Why I don’t hate BP

I don’t hate BP or any other oil company. Neither do I defend BP.  An oil company is not a person. It is an organizational structure through which people operate.

I drive a car, and I need gasoline to make my car run.  The hard-working men and women of BP, ExxonMobil and the other oil companies extract oil in remote parts of the world and distribute and refine it in an incredibly complicated process. Thanks to them, I can drive up to the pump whenever I want, and fill my tank with gasoline. I am grateful to them.

There are people in BP’s chain of command whose decisions resulted in the Deepwater Horizon oil disaster, which resulted in 11 deaths and the destruction of the property and livelihoods of untold thousands along the Gulf coast.  I loathe and despise these individuals, even though I will never know who most of them are, and I know they will escape any serious consequence of their decision.

Some of these same BP executives ordered the survivors of the Deepwater Horizon rig held incommunicado until they signed waivers of liability, and their henchmen are acting like little tin dictators in the Gulf. I loathe and despise these individuals as well.

But the fact is that we the people, for all the talk about “ending our addiction” to oil, are going to need oil for the foreseeable future, and we will have to rely on the knowledge, experience and effort of oil company workers. What’s wanted is not to destroy the corporate structure, but to put responsible people in charge of the structure, and subject them to reasonable regulation.

Click on this for a sensible comment on how to think about corporate responsibility and regulation.

I think it is good that President Obama was able to get BP to agree to set aside $20 billion to compensate victims of the Deepwater Horizon disaster and to agree to submit to an impartial arbiter.  In the ExxonValdez disaster, it took 19 years of litigation before the victims were compensated, and the original jury verdict of $5 billion was reduced to about $500 million.  I don’t think the people in the Gulf who lost their properties and businesses as a result of BP’s negligence want to wait until 2029 and settle for 10 cents on the dollar.

I as an investor may suffer some minor loss as a result.  It is an example of the ripple effects created by the corporate structure. Some of my retirement savings are in Vanguard and T. Rowe Price stock mutual funds, whose holdings include BP.  It may be unfair that I suffer from the decline in BP’s stock price when I had nothing to do with the decisions that caused the stock to decline, but it is no more unfair than I benefit from rises in stock prices when I had nothing to do with the decisions that caused them to rise.

Click on this for a retrospective on the Exxon Valdez disaster, and lessons to be learned.

Click on this and this for reports on BP management’s strongarm tactics.

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