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Obama versus BP
Wed, 09 Jun 2010 15:47:32 GMT
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By: Seyed Arash Rezazadeh

When BP said it would protect the American coastal shores, it was a laughable proposition and the proof is now at American shores as the oil reaches Louisiana and Florida wild life and beautiful scenery.

In a deceitful campaign, the British company has often claimed that it will pay for all damages while it knows that American law and legal system will not enforce American people's will.

Deepwater Horizon offshore drilling rig blew up on April 20, 2010, of the coast of Louisiana in the Gulf of Mexico. After the ensuing huge fire, a massive oil spill followed, discharging oil at an estimated rate of 25 thousand barrels per day.

Inadequate Equipment
As the oil field's principal developer, initially BP took a defensive posture, portraying itself as a victim by remaining on the defensive. It is now certain that the accident was preventable and that BP did not install its American rigs with acoustic switches which allow the crew working on a drilling rig to shut down the well in time of crisis.

In fact, the use of acoustic switches in other parts of the world is mandatory. But, as they were not required to be used in the more legally friendly US waters, they were not installed for Deepwater Horizon.

This unethical practice has now cost BP 11 lives, a very bad reputation, the loss of one third of its value in the stock market and a major oil spill.

A Tragedy of Epic Proportions
Now experts fear a tragedy of unprecedented proportions materializing right at US, Mexico and Caribbean front gates. This crisis threatens to become US's biggest environmental disaster effecting vast and significant areas relevant to tourism, fishing industry, and habitat of hundreds of animal species.

While people living in the affected coastal areas of Louisiana and Florida, are anxiously wondering how BP and their government will deal with the oil slick, the tourism and fishing season are in ruins and a massive hurricane season is expected in the Gulf of Mexico.

Meanwhile, squabbling continues in the US Congress and the president wonders how to deal with this disastrous environmentally damaging incident.

On one side of the squabble lie the pro-oil officials such as Texas Governor Rick Perry who describe the disaster as "an act of God." Along with men like this, stand major oil companies who have a good understanding of how this disaster will change their image and reputation from investors to plunderers forcing the American government to ban new offshore drillings in the Gulf of Mexico.

And then there are those who take the side of the people. These argue the disaster should have been avoided and that BP has reneged on its responsibilities. Lots of these people know they will not able to do much!

As President Obama visits Louisiana and the effected areas and plasters the multinational again and again, claiming that BP is responsible for the leak and that the company would be paying the bill, no real guarantees for a real compensation are provided.

On Sunday 2 May 2010, Obama explained the US is dealing with a massive and potentially unprecedented environmental disaster and that "The oil that is still leaking from the well could seriously damage the economy and the environment of our Gulf states. It could jeopardize the livelihoods of thousands of Americans who call this place home." This still is still a good way to describe the disaster but where are the solutions?

Losing Market value
Touching on the stock market value, BP has to do something and fast. We have to remember that BP is benefiting from US stockholder investment in its stock. And considering that the company's stock has lost over US$60 billion dollars off its value since the incident, the company is desperate to improve its image through a campaign of public relation in order to avoid divestment.

Considering that the company does not want to lose its market in the United States and its right to operate in the Gulf of Mexico, the question remains how honest is BP in its claims and publicity campaign?

What History Tells about the Big Oil?
A review of a historical precedent is the case of 1989 Exxon Valdez disaster. In this case, Exxon paid some US$2 billion for clean-up and a further US$1 billion to settle civil/criminal charges.

However while it was believed some US$5 billion would be paid for punitive damages Exxon paid only US$507.5 million in 2008, equivalent of 12 hours of its revenue. What was important was that Exxon did not dispute on its intentions to pay for the disaster when it occurred.

But, once the issue was pushed out of the realm of public scrutiny, Exxon dragged feet for so long that nobody cared how much it was paying. In fact, a new generation of Americans was raised without even knowing about the disaster.

Furthermore, Exxon managed to recover much of its clean-up and legal expenses from insurance companies. One can remember that Exxon made similar public boosts on corporate social responsibility in its campaigns, while benefiting from the tacit assistance of the former Republican president, George Bush.

The Way Out
Well let's smell the coffee (or maybe I should say smell the oil!). BP is a corporation with a corporate structure. Its sole purpose is to make money out of oil.

The multinational has one of the most aggressive corporate structures and BP does not see any reason to deviate from its goals unless people can inflict such financial damage on it that it will be left with no other choice but to comply with all its environmental and corporate social requirements.
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