The British Petroleum Company: Target Markets

BP plc (formerly known as The British Petroleum Company plc) is a UK-based gas and oil company. It has been around for 100 years and is still expanding into new markets (#24 BP, 2019). BP plc operates in every part of its home country, the United Kingdom. It sells fuel through over one thousand service stations across the kingdom that weekly reach seven million customers (BP, n.d.). In its home country, BP plc is a major employer: 15,835 people work for the corporation directly, and 123,000 jobs in total are supported by BP in one way or another (BP, n.d.). BP hires a wide range of high-skilled professionals from rig technicians to retail assistants and well intervention engineers.

BP makes significant contributions to UK GDP, which in recent years has amounted to £10.3 billion or 0.5% (BP, n.d.). BP plc remains one of the most important investors in the North Sea, which promotes UK energy security (BP, n.d.). Today, there are around 120 sites with 260 operating wells in the United Kingdom located primarily in southern England, the Midlands, South Wales, and central Scotland (#24 BP, 2019). Daily, they produce between twenty and twenty-five thousand barrels of oil equivalent.

BPs primary contender is Royal Dutch Shell, a British-Dutch oil and gas company headquartered in the Netherlands and incorporated in the UK. Over its century-long history, Royal Dutch Shell has expanded into 78 countries (#9 Royal Dutch Shell, 2019). Currently, Royal Dutch Shells activities can be categorized into four business groupings: upstream business, integrated gas and new energies, downstream business, and projects and technology (#9 Royal Dutch Shell, 2019). In Africa, Algeria, RDS is doing upstream business in Cameroon, Egypt, Algeria, Gabon, Ghana, Libya, Morocco, Nigeria, Tunisia, and South Africa. In Asia, RDS is active in China, Hong Kong, Brunei, Malaysia, Singapore, Philippines, and India. Among European countries, the British-Dutch company is operating in Ireland, the UK, and Nordic countries. Lastly, RDS is present in North America (the US and Canada) and Australia.

BPs target markets largely overlap with those of Royal Dutch Shell; however, there are significant differences as well. In Europe, BP is operating in far more countries than RDS, which includes the United Kingdom, France, Germany (through the Aral brand), the Netherlands, Switzerland, Italy, Austria, Poland, Greece, and Turkey (BP, n.d.). On the contrary, as compared to RDS, BP is not present in Nordic countries. BP has expanded into South America (example: Brazil and Trinidad and Tobago), which RDS has yet to do (BP, n.d.). Both BP and RDS are present in the US, Canada, and Australia (BP, n.d.). Among other overlaps in operating countries are Egypt in North Africa and China and India in Asia (BP, n.d.). In contrast, RDS is not active in Angola, where BP is involved in offshore oil development at a total of nine oil exploration and production blocks.

Being some of the largest oil and gas companies in the world, BP and Royal Dutch Shell offer full-cycle solutions, which is especially important when it comes to emerging economies. Both BP and RDS have business groupings that include upstream and downstream activities as well as search for new energies, projects, and technology. Some operating countries are involved in the full cycle, while for others, it makes sense to focus primarily on only one aspect (example: upstream business in Algeria). While RDS outpaces BP in producing capacity, BP stands out due to its efficiency and superior refining availability (Vara, 2019). According to Vara (2019), BPs upstream operations show better cost efficiency. Its ten-year average upstream unit production cost is 20% less than that of Royal Dutch Shell: $9.46bn per barrel of oil equivalent vs. $11.64 respectively. Apart from that, BPs refining availability is somewhat higher compared to Royal Dutch Shell: 94.87% and 91.66%.

References

#24 BP. (2019). Forbes.

#9 Royal Dutch Shell. (2019). Forbes.

BP. (n.d.) Who we are

Vara, V. (2019). BP vs Shell  whose business is better and more efficient?

Posted in BP

BP Oil Spill and Its Effects

The BP oil spill, also referred to as the Deepwater Horizon oil spill is the worst oil spill in history that took place in the Gulf of Mexico for about ninety days in 2010 and its effects are still being felt even after the release of oil into the environment was stopped.

Whereas there are other purportedly extensive oil leaks to the environment that have taken place in the past, such as the 1979-1980 Ixtoc I oil spill in Mexico that released about thirty thousand barrels of oil per day and lasted for nine months, the BP oil spill remains the most catastrophic in the history of the petroleum industry (National Research Council,567).

The gushing out of oil started on April 20, 2010 following an explosion and subsequent fire of the Deepwater Horizon and after trying several options, the seep out was at last ended on July 15, 2010 by capping the gushing wellhead (Corn and Copeland, 1).

The disaster led to the death of eleven workers of the oil company and injured seventeen others. Scientists approximated that over 50, 0000 barrels of oil per day were being released into the environment before the leak was successfully stopped (Robertson and Krauss, para. 6). The environment problem caused extensive damages.

The cause of the BP oil disaster has been attributed to many reasons, but chief among them is negligence. Surely, the company was not trying to blow up its own well; however, the actions it took before the disaster reveal that it was courting imminent problems (Romm, para. 4).

Since BP was trying to finish the project as per the initial plans, the company engineers opted for a series of shortcuts that went contrary to the standard practices of effectively drilling oil wells. For example, the company engineers used an inefficient casing material design and avoided intermittent testing for backpressure among other malfunctions in standard safety procedures.

These conscious judgments to undermine safety procedures and practices indicate that the negligence of the company was the prime cause of the disaster. Conversely, prior to the incident, BP had spent many dollars on improving its public image. Thus, the incident meant that the company was trying to improve its brand while neglecting to address its own intricate issues, such as fake workers policy.

Further, the report of the staff of the presidential commission investigating the BP oil spill incident released on December 2, 2010, revealed that the federal inspectors failed to act professionally in inspecting oil rig operations, the inspectors are poorly trained in effectively performing their duties, and there is inadequate availability of resources for handling such catastrophes (Mintz, para.1).

The BP oil spill had devastating effects to the environment. The incident was the worst environment catastrophe that the United States has encountered in history, nearly twenty times greater than the 1989 Exxon Valdez oil spill (Wells, 4).

The disaster led to widespread damage to marine and wildlife habitats in the area. In addition, the fishing and tourism industries in the area also recorded a decrease in earnings. Similar to the Exxon Valdez oil spill, some effects of the BP oil spill will be felt in years to come.

The consequences of the disaster are threatening the normal operations at eight national parks in the United States and more than four hundred animal species that habit the Gulf islands and marshlands, including some species in danger of extinction, are at risk. By November 2, 2010, over seven thousand dead animals had been collected.

Most of the animals died after ingesting the oil, which poisoned their systems. Other immediate consequences of the disaster were oil-coated birds’ feathers that hindered their ability to regulate body temperature, sea turtles were covered with oil, and dead and dying deep-sea corals were found seven miles from the deepwater horizon well.

Further, dangerous chemicals from the oil and dispersant have been reported to lead to health problems of the individuals staying near where the disaster took place. Scientists have suggested that in the long term, the disaster will lead to unbalanced food web, decreased fish and wildlife populations, and decline in recreation activities (National Wildlife Federation, para. 1-3).

To avoid such a catastrophe in the future, a number of proposals should be adopted. First, regular inspection should be done for wear and tear and leaks in equipment for the production of oil.

And, this inspection should be done by accredited individuals who will not shy away from doing a thorough inspection. Second, employees ought to be given adequate training and re-training to enable them cope well with everyday challenges in oil production and how to manage them.

Next, a well laid down plan should be established to ensure that oil leaks are handled immediately in a professional manner in case of an accident. Lastly, the government should institute effective legislations and regulations to prevent and respond to such a catastrophe instead of relying on the same-old response of looking for scapegoats.

Works Cited

Corn, Lynn, and Copeland, Claudia. Deepwater Horizon Oil Spill: Coastal Wetland and Wildlife Impacts and Response. Washington: Congressional Research Service, 2011. Print.

Mintz, Steven. “Horizon Deep Water Oil Spill.” Ethics Sage. 2010. Web.

National Research Council. Oil in the sea: inputs, fates, and effects. Washington, D.C.: National Academy Press, 1985. Print.

National Wildlife Association. “How Does the BP Oil Spill Impact Wildlife and Habitat?” Nwf. 2011. Web.

Robertson, Campbell, and Krauss, Clifford. “”. The New York Times Company, 2010. Web.

Romm, Joseph. “Gulf oil spill”. Salon Media Group, 2010. Web.

Wells, Peter G. Exxon Valdez oil spill: fate and effects in Alaskan waters. Philadelphia, Pa.: ASTM publication, 1996. Print.

Posted in BP

Effects of BP Oil Spill

Introduction

BP oil spill is an environment catastrophe that has affected the United States of America and the world at large (Wheat par 1). The oil spill affected the Gulf region’s environment and its inhabitants and consequently affected the overall US region and the impacts are likely to persist for a long time.

The United States has to deal with the catastrophic consequences of a disaster caused by a company that supplies a commodity of vital importance in the running of the country’s economy and the global economy at large (Szabo par 1). The oil spill’s detrimental consequences have extended further beyond the Gulf of Mexico into the heart of the Western part of Africa affecting countries like Ghana among others (Wheat par 2).

The oil explosion occurred on April 2010 on the deep water horizon oil drilling rig in the Gulf of Mexico with 126 people on board. The oil explosion caused instant death to eleven people and fifteen were severely injured (Hailes 619). The oil spill further caused death to aquatic life. Bp was under contract with the owners of Deepwater Horizon to drill an exploratory well and during the period when the massive explosion occurred, the companies were contemplating on closing the well in order to redirect it to commercial production (Hailes 619).

A second explosion occurred few days after which caused the sinking of Deep water horizon into the Gulf of Mexico. When authorities inspected the capsized rig with remotely operated vehicles, they established that there were two oil leaks from the well pipe that were leaking at a rate of 1000 barrels per day (Hailes 619).

However, it was later established that 5000 barrels of oil had been leaking per day (Hailes 619). This led to declaration of the BP oil spill as an issue of national significance by the secretary of homeland defense leading to appointment of national incident commander to coordinate response resources at national level while President Obama stopped all drilling activities in the areas he had previously proposed pending the establishment of BP oil spill (Hailes 620).

In response to the catastrophe, the US set up a regional response team including; national oceanic and atmospheric administration, department of homeland security, the department of commerce as well as environmental agencies which set out to develop strategic plans, provide technical advice to the response team as well as overseeing the response by BP company (Hailes 619).

The oil spill cost the BP caused devastating losses that would amount to $ 1 billion. In addition, the cleaning up process will consume a considerable amount of time and resources which was approximated at about 5 years or more at a cost of $ 5 billion a year (Hailes 623).

In addition, various bodies and entities directly affected by the oil spill moved to courts and filed legal action against the BP Company seeking compensation. The overall process may take 10 years or more further increasing the final cost of the bill inclusive of liabilities totaling up to approximately 20 billion. In addition, BP received numerous insurance claims totaling to 30000 claims and had already made 15000 payouts which totaled to $ 45 million (Hailes 623).

Environment and Economic Impacts on the Economy

Oil spills often result to significant harm to aquatic life as well as severe costs to businesses and the entire public at large. Oil coating, ingestion and absorption of oil may cause detrimental effects to living organisms resulting to direct mortality and adverse sub lethal effects (Hagerty 28). Presence of oil in the water masses aversely affects aquatic life and prohibits the animal’s accessibility to the shoreline areas consequently suffocating them (Hagerty 28).

Further, uptake of dissolved components of oil may be toxic to aquatic life while birds and fur bearing animals lose protection and body heat maintained by their feathers and fur on exposure to oil (Hagerty 28).The Gulf region inhabitants may take a considerably long time to recover from the adverse negative implications of oil exposure that resulted from the BP oil spill.

Natural resources dependent sectors of the gulf coastal economy that have been affected by the oil spill include commercial and recreational fisheries as well as the tourist industry (Hagerty 30).

The environmental effects of the BP oil spill adversely affected the gulf region and the efforts to remedy the situation are likely to impact on the overall US economy (Szabo par 3) Tons of species of creatures were adversely affected by the gulf oil spill. Some of the species that were mostly affected included the North Atlantic Blue fin tuna and whales, among other aquatic creatures which heavily rely on water surfaces for survival (Szabo par 4).

Marine animals, which are fully dependent on water for survival, were also adversely affected as the spill posed danger to their lives (Szabo par 5). Further, the brown pelican whose breeding season was in spring and during the time of the spill the eggs were incubating further posed danger to the species which had recently been plucked off from the endangered species list (Szabo par 6).

The Oil spill heavily impacted on the sea food industry. Oil and toxic hydro carbons which were present in the water were toxic to oysters and remain a persistent problem as hydro carbon can be retained in the coastal sediment for a considerably long time (Szabo par 6).

A significant part of the overall American GDP can be attributed to the revenue derived from fishing along the gulf region, oil industry as well as the tourism industry (Szabo par 7). In addition the gulf region significantly contributes to the sea food industry. The occurrence of the oil spill significantly reduced the output of these industries hence affecting the overall GDP.

Cleaning up the spill is a time and resource consuming endeavor and some of the environmental and economic impacts of the spill remains irreversible despite the clean up efforts. The BP spill led to closure of a considerably large area of the Gulf of Mexico fishery. Consequently, fishermen filed economic injury against the BP Company and the claims are being paid to individuals on daily basis.

The oil has also reached the Gulf of Mexico beaches significantly decreasing tourists turn out in the area. The report of the oil spill negatively impacted on tourism perception in the region leading to decline in tourists turn affecting the areas where the spill had not affected (Hagerty 32). To counter these perceptions, BP funded tourism promotion programs in various affected regions.

Existing Provisions for Oil Spill Response

The United States oil pollution act of 1990 as well as the clean water act is the primary federal statutes designed to regulate the federal response to oil spills (Hagerty 7). The clean water act as amended by OPA creates a provision authorizing the president to establish the national oil and hazardous substances pollution contingency plan to specify the federal response actions and the authorities related to the oil spill (Hagerty 7).

OPA addresses natural resources damages and the restoration of resources that are injured and the services that are lost resulting from an oil spill. There exist other designated agencies that are charged with the responsibility of representing the interests of the public on such occurrences. OPA directs these trustees to act on behalf and return injured resources to their original condition and recover compensation for interim losses (Hagerty 29).

The NCP was the major responsive framework for oil response; other authorities played a major role in the gulf spill response. The department of home land security through the secretary was involved in the oil spill response through his lead role in the department in which the coast guard operates or as the principal federal official for domestic incidence management (Hagerty 9). The secretary of homeland security played a significant role in coordination of the federal responses activities.

The secretary spearheaded the activities of national response team and further classified the event as a spill of national significance hence facilitating the appointment of the national incident commander who coordinated strategic communication, national policy and resource support as well as facilitating collaboration with key parts of the federal state ad local governments (Hagerty 10). OPA further established a compensation and claims process covering the removal costs as well as the costs of damages. (Hagerty 12).

Claims for removal were presented to BP which agreed to take responsibility for the unfortunate occurrence and set aside &20 billion to pay economic damages to people and businesses that were affected by the oil spill (Hagerty 13). An independent claims facility had been established by authorities to foresee process, develop and publish the guidelines of the claims.

The national response frame work is the federal government broader administrative mechanism charged with the responsibility of coordinating the federal responses plans consequently the body provides the administrative policies aimed at achieving a unified system of response through out all levels of the government (Hagerty 9).

OPA creates a provision of oil spill liability that governs any oil discharge by a company’s vessels and facilities that are situated navigable waters or the designated economic zones of United States of America (Hagerty 10). This provision consequently rendered BP liable for the Gulf oil spill and the company was therefore expected to take responsibility by covering the oil removal costs as well as rectifying any negative implications associated with the oil spill (Hagerty 10).

However, liabilities limits differ based on the source of the spill. In the gulf oil spill, the lessee of the area in which the offshore facility is located, BP is clearly a responsible party for the oil leak below the surface from the well while Transocean was a tank vessel responsible party for any oil discharge on or above the surface of the water hence the companies should take responsibility for their actions (Hagerty 11).

Actual Responses by BP

Bp Company utilized dispersants such as COREXIT which is a chemical agent that is composed of surfactants solvents and other compounds which reduce the interfacial tension between oil and water facilitating the break up of an oil slick into small oil droplets that mix with the water column (Hagerty 18).

The question regarding the fate of the dispersed oil particles and the toxicity of the dispersants remains an issue of great controversy. Some people have criticized dispersants claiming that they do not form a permanent solution to oil spill but rather reduces the effects of the same on the environment hence failing to offer a permanent remedy to the situation (Hagerty 18).

In addition, the company established relief wells which were drilled to intersect the blown out well. The company drilled two relief well with the aim of intersecting deep water horizon well near the bottom and plugging it with heavy mud and cement (Hagerty 22). However, this process took a long time to complete and therefore did not form an efficient response mechanism to the oil spill.

Conclusion and Recommendation

The BP oil spill is a clear evidence of negative implications of corporate actions on society. The government should set up strict guidelines to regulate the activities of oil companies to avoid such occurrences in the future. In addition, the government should establish advanced response mechanisms to deal with such occurrences in the future.

Works Cited

Hagerty, L. Curry, Deepwater horizon oil spill: selected issues for congress. New York: Diane publishing, 2010. Print.

Hailes, Andrew. Business continuity management. New York:: John Wiley and sons, 2010. Print.

Szabo, Patrick. BP gulf oil spill-impact on the America’s environment and economy, suite 101, 2010. Online publication.

Wheat, Amanda. the American BP oil spill spells disaster for West Africa, commatters Kenya ltd, 2010. Online publication.

Posted in BP

The BP & Deep Horizon Event in the Gulf of Mexico

Introduction

The event is about an explosion that occurred on 20th April 2011 at the Gulf of Mexico in the US. A rig that was being operated by BP was submerged into the waters in order to dig a well for pumping oil from the sea ground. All constructional activities had been completed apart from the final cementing that was to be done after which the well had to be left dormant for sometime before being activated as an oil producer.

After the negative and positive test pumping were done, the project was promising but at the final cementing stage, methane gas escaped through the pipes and finally exploded. This environmental disaster can be termed as the worst that has ever been experienced considering all the submarine projects for oil production more so, those run by BP.

In this accident, 11 workers perished and 17 of them were seriously injured. The oil continued to spill into the surrounding for a period of two to three months even after capping of the well bore was done. Millions of gallons of crude oil spill were experienced and this was expected to continue even in the future (Metapower 2).

With the experience BP had on such projects and its success in exploitation of renewable energy sources, the company did not put into place the right measures in order to take care of any disaster that could have been expected to take place during both the constructional and operational phases of the project.

This was a big project that was expected to have adverse effects on the environment and thus required an Environmental impact assessment process which could have issued a plan with the mitigative measures in order to reduce or cater for any environmental accident that could have been experienced.

Ignorance of the leakage from the rig reported earlier by an engineer also contributed to the failure. The project was autonomous and it required a lot of money which made BP to use shortcuts not considering the effects that this could cost (Pride and Ferrell 35).

Environmental studies concerns all the negative and positive impacts a project can have on its surrounding. Measures are often provided for all projects in order to reduce or completely curb the negative impacts.

Considering the fact that the rig was a submersible one and that a well was to be drilled in the waters, a lot of disturbance in the aquatic ecosystem was to be experienced causing either death or migration of the organisms eventually leading to an alteration in the ecosystem. Both noise pollution by the operating rig and air pollution from the smoke produced by the machine was guaranteed.

Apart from these, spilled oil had lots of negative impacts on the wildlife and the neighboring ecosystems, a number of natural processes such as breeding and mating was affected by the construction activities and even by the fast spreading oil. Water was also polluted by the oils and the dead organisms resulting from explosion thus rendering it unsafe for consumption and other production activities (National Parks Conservation Association 10).

Different publications exist with information concerning this event. Sources used in this work have almost the same information relating to this event apart from the duration of the oil spill, amount of oil spilt and the exact time for explosion. The sources have 2 to 3 days of spill with 200, 201 and 206 gallons of spilt crude oil after the explosion.

Conclusion

The disaster had a lot of negative impacts on the environment which could have been contained if the right measures and procedures were put in place. Simplified design for the well due to the high cost of construction for the right type of well was also a contributing factor. It is therefore, important to consider all these factors in the future when dealing with such a risk project.

Works Cited

Metapowe. Safety at new depths-is Gulf protected against the next oil spill? N.d. Web.

National Parks Conservation Association. National parks. National Parks, 84.4 (2010).

Pride, William and Ferrell, Chris. Marketing. Wodsworth: Cengage Learning, 2011. Print.

Posted in BP

Impact of the BP Oil Spill on Oysters and Clams in Gulf Coast USA

Description of Oysters and Clams

Oyster is a type of seafood with high nutritional value both to marine life and human beings. Experts note that the plant is normally high in fat, protein, Iron and Vitamin D (Judy, 2010). However, oysters are not only part of marine and human nutritional delicacies; they are also an integral part of the sea environment. In the US Gulf coast, oysters are located near the shores (Freeman, 2010).

Due to the close proximity to dry land, oysters and clams play a vital role in the prevention of shoreline and wetland erosion because they act as a natural barrier to slow down tidal waves (which cause wetland erosion).

Due to this reason (and several subsequent factors), oysters and clams contribute significantly to the environment because besides purifying seawater, Oysters and Clams are aquatic plants that provide shelter to other marine life (Freeman, 2010, p. 1). In the purification of seawater, oysters prevent the occurrence of algal bloom.

This is the major reason why oysters and clams are usually perceived to be the backbone of marine life since they are at the centre of the food chain, providing food to other aquatic life.

Despite the integral role oysters and clams play in the sea ecosystem, sea pollution (like the recent BP oil disaster) significantly affects sea eco-balance and subsequently, the sustainability of seafood for humans. This study analyses the impact of the BP oil disaster on the Gulf Coast of Mexico.

Immediate Impact of the Oil Spill on Oysters and Clams

Though it is scientifically proved that adult oysters can potentially reduce the harmful impact of toxic petrochemicals, it is also a well-known fact that these petrochemicals can significantly kill oyster larvae (Freeman, 2010, p. 1).

This effect is only felt in the short-term because in the long-term, it is feared that the chemical dispersants which were used to break the oil cover may have a long-lasting impact on the oysters. The method used to eliminate the oil spill (through fresh water release) was also disastrous to the beds of oysters and clams because it killed all growing oysters in the region (Freeman, 2010, p. 1).

Freeman (2010) affirms that “…..importantly, this freshwater release killed the oysters growing on the interior of the estuaries, an area protected from the oil and chemicals that were washing up on the intertidal oyster beds along the coast” (p. 1).

There were more concerns registered from environmental officials analyzing the impact of the oil spill because it was feared that the chemicals used were killing the oysters and clams too.

It was also reported that the oil spill also negatively affected the reproduction of oysters because they normally produce sperms and eggs in the water to fuse and grow into oysters, but the oil spill caused them to close their shells and eventually suffocate the oyster larvae (Weise, 2010).

Current Impact of the Oil Spill’s on Oysters and Clams

The real impact of the BP oil disaster on the oysters and clams cannot be easily quantified because it is feared that small sea animals may have consumed the petrochemicals from the oil spill (plus the chemicals used to curb the oil spill). These small sea animals will consequently be eaten by larger fish and finally by humans, to affect comprehensively the general eco-balance of sea life.

Already, oyster growth and numbers have been severely affected by the oil spill and it is still difficult to quantify the damage caused by their death on sea life. Moreover, scientists have observed that it is sometimes difficult to quantify the real impact of the oil spill because the effect of the oil impact is interlinked with other disasters waiting to happen (Judy, 2010, p. 3).

However, it is assumed that some adult oysters may not have been severely affected by the oil spill because they have the capability of reducing the negative effect of the toxins. However, the small oyster larvae may have died in large numbers.

The reason, why it is said that mature oysters may potentially survive the oil spill is because when mature oysters taste oil, they close as a result. Though they may not increase in number (because of the curtailing effect of the oil spill), it is assumed that the plants will generally survive (Judy, 2010, p. 3).

Long-term Impact of the Oil Spill on Oysters and Clams

The long- term impact of the oil spill on the oysters and clams is not easy to determine because the larvae are said to die from the effects of the oil spill but the mature oysters are said to survive the oil spill (Freeman, 2010, p. 2). However, it should be noted that the oil spill significantly affected the oyster beds and this may have a long-term impact on the number of oysters in the sea.

Consequently, this means that the number of oysters and clams will potentially reduce, but the situation will normalize once the reproduction process of the oysters start again.

Nonetheless, as a result of the reduction in oyster numbers, the marine ecosystem maybe affected because the eco-balance will be destabilized. The situation is expected to normalize after a year because the oil disaster struck at the reproduction period and it may take another year for the situation to normalize again.

Impact of the Oil Spill on the Louisiana Economy

Impact on Economy during the Spill

Effect on Fishing Industry

The BP oil disaster was identified to have significantly affected the operation of the Louisiana economy because Louisiana is known to supply about 40% of America’s seafood (Weise, 2010). Because of health reasons, some of the oyster beds along the Louisiana coastline were closed.

This closure was bound to affect the supply of seafood in America and consequently the economy of Louisiana because for example, about 23% of all red-snapper fish caught in the US came from the state of Louisiana.

Moreover, since fish can swim away from the zone of oil spillage, it is feared that subsequent harvests are bound to be affected by the fish migration. Consequently, Louisiana fishers are bound to be significantly affected, in terms of low fish production.

Effect on Oil Industry

The oil spill had a significant impact on the economy of Louisiana and the surrounding marine life, but in the same manner, there was also a significant impact on the oil industry.

Not to mention the volumes of oil lost in the spillage, one significant impact of the oil disaster was the financial damages brought about by law suits and cost directed towards clearing the oil spill. In total, BP lost millions of dollars in financial damages and costs that went into restoring the company’s image and reputation in the eyes of the public.

Effect on Restaurants and Tourism

The hospitality industry also suffered great losses as a result of the oil spill because restaurants suffered insufficient supply of seafood because of the death of sea animals and the ensuing health risks posed by the oil spill on seafood.

Tourism was equally affected because the sea was polluted with petrochemicals from the oil spill and in the same manner; the sea was also polluted by chemicals meant to clear the oil spill. Hotels and resorts were therefore significantly affected because leisure activities at the shores were prohibited, consequently leading to a low turnout of visitors.

Current Impact on the Louisiana Economy

Fishing Industry

Currently, the fishing industry is slowly recovering from the impact of the oil spill after it was cleared. However, the industry is still wiling under the long-term effects of the oil spill because the population of oysters reduced as a result of the oil spill and consequently, fishers have to deal with competition from other seafood suppliers who have invaded its primary market to supplement its shortfall.

Oil industry

After the oil spill, the oil industry is still suffering from the effects of negative publicity as a result of the extensive damage the oil spill did on the environment and people’s livelihoods. It may probably take a long time before public confidence is restored.

Restaurants and Tourism

Restaurants and the tourism sectors also have to contend with waning public confidence about the impact of the oil spill on their services. For instance, many customers are now shunning seafoods in restaurants because of the fear that it may be unsafe to consume seafood because of the negative impact of the oil spill on aquatic life. Tourism is also suffering in the same regard because many visitors are still not confident to use the sea.

Cleaning After the Spill

After the oil spill cleanup, the sea situation has not come back to normal because scientists are still grappling with the problem of transferring oyster larvae from healthy sources into the affected areas.

After this process is completed, it may take a long time before the situation goes back to normal. In concurrence to these efforts, environmental bodies have also sued BP for the environmental damages it has caused. Most of these cases are yet to be finalized (Mcgill, 2011).

Conclusion

The BP oil spill has caused extensive damages not only to the environment but people’s livelihoods as well. It is difficult to undo such a disaster in a couple of weeks or months and therefore the impact of the oil spill is yet to be completely eliminated.

More so, its impact on the growth of oysters and clams may have a long-term impact on the marine ecosystem and therefore the comprehensive damage of the oil spill cannot be accurately determined. Nonetheless, it is no doubt that the effect of the oil spill is very extensive.

References

Freeman, M. (2010). The Oil Spill’s Impact on Gulf Coast Oysters. Web.

Judy, J. (2010). Oil Spill Threatens Gulf Oysters, May Impact Seafood Worldwide. Web.

Mcgill, K. (2011). Lingering Effects of BP Oil Spill Topic for Oyster Industry Leaders. Web.

Weise, E. (2010). Spill’s Effects Unlikely To Make Way to Grocery Aisles. Web.

Posted in BP

BP Deepwater Horizon Oil Spill

BP’s handling of the Situation

BP’s immediate response to the disaster was a rather frantic attempt to coordinate emergency response to curb the oil spill (Macalister 2). This happened in the eve of April 20th (The Guardian 8). Many measures were applied to contain the oil leak but quite a number were unsuccessful in the initial stages.

For example, the company tried to pump thousands of barrels of oil into the well to stop the leak but nothing much came out of it (The Guardian 8). The mitigation efforts were poorly coordinated and rather clumsy, with many of the company’s shareholders expressing fear that the company was going to significantly incur a lot of financial damages in the cleanup exercise (The Guardian 8).

This caused BP’s shares to plunge by more than 2% (The Guardian 5). However, the shares of the company hit an all-time low after it was estimated that the cleanup costs and litigation expenses were costing the company in excess of $2.35 billion (The Guardian 8). Nonetheless, after subsequent consultations with the company engineers, the oil leak was contained and sealed to this date.

On 3rd June, the company embarked on efforts to carry out major advertising campaigns to boost the company’s image among the American public (The Guardian 5). This was undertaken through television commercials that were aired throughout the country.

Soon afterwards, the company embarked on rewarding its shareholders with dividends; a move which was politically criticized because the crisis obviously implied increased financial burden for the company in cleanup costs (The Guardian).

Considering there were a number of fatalities in the disaster, the company decided to pay $20 billion as compensation to the families (The Guardian 5). This translated to 13.5 billion Euros (The Guardian 5).

The above responses implied a number of advantages and disadvantages to the company. Though containing the leak was the first response procedure the company undertook, its lack of coordination showed the company’s weakness in dealing with disasters. However, since it undertook efforts to curb the disaster (as a prompt strategic response) the company was perceived to take responsibility for its own misdeeds.

This was a swift strategy the company undertook. Another commendable response that the company undertook was to compensate the families of those who lost their members in the disaster. This was a positive strategy in portraying the company as having a human touch to its undertakings. In other words, the company was easily perceived as caring for its employees, as opposed to solely being driven by the aim of making profits.

The television commercials and advertisements developed by the company to improve its image was also a good strategy in minimizing the negative publicity the company got as a result of the disaster. However, the effectiveness of such a strategy depended on the content of the advertisements.

Bad content or inappropriate advertising would have easily sealed the fate of the company in bad publicity, but if it were carefully crafted, it would have served its purpose. In this case, the adverts were carefully crafted and they served to mitigate the effects of the bad publicity (though not much effectiveness could be evidenced as will be seen in subsequent sections of this study).

Relevance of Tench and Yeomans’ Statements in BP’s Situation

Tench and Yeomans assertions that it was prudent for the organization to be prepared, knowledgeable, calm, controlled and easy in disseminating information applies best to the BP disaster because the responsive strategy that the company undertook lacked specific elements identified above. One of the most important missing elements in BP’s disaster responsive strategy was the ability to be prepared.

This failure was easily noticed from the company’s uncoordinated efforts to contain the oil spill. Though Tench and Yeomans note that no disaster response offers a hundred percent guarantee of working, it would have been beneficial for the company if it had an effective disaster preparedness strategy for such kind of disaster.

Preparedness could easily have eased the level of stress on the company executives because they were held up in endless meetings to deliberate on how to go about the disaster (a step that could have been easily defined with the preparedness plan) (The Guardian 15).

The Guardian further affirms that “some of the executives were complaining that they wanted their lives back” (16). This kind of assertion however angered the American public (The Guardian 16).

With regards to knowledge management in crisis management, there were reports that BP was aware that its drilling well was leaking, days before the oil spill got out of hand (The Guardian 15). This was an invaluable piece of information for the company, if it acted on it in good time. Because the company disregarded such information, the disaster was extensively disastrous.

The company exposed some sense of complacency in the way it responded to the crisis, and from the analysis of Taylor (9), such an attempt at disregarding important information is unacceptable and potentially dangerous (just like it was).

Calm, as asserted by Tench and Yeomans is an important ingredient in crisis management when evidenced from the BP disaster. The lack of calmness in dealing with the gulf oil spill could be seen from BP’s efforts to try and come up with a quick fix to the problem. This is the reason why there were a number of frantic efforts to salvage the situation and none of them worked for a couple of weeks (The Guardian 5).

A sense of calm in crisis management would have been beneficial for the company because it would have allowed for adequate time to gather data relating to the situation, asses the situation, consult widely and ultimately form a team to deal with the disaster (Bolander 4). A failure to observe calm caused the company executives to freak out and consequently cause the disaster to spin out of control (The Guardian 5).

Communication is also another important crisis management tool advanced by Tench and Yeomans because it helps in the spreading of rumors and perpetration of falsehoods regarding a given crisis. However, before proper communication is carried out, a proper communication structure needs to be in place. Preferably, the communication structure needs to be horizontal and not vertical.

Those to be communicated with include the internal and external shareholders of the organization. BP failed to have a good communication plan in overseeing its crisis management efforts and that it why the company suffered increased financial damages. This kind of consequence is predicted by Schmidt who notes that:

“Companies that underestimate the importance of effective employee communication during times of crisis often suffer significant economic damage as the result of, among other reasons, a lack of trust, low morale, and the subsequent loss of their most valuable asset, well-trained and dedicated employees” (7).

Lastly, Tench and Yeomans note that control is an important tool in crisis management. Control is often exercised by establishing crisis control centers (Conflict Research Consortium 1). Exercising control in crisis management is important in ensuring information is properly interpreted and up-to-date information regarding the given crisis is availed (Conflict Research Consortium 1).

Also, control enables companies to negotiate crisis reduction steps incase current strategies fail to materialize (Conflict Research Consortium 1).

BP did not fair badly with regards to this provision of crisis management, but such an observation cannot be specifically attributed to the company alone because the American government, through the Environmental protection agency (EPA) helped the company establish a control of the crisis (Gibbs 12).

This can be evidenced through its establishment of the website: www.epa.gov/bpspill which provided the public with information regarding the responses the government and the company were jointly undertaking (Gibbs 12).

Comprehensively, from a personal point of view, BP should put in place an elaborate disaster preparedness plan that encompasses the above elements, just like Tench and Yeomans proposes. This kind of disaster management plan would be beneficial in ensuring most functional areas in crisis management are well catered for.

Opportunities in Crisis Management

The assertion by Jeflkins that organizations can potentially benefit from opportunities brought about by disasters is true because crisis management potentially poses a lot of opportunities in the event of a disaster. However, it should be understood that before any opportunities are capitalized in the event of a disaster, proper crisis management should have been first undertaken and all the people who need to be helped, are helped.

This is a pre-condition to taking advantage of crisis opportunities, otherwise, if the above is not observed, the attempt to capitalize on an opportunity from a crisis may prove futile or cause more harm that it can.

However, in coming up with opportunities in the event of a crisis, it should be acknowledged that in the process of rebuilding (after a crisis) people can capitalize on their experiences (after a crisis) to build something better to withstand future crises.

For instance, since the BP oil spill was brought about by structural and human error, during the rebuilding of the damaged well, the engineers can build the well valves in a stronger way to prevent any future spillage. Also, policies can be formulated to correct future human errors of similar kind, say, through increasing human monitoring stages (and the likes) so that future calamities of the same magnitude can be avoided.

Crises can also provide an opportunity for leadership change, in the sense that, leaders can develop better skills at handling their roles. In particular, “crisis leadership” can be an easily developed skill among a crop of leaders in an organization.

This is probably an opportunity that BP failed to realize because its current crop of executives was up for resignation after the disaster (considering they were perceived as part of the problem since they failed to curb the disaster).

In reference to this development, the US president, Barrack Obama, pointed out that he would have fired the company executive if he was working for him (The Guardian 32). Such sentiments were probably said because it is human nature to find someone to blame.

However, such a strategy would not be recommended when analyzing the opportunities crisis and disasters bring to the organization. This is true because the company executives who were up for resignation were better placed to handle future company calamities (incase they happened) because they had adequate knowledge on how to handle such disasters. This experience is acquired first hand; meaning that it is possibly invaluable.

How to Improve Company Corporate Image

BP’s corporate image should be improved through effective marketing strategies that can restore the company’s position in the corporate map. The marketing tools to be used change by the day but the company should consider using a wide variety of channels. This includes, website marketing tools, print media, television and radio.

These tools should all be engaged simultaneously because the public should be bombarded by positive media advertisement regarding the company since it has been 9 months and the company may still continue to suffer from poor reputation and customer skeptism if it does not do something drastic.

Firstly, since the company is currently experiencing a lot of customer skeptism, low customer confidence and confusion regarding the company’s ability to handle crises in a good manner; it is up to the company to project a good corporate image with these concerns in mind. Specifically, the company should project an image of dependability, reliability and remorse so that they can win back customer confidence.

More importantly, the company should project an image to portray the fact that it is doing everything in its capability to reverse back the damages it caused to the environment because environmental degradation is one concern which much condemnation was directed at the company.

This involves doing something out of the ordinary, say, sponsor an environmental cause that projects a perception that the company really cares about the environment. Doing the bare minimum (which is cleaning up the oil spill) is not enough to restore public confidence, since many people would think it is only doing so with the aim of restoring “status quo”.

Moreover, the company should be creative enough to devise ways through which it can communicate reasons why the company should be trusted again. A failure to do so will lead to less patronization of the company’s outlets because of a lack of customer commitment and therefore most of its traditional sales will go to its competitors.

These factors should be communicated through print, internet, television and radio because the company needs to reach as many people as possible. This involves the use of an integrated marketing strategy because the more channels the public hears the message, the more effective the message is likely to be, and the more the number of people the company will reach.

An integrated marketing strategy is also identified by many researchers a sure way of boosting the credibility of the company and trust between the company and the public (Optimal Marketing Communications 5).

For example, Optimal Marketing Communications affirms that “Keep in mind that the more your target audience sees and hears the name of your organization or business, the easier it will be for you and your associates to sell your products, services, or point of view” (5).

Secondly, since the company had already issued a number of press releases regarding the state of the disaster; the company should organize with the local media, and even international media, to carry out media interviews so that the company can explain the improvements it has made so far, and how it seeks to handle such kind of disasters in future (Optimal Marketing Communications 6).

In the same regard, the company will also be in a good position to reiterate its environmental commitment, especially in light of the fact that the oil industry has been singled out to be one of the most visible catalysts to environmental degradation. This kind of public relations strategy should be pushed through television and radio.

Thirdly, the company should push its “positive image” agenda through editorials and guest columns (written by either the company itself or its associates).

In this kind of marketing strategy, the company should embark on resonating the company’s commitment in environmental preservation, but most importantly, the company should consider reiterating its past record of good environmental practices and how it has been mindful of its employees’ welfare.

This will be in light of the number of employees the company lost in the disaster and how it responded to the same. A good record of disaster preparedness, environmental practices and employee welfare would instill a perception that the oil spill Disaster was a secluded case and probably an accident.

Lastly, considering the company experienced a bad reputation not only among the public but also the company stakeholders; it is advisable that the company undertake a public relations exercise to restore the trust its stakeholders had with the company (and more especially with its management).

This ought to be done through workshops and seminars where the company will communicate its position regarding the measures it has taken after the disaster and how it seeks to improve its image in light of the same. This strategy is important because company stakeholders support the management and operations of the company; so if the company cannot be guaranteed of internal support, it would be fighting a losing battle.

Works Cited

Bolander, Jarie. . Web.

Conflict Research Consortium. Crisis Management. Web.

Gibbs, Robert. . Web.

Macalister, Terry. . Web.

Optimal Marketing Communications. Public Relations and Press Releases: Powerful & Cost-effective Marketing Tools. Web.

Schmidt, Oliver. Effective Employee Communication in Times of Crisis. 2010. Web.

Taylor, Michael. Importance of Disaster Remember the Preparedness and Mitigation. Web.

The Guardian. BP Oil Spill Timeline. Web.

Posted in BP

BP Company Oil Spill Problem

Introduction

The oil spill shook the U.S when it occurred on the twentieth of April 2010. Never had such a magnitude of oil spill witnessed. Oil prices have been affected, surging day by day with more spilling recorded in the gulf. Problems are also mounting with the weather condition in the gulf, storms have been witnessed and this is threatening to expand into a hurricane (Welch and Joyner 1). The gulf has been a production site for oil in the U.S and the effects are wide and large. Several environmental effects associated with the spill have been witnessed, and the company is trying all its mitigation measures as well as the federal government with little progress. This disaster has greatly affected the company and the country’s economy. BP rates as one of the largest multinational firms in the world; these effects are therefore deemed to affect the economy, for instance, the surge in oil prices and the fall in market capitalization. This paper will investigate problems associated with the spill, clients, and stakeholders in BP.

Problem

The problem of oil spill started in the Gulf of Mexico, which is also referred to as deep-water horizon, on the twentieth of April, 2010. This has continued since, causing a massive loss of oil in millions of Gallons. The rig at the station exploded and this killed 11 employees as well as injured another 17. It has since continued causing massive damages and losses (BP p.l.c. 1). This oil came from below the surface of the ocean and is continually raising fears over its potential impacts on the environment. Fishing industries, as well as tourism, wildlife, and marine habitats, have been critically affected, BP has been blamed by the federal government for the disaster and has been held up to cover the costs associated with cleanup being done. Other impacts that have risen include effects on the ecological system, litigation, health, ocean drilling policies, among others. Besides, its stock valuation has gone down tremendously to almost half its capitalization (Welch and Joyner 1).

Clients of BP

Clients of BP are feeling the heat as their customers continue to dwindle due to the massive effects brought about by the oil spill. Most people are now opting for other competitors because they are concerned about the rig disaster, its effects on the environment, and aquatic life. This has affected most of the clients as is explained by Haltenholf, a dealer who manages a BP station at Kirkwood in Manchester. This in turn lowers the profitability of the company and has resulted in the fall in the market share value (Corrigan 1).

Stakeholders

Stakeholders form an integral part of any company’s success. BP, like any other firm, has stakeholders and it must communicate effectively with them. This has not happened as was required, given their way of handling the spill. Communications with the main stakeholders have been poor and the company should improve on that if such consequences are to be reduced. The community is important and should be given prior communication if safer methods are to be implemented (Clark 1).

Conclusion

The BP oil spill has been the worst of all other spills witnessed all over the world. The amount of Damage to the economies and environment, added to the casualties, has worsened the situation. Its expected impacts on the environment, especially around the gulf are unbelievable. As the disaster mitigation measures continue, it is important to note that such incidences should be avoided in the future. Stakeholders should also be involved fully in the process.

Works Cited

  1. BP p.l.c. Gulf of Mexico response. BP global. 2010.
  2. Clark, Terrence. Who are my stakeholders and should I care? CA Community. 2010.
  3. Corrigan, Don. Area BP stations Fell Consumer Heat over Gulf Oil Spill Disaster. Southcountytimes.2010.
  4. Welch, William and Joyner, Chris. USAToday. 2010. Web.
Posted in BP

The BP Oil Spill and the Importance of Oil on Global Economy

Introduction

The eve of April 20th, 2010 was just like any other in the Gulf of Mexico where the various oil rigs were busy in their extraction of oil from the sea bed. This, however, was not the case with Deepwater Horizon, one of the ultra-deepwater rigs located around 50 miles off the southeast coast of Louisiana, which was involved in a huge explosion that eventually resulted in the death of eleven workers and the sinking of the rig two days later. Despite the loss of precious lives, the damage did not stop here, and immediately after the sinking of the rig, reports of a major oil leak came in. The oil spill is majorly the result of a failed blow-out preventer which was installed at the mouth of the pipe in the sea bed, and as a result of its failure, this still continuing oil spill is now regarded as the worst oil spill in US history.

Oil Spills and their Environmental Effects

The Deepwater Horizon is being said to release up to 5,000 to 10,000 barrels of oil per day. Such a high rate is being feared by environmentalists and other scientists as an incident that is bound to damage the nearby environment permanently. This high rate of the oil spill has caused the spread up to the coastal areas of Louisiana, Mississippi, and Alabama causing the closing down of many beaches, limiting the fishing industry to only a few areas, resulting in a serious impact on the economics of the region.

But the damage of the oil spill is not only in terms of economics. Economically thinking, the damage is far more beyond our imaginations. This oil spill has led to the limitation of the supply of fresh oxygen into the water, thus resulting in the deaths of marine life. Fishes and underwater plants are dying at an increasing rate due to the lack of oxygen and the toxicity of the region[1]. Moreover, the vapors released by the spill are damaging the environment due to their toxic nature and are continuously spreading.

The Importance of Oil in Global Conflicts

Looking at the Deepwater Horizon oil spill, one simple question comes into our minds: is this the same oil being wasted that we’ve been fighting over for years? The answer to this question is “yes, it’s the same.” When asked, many people would see it as a blow to the sacrifices that our ancestors did in making sure that the land that we live on is abundant of all resources and we do not have to ask others for their help. In this modern era, oil has become a very important part of our life – the importance which can be signified by the fact that think tanks globally are thinking of effective alternatives to oil just so that it can be preserved.

Global history is filled with fights over the issue of natural resources. There have been numerous battles and wars won and lost just so that the other nation could get hold of more resources. Such resources are mainly water and food, but after the discovery of oil, the fights are now about oil, water, and food[2]. Any country with all of these three resources has the potential to rule the world, a threat which was proved not very long ago when the oil-producing countries in the Middle East banned the export of oil to the west, resulting in high inflation throughout the countries that were dependent upon it.

Even in this modern era, where we have developed alternatives to energy, there is still an ongoing war between the countries for the availability of oil. Countries are still trying to negotiate their share in the control of the oil from the oil-producing countries. While some have succeeded in getting theirs, many have failed simply because they cannot afford such a venture. Global conflicts are occurring between countries as they have yet failed to settle their agreement with the oil-producing countries. Countries are also trying to gain the maximum possible advantage that they can attain in oil production in international waters.

Conclusion

The recent oil spill, which is being blamed on BP, has raised numerous questions, not only on environmentalists alone, but also on the minds of scientists, and historians. Those who have a brief knowledge about global history know that resources such as oil have always been the cause of conflicts in one way or the other. It is, therefore, better to say that such oil spills are a serious waste of a very precious resource as our daily lives depend heavily on oil. An error in the case of oil extraction should be heavily penalized as the company involved that although the venture is in the favor of the country’s economical stability, on the other hand, one slightest mistake would result in the loss of both the money involved along with the surrounding environment.

References

  1. Dupraz, Emily. “The Oils of War: Conflict in the Sudan.” Harvard International Review 24.I (2002).
  2. Robelius, Fredrik. Giant Oil Fields–The Highway to Oil: Giant Oil Fields and Their Importance for Future Oil Production (Uppsala Dissertations from the Faculty of Science & Technology). Uppsala Universitet, 2007.
  3. Thomson-Smith, Lydia D. Oil spills: Cases, causes and consequences. FastBook Publishing, 2010.
Posted in BP

BP’s Macondo Oil Explosion Effects on the American Society

Introduction

That business causes profound effects on society is a well-known fact. The main purpose of legitimate business activity is to improve the lives and wellbeing of citizens in ways that make organizations profitable. Simply stated, organizations and businesses cannot be successful, unless they benefit the society in which they operate.

Unfortunately, businesses produce a multitude of negative effects on society. The explosion at BP’s Macondo oil well in 2010 confirmed that businesses were a serious threat to stability and peace in the American society. Only a broad regulatory move can help to resolve the ecological and economic safety problems in the U.S. oil industry.

The explosion at BP’s Macondo oil well and the subsequent spill of almost 5 million barrels of oil into Louisiana waters was one of the hot topics in the U.S. in 2010. The New York Times called the oil spill “a potentially unprecedented environmental disaster” (Broder & Zeller). The exact causes of the disaster are poorly understood.

It would be fair to say that a combination of mechanical and human failures caused an unprecedented ecological catastrophe in the Gulf of Mexico. The largest oil spill in the history of America, the blowout that killed 11 men and resulted in enormous economic losses, the Deepwater Horizon tragedy was a logical result of the BP’s failure to anticipate and address the complexities in operational implementation, engineering design, and team interfaces (Clayton).

The tragedy was not merely the product of BP’s carelessness but a reflection of an “industrywide culture of complacency” (“One Year Later: Editorial”). For years, companies in the U.S. oil industry paid no attention to the technical and safety requirements.

The results of internal investigation suggest that the main reasons of the tragedy include but are not limited to faulty cement at the bottom of the oil well, incorrect and unprofessional evaluation of negative pressures, and the presence of natural gas in the engine and ventilation systems (Clayton).

Technical and human failures in the oil industry cause profound effects on the lives and wellbeing of the American people. The scope of the ecological damage is difficult to estimate. 1,000 miles of contaminated beaches and soiled fish nurseries are just the beginning (“One Year Later: Editorial”).

Years will pass before scientists can estimate the damage caused to the tiny organisms in the Louisiana marine ecosystem. The economic effects of the oil spill are no less serious. Following the oil spill, President Obama put a moratorium on deep-water drilling in the Gulf of Mexico (Zeller).

“Each exploration and production job represents four supporting jobs in and around the region. If that is the case, thousands of jobs – and millions of dollars in wages – could be affected by the work stoppage.” (Zeller)

As a result, Louisiana residents asked the Obama administration to review and lift the ban (Zeller). Certainly, the oil industry is a crucial factor of economic stability in the U.S. The U.S. dependence on foreign oil is a continued object of public scrutiny. However, increased drilling is unlikely to reduce oil dependence in the U.S., since the amount of available oil can hardly meet the growing demand for oil in America (Gertz).

Only a broad regulatory move can help to resolve ecological and economic safety problems in the U.S. oil industry. The oil spill exposed severe flaws in the system of regulation and federal oversight in the U.S. oil drilling sector (“One Year Later: Editorial”). The relationship between regulators and the oil industry was getting extremely costly (“One Year Later: Editorial”).

The lack of control over the actions and decisions in the U.S. oil industry affected the lives and wellbeing of millions of Americans. As of today, companies in the oil industry lack financial opportunities and equipment needed to prevent further disasters. Congress could contribute to the ecological and economic balance in the U.S.

The National Oceanic and Atmospheric Administration could become an equal partner in decisions regarding oil drilling permissions in the U.S. (“One Year Later: Editorial”). It is imperative that a new system of federal oversight in the U.S. oil sector be developed, to ensure that companies comply with the ecological and technical regulations and demands in the oil sector. Certainly, this solution is not without controversy.

The development and implementation of a new system of federal oversight will incur additional costs and increase the burden on the U.S. taxpayers. However, given the crucial role of ecology and the economic implications of the oil drilling sector, oil companies can become the main source of funding for the proposed system. This is how the state can release taxpayers from the need to invest additional resources in the development of sophisticated oversight systems in the oil drilling sector.

Conclusion

Businesses cause profound effects on the American society. The explosion at BP’s Macondo oil confirmed that businesses threatened stability in the U.S. Technical and human failures in the oil industry negatively affect the lives and wellbeing of the American people. The scope of the ecological damage is difficult to estimate.

Only a broad regulatory move can help to resolve ecological and economic safety problems in the U.S. oil industry. Congress must initiate the development of a sophisticated system of federal oversight in the U.S. oil industry. Oil companies can become the main source of funding for the proposed system. This is the best way to ensure that oil drilling companies comply with the technical regulations in the U.S.

Works Cited

Broder, John M. & Tom Zeller. “Gulf Oil Spill Is Bad, but How Bad?” The New York Times, 3 May 2010. Web.

Clayton, Mark. “BP Report On Cause of Gulf Oil Spill Spreads the Blame.” The Christian Science Monitor, 8 September 2010. Web.

Gertz, Emily. “Can Offshore Drilling Really Make the U.S. Oil Independent?” Scientific American, 12 September 2008. Web.

“One Year Later: Editorial.” The New York Times, 15 April 2011. Web.

Zeller, Tom. “With Drilling Stopped, Losses Could Multiply.” The New York Times, 4 June 2010. Web.

Posted in BP

BP Plc: Remaining Relevant and Acceptable

Introduction

British Petroleum (BP plc) was initially called The British Petroleum Company, and after a merger with Amoco became the BP Amoco plc, and currently, BP plc. As the third largest global energy company, the British global energy company is also categorized as world’s 4th largest company. Being a major oil company, the multinational oil company BP is the largest corporation in UK. In addition to the oil exploration, the company also deals in natural gas and marketing of petroleum products (Buono, 2009).

BP’s global presence was promoted by the merger with Amoco in 1998 making it BPAmoco, which changed to BP in 2000 to date. However, Condon (2002) believes that in the US the grade BP gasoline is available as Amoco Ultimate. Most of the other gasoline centres in the US were faced with a number of challenges caused BP to exit the Southern market. Instead, BP has targeted its oil exploration activities in the Soviet such as the Russian TNK-BP that provides for BP’s 20 percent of its global reserves (Burgess, 2002).

Strategic commercial challenges and possible solutions

As a global producer, BP has to contend with the strategic commercial challenges such as fierce competition for markets and talent; investors’ expectations and market demands for sustained competitive performance; and scrutiny and in some cases public doubt.

Additionally, changes in the global economy present a cadre of new challenges, which include the absence of a framework of global rules; the organization and management of companies; cultural diversity; and the question of corporate responsibility for the externalities linked with business activity (Cox, Clegg and Grazia, 1993).

According to Daft (2009) the global environment is a threat to a company’s survival especially in foreign countries. Therefore, BP just like any other player in the market has to wrestle with its weaknesses and threats while capitalizing on the strengths and opportunities.

As such, firstly, the absence of the framework of global rules becomes a disadvantage to businesses that normally operate under regulation and legal clarity. The absence of this legal umbrella is associated with the fact that the international companies are basically established for a different age (DePalma, 2002).

In business, trade issues are mostly based on agreements with the exception of investment protection, environmental issues and the aspect of intellectual property, which are yet to be incorporated. In this context, the unforeseeable consequences of climatic changes result in lack of agreements on most aspects of trade.

The operation at a level of integration devoid of the law means that a company established in a given country is required to obey the jurisdiction rules while at the same time abiding by the law of every place it is operating in. in the process of staying up to date with the policy requirements, certain companies will be forced to adopt own rules prior to the formulated regulatory standards.

Because there will be need for a global company to keep understanding and interacting with new policies in every country of operation, companies ought to ready themselves by creating mutual advantages and not only pursing their interests. BP should therefore encourage its workforce in the various countries to watch out for likely mutual interests in addition to the primary interests in the country of operation (Doh, 2005).

Secondly, the problem of how companies are organized and managed is pegged on to the fact that competition on the international scale requires a widespread design of operations. BP for instance has the distribution scale with its spread in over 24 time zones and 110 national jurisdictions.

In the case of BP’s distribution scale, Dunning, (1997) asserts that the commonly used command and control model would not work effectively. Instead, efficiency can be achieved by the use of delegation of authority, thus establishing what a given manager is tasked with. There is also the need for the managers at different levels to understand the framework that dictates how their jobs will be conducted (Dunning, 2002).

Consequently, with BP’s more than 100 countries of operation, there will be unforeseen from one place to the other; especially, with the diversity in the cultural differences and cultural orientation. Unfortunately, unpredictable circumstances that call for urgent reaction might also cast more doubt in the quality of judgement of local managers and team leaders.

Away from the mistrust for the judgement of local managers, most situations often suffer the urgency and the limited time to get the concerned manager to respond immediately. In this case, the presence of a localised managerial team at the various establishments will help hasten decision making and resolving of unexpected circumstances (Grabinski, 2007).

Therefore, the command and control model of management will be replaced by a new combination of corporate culture, standards and values that present a universal ground over which people can confidently make decisions and judgements as expected of them. With the understanding of such a management model, the company’s growth and expansion in the global scale is highly assured (Hitt, Ireland, & Hoskisson, 2008).

Thirdly, cultural diversity is proving to be difficult to handle. This is true for companies with international presence and it is about values and norms. The monocultural nature of businesses has also been presented by the nationality of the company reflected in the workforce makeup. Although the monocultural setup would mean close understanding between people tasked with diverse responsibilities and a common sense of values, this has not been sustainable in the globalised world.

Therefore, businesses have had to employ local stuff in senior roles in order for business to thrive in the local market. Additionally, senior positions can be available globally to those who are competent and deserving. Instead, any merit should be considered while appointing holders of the positions irrespective of their background and nationality. For instance the operation across cultural boundaries means that meritocracy is vital as a toll of maintaining motivation (Hitt, Ireland, and Hoskisson, 2007).

In addition, Langit (2007) suggests that there is need to understand adapt to the many strong cultures in the countries of operation, in order for the smooth running of business across cultural boundaries. Considerably, operations in Islamic countries during tensions between Islamic communities and the west, can prove demanding in a similar way as operating in Russia where there are transitions from the rigidly centralised systems.

Thus, people who can fit into diverse cultural communities and bridge the divisions are few and far between. The ability to understand the differences in the cultural orientations and be able to merge them, calls for the search for strong and senior local people, who are ready to learn the complexities of global organizations.

Lastly, the fourth challenge if corporate responsibility for the consequences of business operations. Global companies, often times concentrate on their core business without concern for their impact on the society they operate in. for instance, the resource sector are faced with the consequences of creation of wealth resulting to the disruption of local economies.

On the international realms, company’s activities may affect labour markets and as well as other major currencies that are in use. Eventually, dispatch of products to the final consumer can benefit the user and consequently affect the environment. Such issues are of great value for companies that would like to remain sustainable. In retrospect, the recognition of the impact to the society should always be countered by amassing skills and technology to make the impact positive (Lock, 2008).

Primarily, globalisation is the first gesture toward countering the negative effect to the society companies operate in. the increase in the scale of global companies, empowers otherwise small companies with the power to increase their operations which would otherwise have been impossible individually.

Similarly, the social contract which gives room for companies to expand as much as possible, assigns responsibility to the companies to tackle the worldwide challenges instead of adopting the ‘blame game’. As a result, the companies develop systems and policies that help resolve certain issues that are occurring to partners in the industry long before they fall into similar traps.

Although natural resources is also party to the greater challenge facing global companies, preparation for these shortages has been looked into so as to ensure future sustainability of the company in the global market. Alternatively, use of environmentally-friendly resources has been another development towards countering the negative impact through emissions and effluents. Various countries have also adopted different legal actions and policies towards the parties responsible.

At a global level, social responsibility has also been adopted by international companies through developing the social and economic capacities of the countries of operation. Such concise efforts to ‘give back’ to the community can be disseminated through training, education and fostering for institutions that erect the civil society.

However, the political arena should not be domicile of their employees despite their desire to have strong societies. Instead, their participation is allowed as long as they uphold integrity without challenging their legitimacy (Nejati, Shafaei, and Mostafa, 2008).

However, standard practice requires that companies should not overstep the boundary of legitimacy; especially the primary focus of the company is purely profits. Actually, because companies invest for the long term especially in facilities and plant, there is little effect from the conflict with the political issues that would affect its operations.

Therefore, in the new global arena companies are tasked with the long term interest in expanding their operations and products which is considered a higher calling relatively compared to their role in the industrialised, developed countries with functioning systems.

According to Nelson, (2006), British Petroleum should continuously support investment in education of the people in the society in which they operate. Such investment may not have quick benefits especially in countries in Asia or Africa. However, it has long term benefits in the long run both to the company and the society as a whole.

The members of the society who are educated bring skills and knowledge to the company and society as a whole. Therefore, they are able to bring new ideas and new strategies as well as improve the existing process in both the company and the society as a whole. As a result, the company’s competitive edge is enhanced.

According to Nicholson (2007) there are four main issues that the British Petroleum must deal with in order to be competitive both at the present time and future. The first issue is that the company must learn to work efficiently and effectively in the absence of worldwide operating rules.

Secondly, it must learn to organize itself profitably across wide geographical realms. Thirdly, it must learn how to create an organisation with a global culture and must embrace meritocracy. Finally, a company must understand its role and legitimacy in the society in which it operates.

Companies that operate in international and less developed countries play pivotal role in developing trade issues. The companies work as agents of development and sustainability of domestic and international trade policies. Such companies become successful in their operations and promote economic development and relevant trade policies. To be successful, private international companies must also learn to operate in partnership with state agencies.

This poses a great challenge because state agencies’ key objectives are not to make profits and maximise shareholders wealth but improve lives of its citizens (Princeton Review, 2004). Therefore, the international companies must learn to bargain for their own interests. In addition they must understand how to develop and nurture benefits of the partnerships. Consequently, they become powerful because they have the support of the state agencies’ in which they operate (Trout and Steve, 1997).

Global disparities of wealth and purchasing power of different nations and individuals pose both a challenge and opportunity to various companies. The company should ensure that it gets the support of nearly everybody including those who may not afford to purchase its products or services.

This is achieved by developing and nurturing business models that has the ability to reach individuals and countries existing at the bottom of the economic pyramid. This is because poor population is part and parcel of company’s market and promoting business models that help them grow and develop would increase market of the company’s products in future (Sturdy, Clerk, Handley, and Robin, (2008).

Conclusion

British Petroleum is a company that has a global presence. Therefore, it is faced with both myriad of domestic and international challenges and opportunities. British Petroleum is facing competition today than ever. Other oil companies encroach their market share, global warming is biting hard and trade policies are changing at ever increasing rate.

The challenges are hard to solve and emerging opportunities demand skill, knowledge, good positioning and approval of the societies in which it operates. Consequently, British Petroleum should be able to deal with the challenges and exploit opportunities that face them with sheer boldness.

To remain relevant and competitive in the current age, British Petroleum must embrace new and appropriate technologies, help develop the society in which it operates, and invest in training and retraining its current and future workforce. Furthermore, British Petroleum should develop practical ways of handling conflicts resulting from competition for natural resources in areas where they obtain their oil. The issues of global warming are hurting the global world.

Therefore, to remain relevant and acceptable, it must adopt technology and processes that minimise emission of pollutants to the atmosphere. It should also contribute in rebuilding the damaged environment and help nations cope with environmental challenges.

Finally, British Petroleum must do the following four things to remain competitive. It should learn to operate effectively and efficiently, organize itself profitably across the vast geographical landscape, create an organisation culture that promote meritocracy and it should understand it role and legitimacy domestically and internationally.

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