Let’s face it the World is dependent on oil. We use it for so many purposes in everyday life that I am sure this is not news to most of you. From heating our homes, to fueling our cars, even the pavement we drive on consists of 2% petroleum. Oil is arguably the most valuable natural resource in the world, and many countries will do whatever they can to get their hands on as much of this resource as they can.
The demand for oil related products are staunchly inelastic. This is why companies can get away with charging exorbitant prices and why the purchase of these products is so heavily taxed. People rely on oil; therefore they will buy it, period. Unfortunately, oil is also a very volatile substance that can be toxic to both the environment and humans if handled incorrectly. An example of the damage that poor safety management can cause can easily be seen in the BP oil spill case in 2010.
The BP oil spill; also known as the Deepwater Horizon oil spill, the BP disaster, the Gulf of Mexico oil spill, and the Macondo blowout; was arguably the largest and most detrimental oil spill to ever occur in the oil industry. The Deepwater Horizon was a semi-submersible Mobile Offshore Drilling Unit (MODU) that drilled oil for the British company, BP, just off the Gulf Coast. However, on April 20, 2010 disaster struck when this massive ship exploded killing 11 crewmembers and leaving the wellhead it was drilling from uncapped. Because the wellhead was left uncapped oil began to immediately flow into the ocean itself. Overall, it is estimated that 4.9 million barrels of oil was spilled into the ocean, which is equivalent to roughly 210 million gallons. 210 million gallons…how could BP let this happen?
The reason for this astonishing number is due to the fact that it took BP 87 days to recap the oil well (and there is still debate that the well may still be leaking). 87 days…that seems like an unusually long period of time needed to fix this problem. In the course of these 87 days there was massive devastation to the ecological environment and the organisms that inhabited these areas. I am sure you all remember the photographs of birds covered in oil. The devastation was unreal.
So why is it that it took BP so long to respond to this devastating crisis, and more importantly what caused this crisis to occur in the first place? While numerous sources have investigated the spill and come to a variety of conclusions, it is clear that the spill was caused by unethical decision making on the part of BP’s executives. The BP executives, like the CEOs of most companies, wanted to make money (and in the oil industry you can make a lot of it) but at what cost? The executives were well aware of the volatility of oil and the dangers offshore drilling, yet, they still chose to cut corners when it came to safety to make those extra bucks.
So what makes this case different from the Lehman Brothers case or the Enron case? I would argue that due to the physical damage inflicted on both people and property, the decisions that lead to this event were even more reckless than what those that led to the collapse of Lehman Brothers and Enron—and the funny thing is BP is the only company out of those three that still exists. Yes, I will agree, it sucks to lose all your money, but at least you can still live/function physically. The immense amount of physical damage is what sets the BP oil spill apart from other business disasters caused by poor decision-making. This is your personal safety we are talking about here. One can recover from a financial crisis, but what do you do if all of a sudden you contract a disease due to oil exposure. Life threatening physical problems that are out of your control are much harder to recover from. So I will end with this question: Do you think that the BP oil spill was “more” unethical because it caused so much physical damage? Or is it in the same league as the financial crisis? Obviously these are two very different fields, but they can be compared because both occurred due to poor upper level management.