The Demise of BP?

I know that when the shortages occur, we will probably try to drill anywhere and everywhere out of desperation. I believe I understand what the consequences of shortages may look like – hence my support for expanded drilling. But this disaster has convinced me that we have exceeded the depths at which we can safely drill and extract oil. There will always be human error, and there will always be companies willing to take shortcuts. When the consequences are potentially severe, you have to play it safe.

But that’s a digression from the title of this article. When the BP disaster in Texas City occurred in 2005 – killing 15 people and doing a great deal of damage – it was a serious blow to the company’s image. They had carefully crafted the image of a company – now rebranded Beyond Petroleum from British Petroleum – that was moving away from oil. They deeply cared about the environment and were moving the company in a new, greener direction.

Then the explosion happened and the world was focused on BP the oil company. While it wasn’t a death blow for the company, their carefully crafted image vanished in the eyes of many people. For many, they were simply an oil company trying to convince people they were something beyond that.

With the latest disaster – which many have already categorized as the worst environmental disaster in U.S. history – BP’s image has likely taken a death blow. Sure, ExxonMobil survived the Valdez disaster, but it was a stain on their corporate image that will last forever. But unlike BP, ExxonMobil never pretended to be anything other than an oil company. Still, ExxonMobil since then has been viewed by many as the epitome of the greedy, dirty oil company.

The situation that has constantly come to my mind is the Bhopal disaster and the subsequent fallout. For those who are unfamiliar, in 1984 an accident at a Union Carbide plant in Bhopal, India wrought terrible destruction on the population there. The official immediate death toll was 2,259, but it has been estimated that ultimately more than 15,000 people died as a result of the incident.

As a result of this tragedy, Union Carbide’s reputation was destroyed. They would forever be viewed by many as a company with lax safety standards who put profits ahead of lives. They continued to function as an independent company for a number of years as the inevitable lawsuits played out, but this former component of the Dow Jones Industrial Average was ultimately swallowed up by the Dow Chemical Company.

It is hard for me to envision a different fate for BP. While the nature of these incidents is certainly different (I don’t mean to imply that the oil spill is comparable to thousands of people dead in India), BP will now forever be viewed as the worst kind of corporate polluter. That is simply reality. Many people will make it a point to never buy BP products again. Investors who bought into the rebranding – and hung around after Texas City – may have had their fill. There can be no rebranding in the aftermath of this.

The Oil Drum