BP: Rich Financial Rewards, Great Reputation but at What Cost?
BP is on course this year to announce the largest profits ever by a British company, with annual profits of over $21bn (£12bn). This is despite the company taking a billion dollar hit over the fallout from Hurricane Katrina. The company’s giant windfall is due to the recent high oil prices.
The news comes hot on the heals of other news that John Browne, BP’s chief executive has been voted Britain’s most impressive businessman for a record seventh time in a survey of more than 130 top executives undertaken by the Financial Times.
But all is not rosy for BP.
BP’s refinery affected by Hurricane Katrina is its vast sprawling 1,200 acre site near Texas City. The refinery was already struggling after the worst accident at a US refinery for over two decades when an explosion killed fifteen people and injured 170 others in March 2005.
Some of the survivors lost limbs or the ability to have children. Others were badly burned on the inside and outside of their bodies. Others have years of physical therapy ahead to be able to walk again.
Workers had been concerned about safety at the plant before the explosion: An internal survey of workers conducted in November 2004 and gioven to management two months before the blast found that safety was their overwhelming concern.
An internal BP audit after the explosion found widespread lapses in leadership, risk awareness, compliance with policies and workplace conditions at the refinery.
A subsequent investigation by the US Department of Labor, through its Occupational Safety and Health Administration (OSHA) division, uncovered more than 300 violations at the BP plant. OSHA fined the company a record $21.4 million.
But if you do the sums: $21 million divided by $21 billion – the fine equates to 0.1 per cent of BP’s profit – hardly anything substantial.
Another investigation into the explosion by the US Chemical Safety and Hazard Investigation Board (CSB), uncovered evidence of “serious management problems” at the Texas refinery and determined the accident “was completely preventable.”
For example, two and a half years before the fatal explosion, BP managers rejected an outside contractor’s proposal to attach a flare to a crucial vent stack that if fitted could have prevented the blast.
So serious was the explosion it has now been referred to the Department of Justice for possible “criminal action“.
Elsewhere in the US the Washington Department of Labor and Industries fined BP for serious safety violations in connection with the death of a contractor at another refinery.
Elsewhere BP is facing antitrust action in Alaska as the company has been accused along with Exxon Mobil of withholding gas from the market and inflating the price paid for gas by US households.
The company is also facing the wrath of green campaigners in the US after it announced it wants a three-decade-old law protecting Puget Sound, an estuary containing oysters and clams in Washington state, to be repealed so that more tankers can travel to and from the refinery it owns in the area.
It is also facing the wrath of the unions, by considering cutting up to 2,500 jobs as part of a two-year efficiency drive at its European downstream operations
So BP makes obscene profits, its CEO John Browne is admired by his peers, but what is the ecological and social cost of BP’s success?