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Brooks Wilson's Economics Blog: BP a Bad Corporate Actor?

Friday, May 21, 2010

BP a Bad Corporate Actor?

In the two previous posts, "Reid on Greed" and "The Oil Spill and the Government," I suggested that oil company executives have always been and will be self interested and that self interest is likely to lead them to avoid costly oil spills.  I also suggest that regulation beyond law requiring oil companies to pay damages may be a costly, redundant, and unnecessary burden on taxpayers or consumers who ultimately pay for the regulatory structure. 

To guard against confirmation bias, I looked for information that suggested that BP was negligent and found an editorial in the Houston Chronicle, "Spillover effects: Some success, but new questions to answer about Deepwater Horizon disaster," that did just that.
It does not help BP's cause in the Gulf spill that two of the company's refineries account for 97 percent of all flagrant violations found in the industry, according to the Center for Public Integrity. While these matters are not specifically related, they contribute to a growing impression that BP is a corporate bad actor.

As reported in Tom Fowler's energy blog this week, most of BP's citations were classified by OSHA as “egregious willful.” A willful violation is defined as “one committed with plain indifference to or intentional disregard for employee safety and health.” That is bad news for BP, and likely will be used by critics to tar the entire industry.
These statistics do not prove BP malevolently negligent or negligent, but they are suggestive. BP could be incompetent, miss measuring the danger of a spill and the associated cost.  It could simply be an unavoidable accident given knowledge before the spill.  I have still not found information to suggest that a different regulatory structure would decrease the probability of an oil spill.      Replace this text with...

1 comment:

  1. Kevin Wilson25/5/10 7:35 PM

    I find this article really effects me, I grew up in Corpus Christi, the town really depends on offshore and near shore drilling as well as oil tankers that come in from other countries. I feel that this company would really be affected by the externalities of this spill and it would not only decrease demand from the company but it would decrease the supply by the company as well.