Blog 2
Global politics fire fuelled by an oil spill.
The BBC documentary "$30 Billion Blowout" was a really insightful 60 minutes into one of the largest oil accident ends and Worst
environmental disaster America had ever seen. The Deep Water Horizon oil spill that occurred on the 20th of April 2010 was the largest "accident" that had ever occurred on any of BP's oil rigs across the globe.
11 people sadly lost their lives because of this event but this was just the beginning of the trauma this explosion brought to one of the UK's oldest and largest oil companies. The explosion was stated to be caused by the company cutting safety measurements in an attempt to slim the business down and cut costs. The specific risks that were caused through the company's cost cutting was a flawed design for the cement used to seal the bottom of the well, a test of that seal identified problems but was "incorrectly judged a success" and the workers' failure to recognise the first signs of the impending blow-out. All previous incidents inevitably leading to the Deep Water Horizon accident (News, 2011).
In 2010, the former BP boss Tony Heworth was the most hated man in America, pilloried over the Gulf of Mexico disaster, the biggest marine oil spill in history (Kowelle, 2014). In the documentary Tony stated that as the outrage from American citizens grew they used him to point their anger too as he stated it was easier to hate one man instead of a company. Not only was Tony made out to be the blame for the safety issues that led to the Deep Water Horizon accident he made the overall aftermath significantly worse for the company. On multiple different TV interviews Heworth stated many off the cuff sentences such as "he just wanted this over so he could have his life back". This statement made only fuelled the fire of hate that America had already started for Tony and the company.
There were three major factors that contributed to the company's negative ethical reputation from this event, these being environmental
disaster, political
uproar and financial
crisis. The knock on effects that occurred from the oil spill were detrimental to the Gulf of Mexico residents and wildlife. As shown in the documentary most of the news outlets focused on the effects the oil was bringing to wildlife in the surrounding areas. One of the most memorable media images from the Deep Water Horizon incident was of the oil covered pelican found in Louisiana. This image was used as because of the abundance of Brown Pelicans found along the coast of Louisiana, the state is commonly referred to as "The Pelican State, therefore these birds are a massive part of the culture and to see them in this state because of BP caused uproar throughout America. The citizens of America used this image every chance they got, whether it was being shown in court to back up the criticisms that were being thrown at the CEO Tony or to draw people in to read articles reflecting BP in a negative light. As you can see the photo was very attention grabbing.The documentary was made by the BBC therefore produced and filmed in the UK, if the documentary was shot by an American television organisation the overall message of the documentary would have been very different.
Should Obama have kept his personal feelings out of the politics?
JPMorgan Chase calculated that oil spill clean-up efforts actually boosted the economy in 2012. BP spent $6 billion to hire 4,000 people to clean up the spill that year (AMADEO, 2019). But anything that BP was seen to do the right way was not shown to Americans as the politics that were involved along with this oil spill were all mixed up. In the documentary President Obama was shown to be acting professionally and once BP went on the defensive about the accident this soon changed. BP
started to get referred as British Petroleum even though that name hadn’t been
used in years, this was to remind Americans it was a British company. Before watching this documentary I had never knew the full name for BP. President Barack Obama called the fund a “good start” but stressed that he will continue to hold the troubled British oil giant “accountable” for all future claims, noting that the fund is not capped and that potential fines and legal claims will be paid in addition to the $20bn (Mason, 2010).
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After the incident Tony announced he was still going to continue to pay the shareholders dividends on top of the amounting debts that were occurring from the Oil spill. This caused even more outrage as the company was seen to be still putting their organisational goals such as profit before the money and effort that was needed to be put into the clean up for the oil spill. Dividends
are not legally required; they are optional. If BP does not pay a dividend, a
shareholder cannot go into court and sue BP. Dividends are to be paid only when
the company has enough money to take care of its operations, including
potential liability for the spill (Brown, 2010).
Before the accident on April 20, BP was Britain's biggest
company, with a stock market value of £122 billion. Since then, £49 billion has
been wiped off its value (Louise
Armitstead, 2010). The Deep Water Horizon accident that occurred not only caused
many issues in America but had significant effects back home in the UK.
From the decision to stop paying dividends to the dramatic share price
drop meant that many people futures such as pension funds are treading in deep oily water. As you can see from the diagram the share price took a massive hit
from the effects of the oil spill, not only did the company lose billions of
dollars from debt owed from the incident but the reputation and share price of
the company also took a massive hit. From watching the documentary the main
aspect to reflect on is if Barack Obama hadn't taken his attack on the British
company for his own benefit would the effects of the deep water
horizon accident been more easy to handle.
Bibliography
Before the accident on April 20, BP was Britain's biggest
company, with a stock market value of £122 billion. Since then, £49 billion has
been wiped off its value (Louise
Armitstead, 2010). The Deep Water Horizon accident that occurred not only caused
many issues in America but had significant effects back home in the UK.
From the decision to stop paying dividends to the dramatic share price
drop meant that many people futures such as pension funds are treading in deep oily water. As you can see from the diagram the share price took a massive hit
from the effects of the oil spill, not only did the company lose billions of
dollars from debt owed from the incident but the reputation and share price of
the company also took a massive hit. From watching the documentary the main
aspect to reflect on is if Barack Obama hadn't taken his attack on the British
company for his own benefit would the effects of the deep water
horizon accident been more easy to handle.
Bibliography
AMADEO, K. (2019,
Feb 01). BP Oil Spill Economic Impact. Retrieved from
https://www.thebalance.com/bp-gulf-oil-spill-facts-economic-impact-3306212.
Brown, D. A.
(2010). BP right to stop paying dividends.
Gordon, M. J. (1959).
Dividends, Earnings, and Stock Prices. The Review of Economics
and Statistic, 7.
Kowelle, J.
(2014). Tony Hayward – comeback of a BP oil spill pariahTony Hayward –
comeback of a BP oil spill pariah. The Guardian.
Louise Armitstead, M.
B. (2010). BP oil spill: US will 'take action' to stop BP dividend. Telegraph.
Mason, J. Q.
(2010). Oil spill: BP suspends dividend to pay for $20bn clean-up fund. The
Telegraph.
News, B. (2011, January
6). US oil spill: 'Bad management' led to BP disaster. Retrieved
from https://www.bbc.co.uk/news/world-us-canada-12124830.
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Very interesting blog, opened my eyes to a lot of issues i never knew about.
ReplyDeleteA fantastic insight into the repercussions of the oil spill on BP and the other stakeholders that were impacted. Interesting that BP continued to pay dividends to shareholders despite the rising debts that the company was facing, ties in with what seems to be the CEO's reckless attitude. I recall him stating he couldn't wait to get his life back... disregarding the loss of lives that the oil spill caused.
ReplyDeleteWould be interesting to know if the CEO accepted accountability for the disaster? Especially in today's culture, business' need too be seen to be acting ethically, considering the environment and all other stakeholders, rather than purely focusing on dividend payouts for shareholders.
No he did not take accountability for his actions, after the incident had occurred and the final price of repayment had been agreed with the US government he was replaced ironically by an American. He has now gone on to work very high up in a number of large organisations accros the UK.
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