The Magazine

Beyond Pathetic

BP’s Gulf disaster was no surprise to those who understood the corporate culture.

Jun 28, 2010, Vol. 15, No. 39 • By ANDREW B. WILSON
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To prevent D from happening, under Bea’s unforgiving theorem, it is necessary to zero out both A and B as sources of failure. And in at least four out of five cases, Bea says, A doesn’t cause disasters. The underlying design and technology is normally sound. The problem is with B—human or organizational weakness.

And that is almost certainly the case in the Deepwater Horizon disaster. Bea and other experts have pointed out a number of deviations from normal oil industry practices—involving BP as the owner of the well and the supervisor of the entire operation, the Minerals Management Service as its U.S. government regulator, Transocean as the rig’s operator, and Halliburton as a subcontractor—that put the rig in jeopardy. There were also danger signals—including evidence of a torn gasket and other problems in the Blowout Preventer (BOP), which is the last line of defense against a blowout—that should (in Bea’s words) have prompted the reaction: “Stop. Think. Don’t do something stupid.”

But of course that is not what happened. What now seems the worst decision came during the still unfinished task of cementing down and sealing the so-called “nightmare well.” To save time and money, the decision was made to remove heavy drilling mud and replace it with much lighter sea water. When that happened, the pressure of the column bearing down upon the wellbore no longer exceeded the upward pressure of the buildup of gas in the formation. The wellhead was breached. Then the BOP failed. End result: blowout, and an environmental as well as human catastrophe.

In taking a risk that might have saved a million dollars, fallible human beings created a catastrophe that will cost tens of billions of dollars just to clean up and untold damage to people and wildlife, both in the Gulf and along other shores where the oil from the still uncapped gusher may land. 

For the simple reason that it designed the well and was in charge of the operation, Bea does not hesitate in fixing blame for the blowout on BP. But the real problem at BP, he says, began not weeks or months ago, but years ago. “It lost sight of the fundamentals.”

Listen to the Anthropologists

‘The time to embrace a clean energy future is now.” So said Barack Obama in his televised address to the nation last Tuesday, June 15.

And so said John Browne, BP’s CEO, more than a dozen years ago in announcing his company’s commitment to a clean energy future in a speech at Stanford University on May 19, 1997. In his memoir, Browne recalls this moment as a great turning point for BP and himself. In preparation for the speech, BP minions arranged BP-made solar panels in a great circle all around the university’s open-air Frost amphitheater. “On this day,” he proudly stated, “a Big Oil company broke ranks with the rest of the oil industry. We took our first tentative steps to going green.”

To a great splash of publicity, Browne launched a “rebranding” campaign three years later. What used to be called British Petroleum became BP, a moniker that cleverly fit the company’s new motto of going “beyond petroleum.” And BP changed its logo from the familiar BP shield to an environmentally friendly looking green and yellow sunburst. The company’s values statement was revised to declare that BP would be “a force for good”—as opposed to, one must suppose, a force for evil.

Lord Browne (he was made a life peer in 2001) earnestly explains the purpose of all this imagery in his book, the aptly named Beyond Business:

The new helios logo and the line beyond petroleum expressed the new identity of the company. They gave a strong message that BP was intent on becoming a new type of global energy enterprise. We meant to tell people that we were ready to do more than they would expect when it came to confronting the difficult issues, such as the conflict between energy and environmental needs.

With great big blobs of oil washing up on the shore, it is almost comical—no, it is comical—to see some of BP’s erstwhile friends in academia and other centers of high-minded thought running for cover. To cite one example, thanks to BP sponsorship, 300 researchers in white lab coats at Berkeley are busily searching for ways to make green fuels that will reduce our dependence on oil. In 2007, BP set up the Energy Biosciences Institute, saying it would spend $500 million over the next ten years to support research into plant-based fuels at Berkeley and two other universities. This is the largest corporate donation ever for university research.

Embarrassingly enough, Berkeley has an escape clause in its contract with BP. If anything were to happen on BP’s side, such as “environmental despoliation,” that would cause the university to violate its own principles in continuing the collaboration, the university could bail out of the agreement. In other words, with seven years to go on the grant, the university is at liberty to shut down the research lab and tell BP that it doesn’t want any more of its money.

“We don’t want to sacrifice our research when it has such promise,” said Graham Fleming, Berkeley’s vice chancellor for research (quoted in the Sacramento Bee). Anthropology professor Laura Nader (sister of Ralph) will have none of that. “Your anthropology faculty told you this was a criminal corporation,” she fulminated in a letter to the university’s chancellor. “Listen to the anthropologists—we know some things that other scientists might not.” I love her argument, but I am betting against Laura Nader in this fracas, knowing how easy it always is for those of a progressive mindset to accommodate their own self-interest within the framework of the loftiest idealism.

It is also funny to observe how President Obama and leading Democrats have seized upon the oil gusher as an excuse to revive cap and trade and ramrod that misbegotten legislation (a huge new tax and a vast extension of government meddling in the private sector) through Congress. The fact is, with help from Enron, BP invented cap and trade and has been hawking it to Congress for years. Browne talks about it in his book. This was 13 years ago:

In order to know where to reduce carbon emissions, we wanted to develop a simple emissions trading scheme within the company. It would become the first of its kind. And the person instrumental in helping us set this up was Fred Krupp, head of the Environmental Defense Fund, an environment NGO. We had come full circle. This NGO had virtually single-handedly halted the construction of the Trans Alaska Pipeline in the early 1970s.

Browne later sold cap and trade to the British government, and Tony Hayward, his successor as CEO, has been trying to do the same with the U.S. Congress. Cap and trade would penalize coal and favor natural gas (of which BP has plenty, as witness the blowout). Through its lobbying efforts, BP has managed to make people like Nancy Pelosi aware that gas is a cleaner burning fuel than coal, even if it failed to tell them that it is—ahem—a hydrocarbon. The speaker demonstrated her ignorance of the energy business when she declared, “I believe in natural gas as a clean, cheap alternative to fossil fuels.”

For the record, cap and trade would do exactly nothing to increase domestic supplies of energy, and it could discourage domestic production of coal, which is in abundant supply.

Though it is now the Democrats’ favorite whipping boy, BP has extended its largesse in recent years to most of the party’s bigwigs, including Democratic pollster and PR point man Stanley Greenberg and Rahm Emanuel, the president’s chief of staff. 

Greenberg, the leading light at Greenberg Quinlan Rosner, is an equal opportunity geyser of left-wing environmental gibberish for politicians, NGOs, and the kind of business people who go along with the Obama brand of corporatist government in which big companies compete for government favors. The last time I looked, Greenberg still hadn’t gotten around to taking down a page in his firm’s website boasting of its work for BP. It tells of how Greenberg helped BP remake itself “as a company focused on transcending the energy-environment paradox.” 

It has been reported that BP paid more than $200 million to Ogilvie & Mather Worldwide for its rebranding campaign. I have no way of knowing how much of that filtered down to Greenberg Quinlan Rosner, or how much they shared with others. But as Andrew Malcolm of the L.A. Times reported:

 Shortly after Obama’s happy inaugural, eyebrows rose slightly upon word that, as a House member, Emanuel had lived for the last five years rent-free in a D.C. apartment of Democratic colleague Rep. Rosa DeLauro of Connecticut and her husband, Stanley Greenberg .  .  . a prime architect of BP’s rebranding drive as a green petroleum company.

Last but not least perhaps, as Malcolm also notes, “BP and its folks were significant contributors to the record $750 million war chest of Barack Obama’s 2007‑08 campaign.” According to Politico, “During his time in the Senate and while running for president, Obama received a total of $77,051 from the oil giant and is the top recipient of BP PAC and individual money over the past 20 years.”

Lesson

If nothing else, the Obama administration’s spiteful and vindictive treatment of BP should stand as a warning to other companies of the dangers of corporatism. To think as Browne did that you are gaining “a seat at the table” is delusional. The old mafia gag about a crooked cop as one “who won’t stay bought” applies to politicians. They are perfectly happy to throw their corporate benefactors under the bus. This is especially true of this administration and this president, who seems to harbor a deep antipathy toward business and business people generally.

In a recent Wall Street Journal column, Holman Jenkins makes the shrewd point that currying favor with politicians and seeking the approbation of one’s critics is also an unnecessary distraction: “A company can’t prioritize everything, and while BP was prioritizing PR and acquisitions, it wasn’t prioritizing operations.”

“There is nothing the greens love,” the English journalist and author James Delingpole observed recently, “more than a nice, juicy oil-spill disaster.” He went on to say,

If anything is going to cause more long-term damage to the planet than the gallons of oil being spewed out by the Deepwater Horizon drilling disaster, it’s the toxic clouds of posturing cant and alarmist drivel billowing forth daily from environmentalists. Most especially from their cheerleader in the White House, Barack Obama.

More ill-considered environmental policies, an increase in the arbitrary power of government, a decline in confidence in the competence of business—all of this could be more damaging in the long run than the oil spill itself.

Andrew B. Wilson is a writer and business consultant.

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