A Free-Market Energy Blog

Deepwater Horizon at 11: Remember “Beyond Petroleum” BP

By Robert Bradley Jr. -- April 20, 2021

“On the 11th anniversary of the BP blowout, the real takeaway is that oil companies that think they are ‘beyond petroleum’ are value destroyers for shareholders and for the environment.”

Every April commemorates BP’s Deepwater Horizon oil spill (April 10, 2010). To the anti-energy Left, Deepwater Horizon is the epitome of oil-gone-bad, coming some 21 years after the Exxon Valdez oil spill. It was not supposed to happen again, but ….

The sad facts of Deepwater Horizon will forever remain. The multiple failures behind the accident are also well documented. But a paradox remains. Mighty BP, captained by John Browne, the leading “environmentalist” of the petroleum industry created the corporate culture that resulted in lax safety and environmental protocols. By saving about $5 million out of $100+ million in drilling costs, the company ended up paying out in excess of $60 billion.

At MasterResource, I addressed the paradox in terms of “global warming as the great environmental distraction.” Greenwashing and political correctness resulted, ironically, in the supposed best company being the worst! Ditto for Ken Lay and Enron on the natural gas side, another story of a postmodern corporation putting sizzle before steak, hat before cattle.

BP Fools the “Socially Responsible” Investors (‘Green’ Enron did too)

They Loved BP and Enron: Climate Alarmism as the Great Environmental Distraction (Part I: Worldwatch Institute quotations)

BP’s ‘Beyond Petroleum’: Climate Alarmism as the Great Environmental Distraction (Part II: Why the ‘greenwashing’?)

Harvard Business Review Article: BP as Environmental Role Model (Part III on global warming as the great environmental distraction)

Opportunity Cost

The time, money, and focus that go in one direction cannot go in another. The most highly valuable foregone alternative is the opportunity cost to the chosen action. In terms of opportunity cost, the results can be spectacularly bad. As I wrote in the aftermath of the BP spill:

Just imagine if John Browne had used the time and resources BP spent on climate alarmism and ‘beyond petroleum’ on real safety and environmental issues.

Browne resigned in 2007, but his successor, Tony Hayward, might have had an inheritance that would have put safety first. Hayward himself was a victim of Deepwater Horizon, replaced by Bob Dudley.)

As I added at the time:

BP might still have a capitalization of $150 billion and not face a potential worst-case scenario of bankruptcy and ruin. And more importantly, the U.S. Gulf would not be in an environmental crisis.

And another example, Enron:

Just imagine if Enron’s Ken Lay had used the time and resources spent on climate alarmism and forced energy transformation on accounting, risk control, and the real things that promote business sustainability. (Lay was a big Christopher Flavin/Worldwatch fan too.)

The lesson:

Diverted management attention has an opportunity cost. Left environmentalists lobbied and praised BP and Enron for putting form over substance. A few shouted ‘greenwashing’, but most applauded their coveted split within the fossil-fuel industry on climate and energy.

The ironic conclusion:

fake environmentalism driving out real environmentalism. Climate and energy reality, anyone?

On the 11th anniversary of the BP blowout, the real takeaway is that oil companies that think they are “beyond petroleum” are value destroyers for shareholders and for the environment.

Leave a Reply