risking their ability to support themselves and violating the right to subsistence. Many of the other consequences of the spill could also be seen as a violation of fundamental international right but for this argument we will focus on the above-mentioned three.
Donaldson later explains that these fundamental rights create 3 duties that “nation-states, individuals, and multinational corporations” must honor (Donaldson 147). These actors all have duties to “(1) avoid depriving, (2) help protect from deprivation, and (3) aid the deprived” so long as it is affordable given the actors’ resources and other obligations (Donaldson 149). Given the actions of BP, Transocean, and Halliburton, the first duty has clearly been violated. The commission who investigated the explosions concluded that the “blowout at BP’s Maconda well was not inevitable, but rather a failure of management in which officials from all three firms ignored critical warning signs and failed to take precautions that might have delayed the completion of the well but also might have averted the environmental disaster” (Mufson). The carelessness of these companies and their desire to work cheaply ultimately triggered the explosion and subsequent spill which deprived individuals of their property, the use of natural resources, and subsistence.
The second duty is slightly more complicated. Long before the explosion, BP failed to institute safety and risk management policies that would help protect individuals from deprivation. Flaws in their regulations were clearly identified by the OSHA following the explosion at their Texas refinery but BP failed to address these problems (Symington). Instead, they continued to take risks and cut costs wherever possible, sometimes even violating US law to do so. Furthermore, their disaster preparedness plan, which ultimately could have helped protect individuals from deprivation, was poorly prepared. The plans were not for the specific well and were riddled with mistakes, even including a section on saving sea lions which do not live in the region (Juhasz). BP is not the only one to blame however. Halliburton, the contracting company who actually injected the cement into the well, stated that they were simply following the orders of BP and thus should not be blamed (Mufson). But as a company, Halliburton has a duty to help protect from deprivation and following orders that clearly risk harming individuals makes them at fault as well. Transocean failed to communicate and properly train their crew which could have drastically changed the happenings at the well and helped protect individuals from deprivation. The government here also failed to properly regulate the actions of these companies. The MMS focused more on granting access to public lands than on overseeing and regulating the process. Drilling at the well had been approved by the MMS without any environmental review or serious inspection (Juhasz). They also approved the terrible disaster preparedness plans submitted by BP. Had the MMS properly fulfilled their duties, many individuals would have been protected from deprivation. Instead they failed to do exactly what their job is designed to do: protect individuals and the environment.
The final duty of corporations is to aid the deprived. Donaldson however suggests that this duty is only required when “corporations themselves have done the depriving” (Donaldson 150). By this notion, the MMS, BP, Transocean, and Halliburton all failed to protect from deprivation and ultimately deprived individuals thus it is their duty to aid the deprived. All of these actors recognized this fact and participated in the giant cleanup effort. But the effort has been criticized as slow-moving and uncoordinated. Many different attempts were made to contain and disperse the oil but it ultimately reached shorelines ruining homes and disturbing the environment. To compensate those effected, BP gave 25 million dollars to the four states affected (Juhasz). Although this helped to fund the cost of the cleanup, the company did nothing to remedy the decrease in tourism or the fishing industry that the region endured as a result of the spill. An escrow fund was also created in order to compensate individuals who were deprived. BP will compensate those individuals as determined by the law but one must wonder if it is too little too late. Aiding those who are deprived due to your actions does not make up for causing the deprivation in the first place. BP, Transocean, Halliburton, and the MMS made many bad decisions that ultimately resulted in the violation of the three duties outlined by Donaldson.
The explosion at Deepwater Horizon can be traced back to several key missteps by all three companies. Their actions, purposeful or not, changed the lives of many individuals and ultimately deprived them of their fundamental international rights. By failing to protect people from deprivation, BP, Transocean, Halliburton, and the MMS, violated their minimal duties and acted in a completely unethical way. BP’s attempt to aid the deprived, though necessary, does not truly compensate for the destruction they caused. Yet it would seem that the poor decisions made are only small part of a serious ethical problem. The relationship between the oil industry and government officials is clearly flawed and in serious need of reform. The MMS needs to eliminate the conflict of interest within their organization and implement better regulations to ensure that a disaster of this magnitude does not happen again. Individual companies also need better safety and risk-management regulations that will prevent future harm to society. Collaboration between the MMS, oil companies, and environmentalists is necessary to establish better guidelines on how to best stop the spread of oil in the most efficient manner. Without series reform, a disaster like the Deepwater Horizon is likely to occur again. It is the ethical responsibility of the oil industry and the government to ensure that they do everything in their power to avoid depriving individuals and to help protect these individuals from deprivation.
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