Wednesday, May 05, 2010

BP Is By Far The Leading Victim of the Oil Spill

Lew Rockwell of the Mises Institute asks an interesting question: "Why Not Feel Sorry for BP?" (based on an article in 1989 by Murray Rothbard "Why Not Feel Sorry for Exxon?"):

"BP market shares have been pummeled. So long as the leak persists, the company loses 5,000–10,000 barrels a day. BP will be responsible for cleanup costs far exceeding the federal limit of $75 million. The public relations nightmare will last for a decade or more. In the end, the costs could reach $100 billion, perhaps wrecking the company and many other businesses.

It should be obvious that BP is by far the leading victim, but I've yet to see a single expression of sadness for the company and its losses. The incident is a tragedy for BP and all the subcontractors involved. It will probably wreck the company, a company that has long helped provide the fuel that runs everything from our cars to our industries, and keeps alive the very body of modern life. The idea that BP should be hated and denounced is preposterous; there is every reason to express great sadness for what has happened.

The abstraction called the "ecosystem" – which never seems to include humans or their civilization – has done far less for us than the oil industry. So let us not forget that the greatest tragedy here is BP’s and its subsidiaries’ and subcontractors’, and the private enterprises affected by the losses that no one intended. If the result is a shutdown of drilling and further regulation of private enterprise, people will lose. And that is what counts."


HT: Jim Morse

36 Comments:

At 5/05/2010 4:34 PM, Blogger juandos said...

Hey, it only gets better for BP, a big time Obama supporter...

From EconoSpeak: White House officials stressed again Monday that BP would be held liable for the cost of the cleanup and economic compensation for losses on the Gulf Coast. But Democratic senators said the Oil Pollution Act of 1990, passed in the wake of the Exxon Valdez, caps economic damage liability at $75 million. Democratic Sens. Bill Nelson of Florida and Robert Menendez and Frank Lautenberg of New Jersey introduced legislation to raise that cap to $10 billion...

Presently though there is a problem: read: SEC. 1004. LIMITS ON LIABILITY

 
At 5/05/2010 4:42 PM, Blogger Cash212 said...

Was BP negligent and/or was this a reasonably expected cost of doing business (e.g. a freak accident every X years)? If so, this is the worst posts I have read on this blog so far (most I like a lot). BP, HAL, Cam, etc. should split responsibility for the negative externality they created.

 
At 5/05/2010 4:42 PM, Anonymous Anonymous said...

The $75 mil limit concerns compensation to affected businesses, workers, etc. They have unlimited cleanup liability.

 
At 5/05/2010 4:43 PM, Blogger juandos said...

"They have unlimited cleanup liability"...

According to whom?

 
At 5/05/2010 5:04 PM, Blogger Dr William J McKibbin said...

This comment has been removed by the author.

 
At 5/05/2010 5:06 PM, Blogger Dr William J McKibbin said...

The enormity of this disaster will likely bankrupt BP unless the US steps in with financial aid. The question to be pondered is whether the US views BP as "too big to fail..."

 
At 5/05/2010 5:07 PM, Anonymous Pingry said...

BP created a major spillover cost and so they should be responsible for it, period.

I don't feel bad at all for BP. And while their shares have been hit hard, any sensible person should hold a diversified portfolio, and, over the longterm, should be alright.

"BP will be responsible for cleanup costs far exceeding the federal limit of $75 million."

Oh, you mean that everything beyond $75 million would be something that you would approve of? You feel that BP should be spared the rest? In other words, you think that BP should get bailed out from the disaster it created, just like the Wall Street firms, which you have criticized.

And finally, to claim that the oil industry has done more for us than the ecosystem is just completely clueless. Ummm...hello misguided political hacks, the ecosystem (they really should have used the term biosphere) provide the air you breathe and the water you drink....nuff said.

Please.....

--Pingry

 
At 5/05/2010 5:07 PM, Anonymous Lyle said...

Note that one could have more sympathy for BP if this was the first time recently they had had a major safety incident. In the last 5 years they had the Texas City Refinery explosion that killed 15 (more than on the rig this time) This cost BP 1.6 billion in costs, as well as a 50 million fine for safety violations, since there were also 3 other incidents at the plant that year.Note that OSHA also fined them 87 million. Then you have the north slope oil leaks due to poorly maintained pipelines that leaked about 6000 barrels of oil, the Thunder Horse near disaster when misplaced piping nearly sank the rig.
The fact that so many things have happened suggests a culture where safety is not Job 1. Lord Browne (CEO)got fired over the earlier events. The new CEO has tried to fix the culture but in a big organization that is like turning a very large crude carrier, it takes a long time.
In terms of safety the CEO and the board have a responsibility to make safety job 1 (because between direct and indirect costs the downside of a disaster is so high).
BP shows another example of the blindness that affects our society a miss perception that there are no black swans in the area. Safety is a culture to scare them away. In most industrial accidents they cause turns out to be a series of errors no one of which causes the event, but together overwhelm the systems. (Just like in the financial sphere).
Massey energy of the recent coal mine disaster has a much worse record than other operators due to again a lack of making safety job 1. If you think about it the odds of something going very very wrong are small but the potential damage it makes sense to spend to maximize safety.

 
At 5/05/2010 5:17 PM, Blogger PeakTrader said...

Cash212, the investigation may determine if it's human error, mechanical failure, an act of God, etc.

Why limit responsibility to only oil producers? It seems you want to victimize the entire oil industry.

 
At 5/05/2010 5:20 PM, Blogger Pat said...

You are out of your mind.
Feel sorry for BP? You are obviously far removed from the affected area. You are only concerned with dollar signs. This is MUCH bigger than that. Come to MS/LA and tell us that BP is the big looser. BP should have had a plan, they should not have been allowed to drill with the pitiful contingency plan they had in place. They should not have mislead with their downplay of the risks before drilling. Thanks for being in DC where it's all about where the funding is coming and going. More lives are being ruined than you see on your joke of a "News" channel.
Look at the Prince William Sound then study Exxon's profit report.

We need to move away from Petroleum as our major source of fuel. We still ignite small fires to propel us for god's sake.

This is crazy. Everyone's entitled to an opinion, but man you really don't care about other's lives.

 
At 5/05/2010 5:33 PM, Blogger mweb said...

If it wasn't for the lobbying and power these big oil companies like BP wield, we'd be WAY ahead of where we are today with alternative energy.

We should have learned in the 1970s that we can't count on oil.

P.S. leading victim? Are you nuts? What about the environment, local fisherman and businesses?

 
At 5/05/2010 5:43 PM, Anonymous Benny The Man said...

Oh, boo-hoo-hoo I am crying for BP. Waa-waa.

 
At 5/05/2010 5:53 PM, Blogger juandos said...

Pingry says: "And finally, to claim that the oil industry has done more for us than the ecosystem is just completely clueless. Ummm...hello misguided political hacks, the ecosystem (they really should have used the term biosphere) provide the air you breathe and the water you drink....nuff said"...

Is this comment coming from someone who walks everywhere bare footed, has no plastic in his/her life and uses none of today's modern medicines?

Just asking...

"We need to move away from Petroleum as our major source of fuel. We still ignite small fires to propel us for god's sake"...

Well Pat do you have a practical idea on what that alternative source should be?

If so why don't YOU start up a company, produce this source and bring it to market?

"We should have learned in the 1970s that we can't count on oil"...

You're not a car owner right, mweb? You don't use electricity, right mweb?

Yeah, let's just fine the hell out of BP, fine them to hell and gone out of existence...

The other companies won't mind stepping in and covering what BP can no longer bring to the market place, FOR A PRICE, A MUCH LARGER PRICE!...

 
At 5/05/2010 7:11 PM, Anonymous gettingrational said...

Is victimhood the ulltimate refuge of scoundrels?

 
At 5/05/2010 7:14 PM, Anonymous Anonymous said...

Just TARP BP or give em a stimulus.Be generous a couple of trillion more wont matter.Just stick it on the bill and give it to Obama and Ben they wont know anyway.

 
At 5/05/2010 7:33 PM, Blogger misterjosh said...

I feel sorry for BP's employees. Does that count?

I think they should be held accountable for the cleanup costs, but unfortunately, the cleanup is going to be run by environmentalists who wouldn't know cost effective if it hit them in the face.

There will be no US bailout for "British Petroleum"

 
At 5/05/2010 7:35 PM, Anonymous Anonymous said...

You are out of your mind. Feel sorry for BP? BP should have had a plan, they should not have been allowed to drill with the pitiful contingency plan they had in place.

In fact, there was a plan in place to deal with a spill, as Ron Gouguet, a former NOAA official, points out:

MOBILE, Ala. -- Federal officials should have started burning oil off the surface of the Gulf last week, almost as soon as the spill happened, said the former oil spill response coordinator for the National Oceanic and Atmospheric Administration.

Ron Gouguet, who also managed Louisiana's oil response team for a time, said federal officials missed a narrow window of opportunity to gain control of the spill by burning last week, before the spill spread hundreds of miles across the Gulf, and before winds began blowing toward shore.

"They had pre-approval. The whole reason the plan was created was so we could pull the trigger right away instead of waiting ten days to get permission ... It's unfortunate they didn't get the burning going right away. They could have gotten 90 percent of the oil before it spread."

Gouguet, now an environmental consultant with Windward Associates in Seattle, was part of the group that created the 1994 plan designed to allow federal responders to begin burning oil as soon as a major spill occurred, without an approval process.

Mobile Register

So, there was a plan, all that was missing was an administration competent enough to follow it. I have no love for BP, it has always tried to game the system, willing paying millions in protection money to the most vile left-wing groups. They should be on the hook for the economic damage they have caused others, but I'm not inclined to be vindictive.


See if you can connect these dots:

"BP and its employees have given more than $3.5 million to federal candidates over the past 20 years, with the largest chunk of their money going to Obama, according to the Center for Responsive Politics."

Politico

“The Interior Department exempted BP’s calamitous Gulf of Mexico drilling operation from a detailed environmental impact analysis last year, according to government documents, after three reviews of the area concluded that a massive oil spill was unlikely.”

Washington Post

 
At 5/05/2010 9:02 PM, Anonymous grant said...

Obviously the rigs/production platforms are not engineered to a high enough standard so an inspection of all these facilities is long overdue and orders to upgrade where necessary issued by a government engineering authority. BP obviously does not have anyone with the expertise to do the job and neither does any of the other operators in the gulf of mexico region. This is not the first rig to fail.

 
At 5/05/2010 10:30 PM, OpenID bbb said...

I don't get the logic. BP is no more than a imaginary concept which in reality cannot be held responsible, or suffer, or produce any sort of benefit, etc. All these things should be attributed to real people: shareholders, employees, managers. Some of those people (probably some managers, engineers, designers and the like) are surely responsible. The costs are likely to be will be born mostly by others, primarily shareholders. But the productive forces behind the concept called BP - its equipment, staff, management - will remain in place and will continue to be employed, whether under the old BP logo or otherwise.

So, if the cleanup costs imposed by the government and the courts turn out to be beyond the BP's means, BP can well cease to exist as a corporate concept. If no other company stands ready to by BP and assume the cleanup costs, its facilities and equipment will be sold separately, and its employees will be hired by other oil companies.

Again, it is only shareholders who definitely deserve Rokwell's empathy.

 
At 5/06/2010 1:55 AM, Blogger OA said...

Geez Pat. BP had a rented rig, staffed by another company's employees, and had a blowout that wasn't prevented by a third company's defective product, which then failed in closing off the pipe. And the leaks didn't really start until the rig went under and crumpled the riser.

Then it was mainly the bad weather that let the slick get outside the original containment. This is 40
miles offshore in 5,000 feet of water, so not exactly parked on top of beaches and shrimp beds.

Even though the shut off failed, they had oil skimmers on site right away and miles of oil booms all
along the coast in days.

The situation is really bad, but it does not seem like BP was cavalier. Presumably they hired out to
drill the well because it takes specialized equipment and knowledge.

Transocean says they are the "world's largest offshore drilling contractor and the leading provider of drilling management services worldwide." 9 of the dead were Transocean employees and 2 were from MI-SWACO if that tells you who was running the rig when it blew. How much second guessing should BP have done on their equipment and operations?

BP is going to pay big for this string of bad events. I don't think they're all a bunch of heartless robots who could care less about people who make a living off the gulf.

And which joke of a news channel are you referring to? I haven't seen any channel that hasn't had fishermen, resort owners, and others saying their lives were over.

 
At 5/06/2010 8:05 AM, Blogger Justus Hommes said...

Worst post in the 2 years I have read this blog. First, I thought this blog was beyond the cult of victim-hood. Second, its not a business enterprise without downside risk, so BP should know a risk of drilling is a leak, and prepare accordingly, whether that is with better controls, sticking with safer projects, purchasing insurance, or holding savings in reserve for such an emergency. Third, the subcontractor status doesn't really matter. It is still the duty of any contractor to make sure they abide by the agreed upon safety controls and processes of BP, and it is still BP's responsibility to ensure that they do so. Finally, are you really trying to say that the oil industry is more important to human survival than clean air to breathe and clean water for a significant portion of our food supplies to grow in?

If BP was negligent is ensuring its contractors complied with the correct safety process (it would not be the first time), and it failed to properly plan for what is an inevitable outcome of its business activities and operations, it deserves to fail, and those oil companies who manage themselves better will benefit. Isn't that the free market you are supposed to be espousing. This talk of tragedy, victim-hood, sadness, and people losing is nonsense, and I expected more from you.

 
At 5/06/2010 8:39 AM, Blogger Marko said...

Do you people think BP is a person, a person that did something wrong and needs to be punished? Let's pretend it is a person then (legally it is actually sort of a pretend person) and see where that takes us.

Mr. BP has a dangerous job doing something important - no one would deny that. Mr. BP gets paid very well for what he does, but also takes extraordinary cautions to make sure something doesn't go wrong. After all, if there is an accident he could be held responsible. So, despite all his precautions, he accidentally causes a massive oil spill that (potentially) causes a huge amount of damages. What do you think should happen to him? Sure, he will get sued for the damages he causes, and a court (and likely a jury) will decide if he was negligent. If he was negligent, he will pay the damages to the extent he has the money. There is a question of reasonable risk, forseeability, etc. Note that Mr. BP did not throw a cigarette out of a window during dry season and start of fire, or do something else obviously stupid that we know of.

Now this is fine, except that Mr. BP is not a person. BP is a collection of over 90,000 employees, and the corporation is owned by millions of share holders. If Mr. BP has to pay, it is actually the employees and share holders that will put up the money, one way or another. People that worked for MR. BP and are retired could end up losing their pensions, people that are admin assistants half way around the world will lose their jobs, etc.

I am not saying that BP should not be liable in court to those that have been harmed by this ACCIDENT, but I agree that BP and its employees are also victims in this accident. They may not be the worse off victims (that might be fisherman in the area), but I agree it is a mistake to demonize BP.

I am trying to think of an analogy. Say that Mr. BP is a independent truck owner operator. He is driving his rig, hauling a double trailer of heavy medical supplies. He recently bought new tires and has performed all the maintenance on his truck required by law, and then some. But despite all of this, his tire blows out, he loses control, and the truck drives into a school bus full of children that was in the wrong place at the wrong time. Investigation shows that nothing was wrong with his tires, he was awake and driving carefully and the blow out was caused by something small in the road he couldn't have seen. What happens to the driver? Do we put him in prison, or make him pay the families for the rest of his life? No, we don't.

 
At 5/06/2010 9:47 AM, Anonymous Aurora B. said...

BP is a victim of their own actions. They suffered from the Titanic mentality ("oh, this is failsafe!") and never made a Plan B for if something went wrong (just like the Titanic didn't have enough lifeboats).

Lew Rockwell is extremely misguided about the oceanic ecosystem. The ecosystem provided a livelihood for many fisherman - a livelihood that is now not an option anymore due to the oil spill. So yes, the ecosystem does play an economic role, if that's how Rockwell determines value, i.e. how x affects humanity.

 
At 5/06/2010 2:51 PM, Blogger Pat said...

"We need to move away from Petroleum as our major source of fuel. We still ignite small fires to propel us for god's sake"...

Well Pat do you have a practical idea on what that alternative source should be?

If so why don't YOU start up a company, produce this source and bring it to market?


Yea there are plenty of ideas that are OUT there. Look around before you start spouting off. Biodiesel and waste vegetable oil are my personal favorites because of the ease, safety and energy conversion associated. I've been making biodiesel for 5+ years, before that ran my vehicles using straight vegetable oil.

About driving the cars, yea, we've been sold cars that are LESS efficient than in the 70s. Why? Well, my opinion is we were told we needed them by the car manufactures. Who in turn lobby with the oil industry. Viscous cycle we've begun. About the other spin offs from the oil industry, sure, medicine etc. We had an extremely cheap source of by products that were put to use. Well, it's time to move away from that.

I will blame BP AND all the others involved. They should not have been doing shoddy work in such a sensitive area.

Screw BP and all that they've done to our coast. It won't be the same for many years.

 
At 5/06/2010 3:41 PM, Blogger bobble said...

let's hope that BP pays for the cleanup, reimburses fishermen for lost income, and is fined for any negligence.

let's hope that any 'lessons learned' from this mishap are implemented in updated regulations.

let's hope that drilling is then allowed to continue.

 
At 5/06/2010 3:46 PM, Blogger juandos said...

Pat continues to whine: "Yea there are plenty of ideas that are OUT there. Look around before you start spouting off"...

Spouting off?!?!

I asked you when are YOU (loud mouth and all) going to start bringing something practical to market...

"I've been making biodiesel for 5+ years, before that ran my vehicles using straight vegetable oil"...

ROFLMAO!

So what? Now your car smells like burning french fries... Are you bring that miracle of modern technology to the marketplace for one and all to buy?

"About driving the cars, yea, we've been sold cars that are LESS efficient than in the 70s. Why? Well, my opinion is we were told we needed them by the car manufactures. Who in turn lobby with the oil industry"...

Man! I can almost hear those black helicopters decending on your abode now...

"I will blame BP AND all the others involved. They should not have been doing shoddy work in such a sensitive area"...

Hmmm, this comes your years of long experience in the oil business, right?

"Screw BP and all that they've done to our coast. It won't be the same for many years"...

Not to worry Pat there are other coasts you can take your french fry burner to...

 
At 5/06/2010 4:35 PM, Blogger Pat said...

juandos, OA, et al.

I'm doing what I can to lead by example. You're right, I can't contend with the billions and billions big oil (BP) spends lobbying for what THEY want, but I can do what I know is right. Using alternative fuels is not a joke to be laughed at, it's what this country/world needs. I lead by example, what are you doing in your daily life? Reading a damn book? Teaching a few shitty lessons to sleeping kids?

This isn't worth my time, you're attitude will not be changed by anything I have to say.

http://www.truthout.org/slick-operator-the-bp-ive-known-too-well59178

BP is in the wrong. Come to the Gulf Coast on your sabbatical to see for yourself, then you may understand.

 
At 5/06/2010 4:50 PM, Blogger juandos said...

pat still at it: "Using alternative fuels is not a joke to be laughed at, it's what this country/world needs. I lead by example, what are you doing in your daily life? Reading a damn book? Teaching a few shitty lessons to sleeping kids?"...

Ahhh, I see your problem now, its your tenuous grip on reality...

 
At 5/06/2010 5:28 PM, Blogger Justus Hommes said...

The whole "real person" versus "sort of a person" distinction is nonsense. There is no reason to feel bad to the investors. This is what investment is all about, calculated risk. The employees of BP, if the company were to fold, may experience short-term discomfort if they have to move to another job, but the market for oil is not going anywhere, so as long as they are competent, they should find work at a competitor picking up market share.

You either advocate for a hands off open market, complete with "creative destruction," or you don't. There is no room for sympathy when it comes to business.

 
At 5/06/2010 5:36 PM, Anonymous Anonymous said...

Hey juandos, your ignorance is too abundant. You really should give it up and come on down to the coast and see for yourself before you start.. like Pat said... spouting off. Just stop.

It's people like you that will keep the world stagnant. And instead of trying to come up with some smart-ass reply to this, try being sensible and factual with you comments. But I'm sure you'll just spit out something stupid.. Only one more thing: You're sheer ignorance is pathetic.

And hey Pat, awesome job on making the world a little better. Keep it up!

 
At 5/07/2010 7:57 AM, Blogger juandos said...

"It's people like you that will keep the world stagnant"...

Well anon why don't you and pat get off your rightous libtard rant and do something useful instead of whine about BP?

Burning old vegtable oil is only good for starting a silly conversation...

There's a wide open marketplace for you to express yourselves...

"You're sheer ignorance is pathetic"...

Hmmm, you too I see have many years of experience in the energy business... LOL!

 
At 5/07/2010 10:00 PM, Blogger Pat said...

Juandos, you don't have any experience with anything except sitting behind a desk. It's people like you that give academics a bad name. Go join the real world for a change.

http://www.sunherald.com/2010/05/05/2158124/ap-impact-rule-change-helped-bp.html

Actually do some research on alternative fuels before talking bullshit.

 
At 5/09/2010 3:01 PM, Blogger Ron H. said...

Pat said:

>"Juandos, you don't have any experience with anything except sitting behind a desk. It's people like you that give academics a bad name. Go join the real world for a change."

ROFLMAO!! Oh please stop! I can't stand it!

juandos This is a 26 year old STUDENT advising you to join the real world. Why aren't you taking him more seriously? Oh the irony!

 
At 5/11/2010 2:18 PM, Blogger Pat said...

Thanks Ron for doing the background search. I'm not trying to hide who I am.

Here's your idea that was to be brought to market. Why didn't it you say? Big oil didn't like it so they squashed it.

http://www.youtube.com/watch?v=gOVEIlMF63U

I guess the big losers in Hurricane Katrina were the Insurance industry as well??

 
At 5/11/2010 3:33 PM, Blogger Kelly McNulty Valenzuela said...

Here's why I don't feel sorry for BP. They have played the government's game instead of fighting them all these years. Now they're stuck in a Catch-22 PR and economical nightmare.

The government ties oil companies' hands, taxes them to death, prevents them from making enough profit to put much money into research and development, etc. Thus, BP has no plan to deal with this sort of disaster, which is just incredible to me.

So why not blame the government? Well, BP and other oil companies sit around and feel guilty, bow down to the enviro whackos and when called to testify on Capitol Hill, say nothing but a bunch of BS instead of the truth.

They need to read Atlas Shrugged, start defending themselves and profits and start running a business the way it should be run.

They willingly put themselves in this situation with the government, so why should I feel sorry for them? They are letting the government kill them.

 
At 6/01/2010 1:10 PM, Anonymous Anonymous said...

Although I do feel for those intrinsically connected to BP, including the small businesses and employees that have nothing to do with the tragedy in the gulf, the public outrage and backlash on BP is the only power we have to hold corporations responsible for their bad behavior. Before the Deepwater Horizon, BP has had several recent terrible safety violations and have been fined and put on probation in the case of the Texas City explosion. The government cited BP as having "organizational and safety deficiencies at all levels." This is a company that just doesn't get it.
I work for a large corporation and we constantly make decisions factoring in public relations costs. They humanize decisions that companies like BP make on a strictly dollar-cost investment. This is not an indictment of the entire company, but there were key decisions made by executives that led to this tragedy. So I don't feel bad for them. I believe BP will likely cease to exist after this fallout and those who lost jobs will find others. For every job a contractor lost, I'm thinking you can find a few fishermen or restauranteurs out of a job due to this spill as well.

 

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