BP’s Warning: Are there limits?
According to a recent New York Times story, BP has agreed to “set aside $20 billion over the next four years to pay damage claims and government penalties stemming from the April 20 explosion of the Deepwater Horizon drilling rig.” They have also agreed to contribute $100 million to support rig workers who have lost their jobs because of the deepwater drilling moratorium along with $500 million to study the impact of the spill. But BP executives have indicated that the ability to support these funds may be compromised if BP, who is the largest producer of oil and gas in the gulf, was barred from drilling in the Gulf.
BP executives are worried about a drilling overhaul bill, which includes an amendment that would preclude permits to drill on the Outer Continental Shelf for any company that has had more than 10 fatalities on its offshore or onshore facilities or if it had been received fines of $10 million or more under the Clean Air or Clean Water Acts within a seven-year period. Under those provisions, BP would be denied permits, resulting in loss of about a quarter of BPs total profits, which are estimated to be $20 to $28 billion annually.
Is it ethical for a BP to try to influence legislation in this way? Are there any ethical limits to the manner in which corporations can try to influence legislation? What do you think?
In response to the previous posts, I think it is important to consider how the recipients of the fund view this situation. The people of the Gulf seem to accept the oil industry as part of their life, it’s dangers to employees simply a fact of life. 29 miners just perished in a New Zealand mine, the first park ranger was just shot and killed in Pennsylvania; many jobs have inevitable hazards. IN regards to the bill, BP is obviously using their charity to prevent the passing of the bill that could inhibit or restrict their previous profit and growth. However, I think we should step back and consider how the thousands of people in the Gulf feel about such a bill. Numerous gas companies drill in both shallow and deep water. This bill, outside the ethical sidestepping BP is attempting, will cripple thousands of household since many will lose their jobs and the ripple effect will affect thousands more. After traveling to Louisiana, I got a strong sense the the people of the Gulf accept the good and bad of the oil industry. Is it ethical for legislators in Washington to assume they understand the economic and culture balance between the people of the Gulf and the oil industry? This bill would affect more than just the oil industry. While there was outrage over the spill, the oil industry has become such an ingrained part of Gulf structure that people seem to accept the flaws, the spills and the fragility of retribution. This is an ethical relationship that should not, cannot, be ignored.
To Lora’s inquiry about the use of the $20-28 billion number, so far as I understand it, that is roughly their average annual revenue, and they said that a drilling ban would result in the loss of about a quarter of their profits, which, in this scenario would be about $5-7 billion and that is the number that I have seen quoted many times before of the annual profit derived from their Gulf of Mexico operations. I do not think the number has been skewed, but nor do I think the number is enough for them to say they can’t afford to stop drilling in the Gulf, even without that money, they’re still looking at $15-21 billion annually, and that’s PROFITS! I’m just saying, the $20 billion fund they agreed to set aside will not be disbursed instantly, but rather over several years and they will have plenty of time to set that money aside without suffering too badly.
The issue of banning BP and only BP from drilling in the Gulf is a significant one, because at what point do we stop trying to make an example out of one company and simply vote to increase our domestic oil production, regardless of who’s producing it? The deaths on the rig were tragic, and as Megan O. pointed out, danger is in the job description, but I think the true tragedy here is how preventable the deaths were, and how much they were the result of negligent actions on behalf of many parties, (mainly it seems BP, but that will be decided in court). So yes, they signed up for a dangerous job, and there are plenty of jobs with higher death rates on the job, but this accident was a tragedy because it was not a result of standard “on the job” dangers, it was the culmination of a series of greedy decisions to cut corners and a complete lack of whistle-blowing from any party involved. So how do you punish that kind of ethical collapse and at the same time, realize the importance of maintaining domestic oil production for national security? In the case of the Deepwater Horizon disaster, the people were treated as a means to an end, and BP has a DUTY to protect its workers better than that. It is easy for the argument to stray to discussions over numbers of deaths or numbers of years to be banned etc. etc., but I think from a judicial perspective and from an ethical perspective, the issue, as the Clean Water Act reinforces, is more about how negligent or grossly negligent BP acted, and to what degree they should be punished for those actions.
This promise made by BP is extremely interesting in terms of compromise and bargaining. For one thing, it seems as if the bargain-end of these payments are fair: how can we expect for the company to shell out that amount of money in such a short period of time if they are barred from drilling in the Gulf, one of their most important areas for production? Surely the profit loss from this type of ban would have impact the company’s annual profits – but it would also be interesting to see where the $20-$28 billion profit loss estimate came from (who determined this number? BP? Could they have “skewed” numbers, like we have read about in cases with Exxon and the Valdez incident? And how GREAT of an impact would that have on BP as a whole in terms of profit?) So would we want the company to make vast promises like this and governmental legislation deters these promises from actually being fulfilled?
Overall, I do believe it seems a bit extreme for BP to be making such a compromise. The governmental legislation, although it is surely targeting one particular company, it’s main goal is for safety and protection – and that is exactly what we need in the Gulf (and all aspects of energy production). I think that regardless of the consequences they will face stemming from legislation that is passed, BP is responsible for allotting the money that the claimants deserve and spill effect tests require, even if it drives the company into bankruptcy…now who actually deserves what amount of money is another issue at hand. Therefore, I do not believe it is ethical for BP to bargain in this manner and try to influence legislation in their favor – they should be held responsible for their actions. And if the government rules the penalties as a ban on drilling AND proper payout to those affected by the spill, then it is their duty to adhere.
It does seem that BP’s actions regarding extra payments need to be inspected. At this point, BP could technically say “Hey look, we are going above and beyond what we were legally required to, so we should be granted the right to drill again because we have learned our lesson and are taking a proactive approach”. Yes, BP is showing some sort of “good will” by doing this, but really, what are their intentions? It looks way more like a PR move than an internal wanting to “do good” and I think a love of people are seeing right through that.
But I also think this is a two way problem. It is understandable that the government is trying to enforce tougher regulations, but they are really just singling out BP, as they are the only company that would be currently affected by this amendment. I mean, there are several other companies that have pretty bad track records when it comes to safety, but what they are saying is that since they weren’t as bad, they won’t be punished? It seems that major action will be taken only if something THIS severe occurs, and that is questionable.
It is a tragedy for anyone to lose their life while on the job. Restricting drilling for years because a company has one fatality may be going too far. If you are going to ban drilling for 5-10 years for 10 deaths, you must also do so for other companies in every other industry. There are many industries that have higher fatality and injury rates than the oil industry. Workers take on jobs knowing that the job is dangerous. While companies should do their best to protect workers, it is impossible to stop all injuries/fatalities from occurring. I believe that a shorter restriction pending investigations and additional precautions would be a more realistic alternative. Similar restrictions should then also be placed on any facility in which an employee is killed on the job.
I believe that any oil company that has experienced one or more fatalities or injuries due to rig explosions should be banned from offshore drilling, but not permanently. A 5-10 year period is a reasonable length of time for oil companies to reevaluate safety initiatives and drilling techniques. A permanent ban on drilling for any oil company, as Caitlin stated, would lead to economic problems and job losses. However, ten fatalities is too many deaths for the government to step in and prevent a company from drilling. One fatality should result in a 5-year ban, an event like the current oil spill should result in a 10-15 year ban.
Supporting the claim funds should not be a problem for BP. If money is an issue (which it is isn’t), BP should revise spending habits and put revenue into high-priority areas. Cutting back on the number of owned rigs in the Gulf would not be a bad thing for BP; downsizing would likely result in more precise drilling techniques and fewer safety concerns.
There are many instances where BP has been reckless in offshore drilling over the past 20 years alone. For example in 2002 BP had an incident in the Gulf of Mexico where they had two near-blowouts that were not widely publicized. But, BP received a letter from the federal Minerals Management Service that expressed their concern about BP’s ability to safely conduct drilling in the Gulf of Mexico. This was one of several incidents that BP encountered while drilling in the Gulf. So why penalize them now?
If the government was so concerned about the safety and conduct of BP why wait until a devastating explosion to pass a drilling bill that evidently is targeted toward BP? In my opinion who is being ethical here BP or the government? The government is clearly trying to make an example out of BP by indirectly targeting them but at whose expense? Inevitably it’s only going to hurt the working class at a whole. There will be fewer jobs, less revenue to contribute to compensation, and BP will continue to lose credibility. We should instead support BP through their misfortune and the government should be the ones of moral standing who begin this trend. The bill should be modified so that it focuses on the environmental issues and the well-being of the workers in general instead of targeting a company that solely fit the descriptions of the bill, which is unethical to begin with. But in the event that BP continues with these “accidents”, BP should be banned of offshore drilling in the Gulf.
I do think BP motives for their generous contributions should be taken into consideration when passing legislation. While BP has indeed promised to contribute more that in owes legally, it is fairly apparent that they are using this to make them look good. The government should recognize this and not let BP apparently ethical behavior influence any decisions on laws passed concerning oil.
On the other hand, I think we need to look at the ethical issues behind the bill. The only company the bill would forbid from obtaining permits to drill in the gulf is BP. I do not think a law of this nature should target a specific company. While new legislation needs to be put in place, targeting one specific company could possibly lead to disasters in other areas of the business. In order to pass an ethical bill concerning drilling permits, the government needs to take a step back and focus on the environmental and economic impacts as drilling as a whole and not let recent events completely influence the decisions.
I agree that BP’s intentions deserve a closer look. However, BP is a company that needs to drill to earn revenue; they do not have an endless supply of money. To protect those who were already hurt from the oil spill, BP needs to resume operations. If they are not able to do this the company risks sinking into bankruptcy, and many people would be left waiting for compensation.
BP should be allowed to start drilling in the Gulf again, but under extremely strict regulations. After everyone has been paid, BP should be re-evaluated. If they have improved their safety measures then they should be able to continue drilling. If the accidents continue then they should be permanently banned from drilling in the Gulf.
I agree that BP’s intentions deserve a closer look. However, BP is a company that needs to drill to earn revenue; they do not have an endless supply of money. To protect those who were already hurt from the oil spill, BP needs to resume operations. If they are not able to do this the company risks sinking into bankruptcy, and many people would be left waiting for compensation.
BP should be allowed to start drilling in the Gulf again, but under extremely strict regulations. After everyone has been paid, BP should be re-evaluated. If they have improved their safety measures then they should be able to continue drilling. If the accidents continue then they should be permanently banned from drilling in the Gulf.
BP’s intentions merit examination. However, they are more or less irrelevant from a consequentialist perspective. If the tactic works, the legislation is amended, and another BP disaster occurs, then the tactic was immoral. If the tactic works and no one is harmed, then the behavior is moral.
BP’s intentions are relevant to the duty and virtue based approaches. If the company is exaggerating the scarcity of its funds to influence legislation, that would be dishonest, untrustworthy, unfair, and, ultimately, immoral from a virtue based perspective. Perhaps the company is being honest, trustworthy, fair and moral to an acceptable level, however, more information is required.
From the duty based perspective, the morality could also go both ways. If BP is exaggerating its limits it is treating the well-being of persons affected as bargaining chips. This may do harm. I also imagine BP would not wish the maxim of their actions universal. Also, if successful, this tactic contributes to the good of a fraction, not to the good of all. Ultimately, this could be seen as immoral. It hinges on the extent of dishonesty and deceit in BP’s warning, and its intended behavior if successful.
I doubt BP is too worried about the $20 billion compared with the fear of losing the right to drill in the Gulf. It’s also extremely important that the Gulf receives this money to bring the region back to life, but allowing a reckless company back into deep waters seems wrong. I say don’t let BP have any role in determining the legislation for this.