Beyond The Gulf Oil Spill

Michael Busby
Copyright 2010
Table of Contents
1.0 Executive Summary ...................................................................................................... 1

2.0 Background ................................................................................................................... 2
2.1 BP’s Corporate Governance ..................................................................................... 2
2.2 BP’s Environmental and Safety Record ................................................................... 3
2.2.1 Exxon Valdez Spill ............................................................................................ 3
2.2.3 Alaskan Oil Pipeline .......................................................................................... 3
2.2.2 Prudhoe Bay Oil Spill ........................................................................................ 4
2.2.4. Texas City Refinery Explosion........................................................................ 4
3.0 Issues of Ethical Significance ....................................................................................... 4
4.0 Conclusion .................................................................................................................... 6
6.0 Appendix A................................................................................................................... 7
6.1 Worker Safety ........................................................................................................... 7
6.2 Environmental Violations ......................................................................................... 8
6.3 Price Gouging Consumers and Taxpayers.............................................................. 10
6.0 Bibliography ............................................................................................................... 11
Cover photo credit: unknown
i
1.0 Executive Summary
On April 20, 2010, the Deepwater Horizon drilling rig exploded in the Gulf of Mexico
killing 11 1 oil platform workers, injuring 17 other workers 2 . The resultant oil spill
required five months to contain and resulted in the largest oil spill in the history of the
petroleum industry before it was declared effectively “dead” on September 19, 2010 3 .
By some estimates, 4.9 million barrels, or 185 million gallons 4 , of oil spilled into the
Gulf, contaminating fisheries and wildlife habitat over a wide swath of the Louisiana
shoreline. Ultimately, hundreds of miles of beaches, wetlands, and estuaries were
threatened with contamination from the spreading oil and the spill has caused extensive
damage to marine and wildlife habitats 5 .
The economic impact to of the Gulf oil spill is estimated to be huge. There was an
immediate loss to BP’s share value. By June 55, investors had driven the company’s
market valuation down by 54 percent since the spill began, erasing $105 billion of
shareholder value 6 . Additionally, BP agreed to set aside $20B as a Spill Response
Fund 7 .
Oxford Economics prepared a report of the potential economic impact to Gulf tourism for
the U.S. Travel Association. Oxford Economics estimated that the economic impact of
the oil spill on tourism across the Gulf Coast over a three-year period could exceed
approximately $23 billion 8 . Cost impact to the fishing industry is estimated at $2.5
billion 9 .
On June 17, 2010, Tony Hayward, the public face of BP, since the oil spill began, faced
questioning by a powerful committee of the U.S. Congress. Hayward was given the
opportunity to explain BP’s action both before and after the rig explosion and subsequent
oil spill. Hayward refused to candidly answer the committee’s questions. "The
committee is extremely frustrated with your lack of candor," Bart Stupak, who was
leading the Congressional investigation into the accident, told him 10 .
Although BP has said it accepts responsibility for the spill, the company denies that it is
responsible for a systematic pattern of safety and environmental failures 11 of which the
1
Wilson, Elizabeth (2010-09-27). “Oil Spill’s Size Swells”. Chemical and Engineering News.
http://pubs.acs.org/cen/news/88/i39/8839notw7.html
2
Welch, William; Joyner, Chris (2010-05-25). "Memorial Services Honors 11 Dead Oil Rig Workers".
USA Today. http://www.usatoday.com/news/nation/2010-05-25-oil-spill-victims-memorial_N.htm.
3
Associated Press (2010-09-19). “Blown Out BP Well Finally Killed". WWL-TV.
http://www.wwltv.com/news/Blown-out-BP-oil-well-finally-killed--103237684.html.
4
Wilson, Elizabeth (2010-09-27). “Oil Spill’s Size Swells”. Chemical and Engineering News.
5
(2010-04-30) “Gulf Oil Slick Endangering Ecology”. CBS Broadcasting.
6
Tharp, Paul (2010-06-25). "Stormy weather: BP's stock hits new low". New York Post.
7
Brenner, Noah and Guegel, Anthony (16 June 2010) “BP Coughs Up $20B for Spill Fund”.
Upstreamonline.com. http://www.upstreamonline.com/live/article217880.ece.
8
Oxford Economics (2010-07-21). "Potential Impact of the Gulf Oil Spill on Tourism"
9
"Bryan Walsh. (2010-05-01). Gulf of Mexico Oil Spill: No End in Sight for Eco-Disaster. Time.
10
Goldenberg, Suzanne (2010-06-17). “BP oil spill: Tony Hayward stonewalls Congress”. Guardian.
http://www.guardian.co.uk/environment/2010/jun/17/bp-oil-spill-tony-hayward-congress
11
Mauer, Richard. Tinsley, Anna M. (2010-05-08) “Gulf oil spill: BP has a long record of legal, ethical
violations”. McClatchy
1
2010 Gulf oil spill is on the latest. A review of BP’s compliance with safety and
environmental laws contradicts BP’s claim of innocence. BP’s safety and environmental
record is certainly at odds with its own company policy statements regarding its alleged
responsible corporate governance. What does it gain a corporation to profess responsible
governance when its own record of performance belies the fact profit comes before the
safety of workers’ health and lives and the environment?
Trying to put forth the proper public image, the corporation attempts to convince the
public it is being governed responsibly. Annunciating the proper aphorisms as part of the
corporate policy as dogma couched in slogan form is part of that attempt. However, if
actions do not mirror words, then slogans are empty, meaningless words and corporate
governance is therefore hypocritical and crosses an ethical boundary from being a
responsible corporation to a being a manipulative, lying, arrogant entity. BP’s safety and
environmental record when viewed in light of its corporate governance statements and
the statements of its governing officers demonstrates BP has crossed that ethical line
from a sensitive, responsible corporation to a scheming, calculating, and controlling
entity.
2.0 Background
2.1 BP’s Corporate Governance
BP is a global oil and gas company headquartered in London, England. It is the third
largest energy company and the fourth largest company in the world measured by
revenues 12 . As with most corporations today, BP attempts to demonstrate it is a socially
sensitive and responsible corporation in its corporate governance. One of the ways it
attempts to convince the individual it is socially sensitive and responsible is by adopting
several aphorisms. Sometimes these aphorisms are collectively called a corporations
“code of conduct,” “ethics code,’ or “social responsibility charters.” Regardless of their
name, these aphorisms are designed to lull the unwary into thinking the corporation
actually “practices what it preaches.” BP has such a stable of aphorisms. Let BP speak
for itself:
How We Operate: BP’s system of governance and management are designed to help us
conduct our business responsibly. They reflect our support for global standards for
safety, human rights and security 13 .
Safety: Safe and reliable operations are integral to BP’s success, and we strive to
continuously to improve our safety performance 14 .
Environmental Management: BP strives to minimize the environmental impact of its
activities by applying management systems and standards and using innovative
technology in its operations 15 .
Safety Management: BP's commitment to safety begins at the most senior levels of our
organization - with robust systems to implement, audit, report on and improve our
performance 16
12
(2010-07-26) “Global 500 - Full List". Fortune.
13
http://www.bp.com/subsection.do?categoryId=2313&contentId=7060027
14
15
2
How We Operate: BP’s systems of governance and management are designed to help
us conduct our business responsibly. They reflect our support for global standards for
safety, human rights and security 17 .
Yet, when we examine BP’s safety and environmental record for the past decade, we
cannot help but reach the conclusion BP’s corporate aphorisms are for show only.
2.2 BP’s Environmental and Safety Record

2.2.1 Exxon Valdez Spill
In 1989, the Exxon Valdez, a supertanker owned by Exxon Corporation ran aground in
Prince William Sound, Alaska on March 24, 1989. Approximately 750,000 barrels of oil
was spilled in the Sound, destroying fish and wildlife habitat and eventually
contaminating about 1,300 miles of coastline 18 .
BP (British Petroleum at the time) “owned a controlling interest in the Alaska oil
industry consortium that was required to write a cleanup plan and respond to the Exxon
Valdez spill in 1989 19 .” The consortium was the Alyeska Pipeline Service Company and
its top executive was furnished by BP. The investigations and subsequent lawsuits
following the Exxon Valdez spill blamed both Exxon and Alyeska Pipeline service
company for the environmental clean-up response that was bungled on many levels 20 .
2.2.3 Alaskan Oil Pipeline

The Trans-Alaska Pipeline System (TAPS) conveys crude oil from the northern
Prudhoe Bay, also called Northern Slope, oil fields to the southern terminus at Valdez,
Alaska. At Valdez, oil is loaded on tankers for transportation to oil refineries in the
continental United States. The TAPS pipeline is approximately 800 miles long and is
connected to hundreds of feeder pipelines 21 .
On May 25, 2010, TAPS was shut down after an unknown quantity of oil overflowed
from a 55,000-barrel storage tank at a pumping station. Environmental officials say that
as much as several thousand barrels of oil may have escaped into the containment area 22 .
At least since 1992 BP has been aware corrosive elements are eating away at the pipeline
walls and since at least 2006 BP has been aware TAPS has severe corrosion issues. A
company report in 2005 stated BP based its corrosion fighting on a limited budget,
instead of need. Additionally a recent company maintenance report gave a grade of “F”
16
17
18
Exxon Valdez Oil Spill Trustee Council (2007-06-30) “Frequently Asked Questions Aboput The Spill".
http://www.evostc.state.ak.us/facts/qanda.cfm.
19
Lyon, Susa. Weiss, Daniel J. (2010-05-26) “Making Money on Oil Disasters: Will BP Take
Responsibility, or Squeeze This Disaster for Profits?”. Center For American Progress.
http://www.americanprogress.org/issues/2010/05/exxon_bp.html
20
Associated Press. (2010-05-25) “BP Played Central Role in Exxon Vavldez Disaster”. CBS News
21
Avro, Samuel R. (2010-05-25) “Alaska Pipeline Partly-Owned by BP Shut Down After Oil Spill”.
Consumer Energy Report
22
Consumer Energy Report. http://www.consumerenergyreport.com/2010/05/25/alaska-pipeline-partly-
owned-by-bp-shut-down-after-oil-spill/
3
to 148 North Slope (feeder) pipelines. The “F” grade means 80 percent of the pipeline
wall is corroded and could rupture 23 .
2.2.2 Prudhoe Bay Oil Spill

On March 2, 2006, a TAPS pipeline oil spill was discovered in western Prudhoe Bay,
Alaska. The oil spill was estimated to contain as much as 267,000 gallons of crude oil 24 .
BP Exploration, Alaska (BPXA) owns 47% of the Alaskan pipeline 25 .
In November 2007, BP Exploration, Alaska pled guilty to negligent discharge of oil, a
misdemeanor under the federal Clean Water Act. The corporation was fined
$20 million 26 .
2.2.4. Texas City Refinery Explosion

On March 23, 2005, 15 workers were killed and 180 others were injured in the
explosion and subsequent fire at BP’s refinery in Texas City, Texas 27 . In the aftermath of
the disaster, BP was charged with criminal violations of federal environmental laws. Not
long after the last embers died, BP was subjected to lawsuits from the victim's families.
See Appendix A. The Occupational Safety and Health Administration slapped BP with a
then-record fine for hundreds of safety violations, and subsequently imposed an even
larger fine after claiming that BP had failed to implement safety improvements following
the disaster 28 .
3.0 Issues of Ethical Significance

On February 26, 2010, the BP Chairman of the Board, Carl-Henric Svanberg wrote,
“BP has driven itself back to competitive fitness; we must ensure we build on the hard
work of the past three years and continue to grow a successful and enduring company. 29 ”
Given BP’s safety and environmental record, it can be said the cost exacted for BP to
“drive itself back to competitive fitness” was charged not to the corporate liabilities
accounting line, but to the health of the environment and to the health, and even lives, of
many people.
Since the environment and people’s health are impacted by BP’s operations, significant
ethical and moral principles become entangled in BP’s corporate governance. Ethical
and moral principles apply to all aspects of BP’s business conduct and the principles are
relevant to the conduct of the individuals working for the corporation and business
organization as a whole. “In some cases, corporations have redefined their core values in
the light of business ethical considerations (e.g. BP's "beyond petroleum" environmental
tilt)”.
23
(2010-11-04) “BP’s Alaska Pipeline System Poses Oil Spill Risk”. NewsInferno
24
(11 March 2006) “Alaska hit by 'massive' oil spill". BBC News.
25
26
(October 26, 2007) “BP fined $20 million for pipeline corrosion". Anchorage Daily News
27
Lyall, Sarah. (2010-07-12) “In BP‘s Record, a History of Boldness and Costly Blunders”. New York
Times.
28
(2009-11-12) “OSHA Levies a Record Fine Against Oil Giant BP”.
http://www.texascityexplosion.com/site/headlines?post_id=803
29
BP’s “Annual Reports and Accounts 2009, p 4. www.bp.com/annualreport
4
An insensitive Tony Hayward, BP’s Chief Executive Officer, stated five weeks after
the spill began, “I would like my life back 30 .” Throughout the crises, Hayward was
accused of being insensitive, unresponsive, and unwilling to be candid regarding BP’s
responsibilities for the spill31 . There are families in America that undoubtedly wish they
could have their life back…before explosions and fires caused by BP cost-cutting
measures killed their loved ones. Hayward’s behavior does not reflect the ideas
incorporated in BP’s corporate governance aphorisms. Hayward’s behavior instead
smacks of corporate elitism and arrogance, certainly attitudes at odds with BP’s corporate
aphorisms.
Both the Texas City refinery and Prudhoe Bay accidents had a similar underlying theme
- BP sacrificed safety for profit 32 . Government investigations following the 2005 Texas
City refinery explosion and fire reported BP’s management was focused on cutting
maintenance and capital spending costs. Also, managers’ performance was measured in
part by their ability to meet these goals 33 .
BP is facing a government criminal investigation into the 2010 Gulf oil spill 34 . In
addition, the Occupational Safety and Health Administration (OSHA) fined BP a then-
record amount for hundreds of safety violations that resulted in the 2005 Texas City
refinery explosion and fire. OSHA subsequently imposed an even larger fine after
claiming that BP had failed to implement safety improvements following the disaster.
Maintenance and safety costs at the plant had been cut as a cost-saving measure 35 . BP
was also accused of mismanagement “from Texas to London” in the refinery explosion 36 .
Again, these measures taken to save money while putting people and the environment at-
risk seem at odds with BP’s corporate governance aphorisms.
During the last twenty years, subsidiaries of BP were convicted of environmental
crimes in Texas and Alaska, not once but three times. Even during the Gulf oil spill BP
remained on probation for two of the convictions 37 . Over the past decade, BP has paid
out $730 million in fines and settlements in numerous cases – see Appendix A -
involving worker safety and environmental laws violations 38 .
The $730 million in fines and settlements BP has paid the past 12 years represent a
measure of sorts of the extent BP has gone to put profit before corporate aphorisms. For
if BP really believed in its aphorisms, there would be nary a single fine, or settlement.
Even now, the corporation is currently the subject of a wide range of safety and
30
Tobin, Maryann. (2010-06-05). “BP CEO Tony Hayward: The most hated man in America?”. National
Examiner
31
Ibid
32
Korosec, Krtisten. (2010-05-07) “BP’s History of Oil Spills and Accidents: Same Strategy, Different
Day”. CBS News
33
Ibid.
34
Cooper, Helene; Baker, Peter. (2010-06-01) U.S. Opens Criminal Inquiy Into Oil Spill”. New York
Times
35
Baker, James A. III Chairman. (2007-01). The Report Of The BP U.S. Refineries Independent Safety
Panel Review”. U.S. Government Printing Office
36
"U.S. Chemical Safety And Hazard Investigation Board. (2007-03) “Investigation Report: Refinery
Explosion and Fire”. U.S. Government Printing Office
37
Mauer, Richard. (2010-07-15) “BP has a history of safety failures”. Anchorage Daily News
38
Slocum, Tyson (2010-05-05) “Cost of Doing Business: BP’s $730 million in fines/settlements + 2
criminal convictions”. Citizen Energy
5
environmental investigations. See Appendix A for a list of BP’s most egregious
environmental and safety violations.
4.0 Conclusion
BP has said it accepts responsibility for the Gulf oil spill, but it denies that it's guilty of
a systematic pattern of safety and environmental abuses and failures 39 . Unfortunately,
BP’s record of safety and environmental abuses as documented in the fines and
settlements it has been forced to pay, belies its public statement of innocence. There is a
documented case for charges BP systematically operates in order to contravene the laws
of the land in order, one strongly suspects, to maximize profit.
Given all we know about BP, one cannot help but begin to think BP is a “wolf in
sheep’s clothing”. A predatory corporation given to lying, scheming, and manipulation
in order to enrich itself, especially at the expense of the environment and the health of
people, BP is now perceived to be out-of-step with current social mores.
Today, people expect corporate governance to be socially sensitive and responsible. A
corporation that is not socially sensitive and responsible must ultimately face not only
legal issues, but also ethical issues for which they will eventually be held accountable, if
not in the court of law, then at least in the court of public opinion. One can be certain
regardless of the court, investor share value will always be negatively impacted by such
callous behavior.
Prior to the Gulf oil spill, BP was flying under the radar and few were taking note of the
many environmental and safety violations it was accruing. With the spotlight on BP after
the oil spill, the world has seen BP for the scheming, controlling, overreaching company
it is. Perhaps, this spotlight will open the eyes of regulators and politicians to BP’s
unsafe practices and force BP to behave in a socially acceptable and ethical manner in the
future , thereby compelling the company, regardless of its desire, to adhere to the letter of
its own corporate dogma, as expressed in its corporate slogans and mottos. Only then
will BP gain some semblance as an ethical and morally just corporation and the stain
from its past mistakes will eventually evaporate just as the remaining surface oil still
found in the Gulf and along Alaska’s shoreline will eventually degrade and “evaporate”.
Yea…right.
39
6
6.0 Appendix A
The following data 40 documents BP’s history of environmental, safety, and consumer
abuse in their U.S, operations only, covering just the past twelve years.
6.1 Worker Safety

BP has paid out $215 million in penalties/settlements for worker safety violations. The
documented fines/settlements are 41 :
• February 2001: Minerals Management Service (MMS) fined BP $20,000 for
workplace violations resulting in serious injury to an employee.
• September 2001: OSHA fined BP $141,000 after an explosion killed 3 workers at
BP’s Clanton Road polymers (plastics) facility in Augusta, Georgia.
• January 2002: MMS fined BP $20,000 for a safety violation.
• May 2002: MMS fined BP $23,000 for a workplace safety violation that resulted
in a worker having his hand injured from an electrical shock.
• September 2002: MMS fined BP $39,000 for missing 13 monthly tests of an “oil
low level sensor.”
• November 2003: MMS fined BP $25,000 for violations that resulted in an oil rig
crane falling into the Gulf of Mexico.
• July 2003: MMS fined BP $20,000 because a subsurface safety valve was
“blocked out of service.”
• January 2003: MMS fined BP $70,000 for a faulty fire water system.
• January 2003: MMS fined BP $80,000 for bypassing “Relays for the Pressure
Safety High/Low for four producing wells.”
• February 2004: MMS fined BP $25,000 because “The Rig’s Gas Detection
System was bypassed with ongoing drilling operations being conducted.”
• July 2004: BP paid a $190,000 penalty to MMS for safety violations that resulted
in a fire.
• August 2004: OSHA fined BP for $63,000 for violations at the Texas City
refinery.
• September 2005: OSHA cited BP for 296 “Egregious Willful Violations” and
other violations associated with the Texas City refinery explosion, fining BP
$21.36 million and entering into a settlement agreement under which BP agreed to
corrective actions to eliminate hazards similar to those that caused the explosion.
• April 2006: BP was fined $2.4 million for safety & health violations at the
Toledo, Ohio refinery in April 2006.
• 2007: BP paid the two largest fines in OSHA history – $87.43 million and $21.36
million. The charge was for willful negligence in the Texas City refinery explosion
• 2007: The U.S. Chemical Safety & Hazard Investigation Board concluded that
“The Texas City disaster was caused by organizational and safety deficiencies at all
levels of the BP Corporation. Warning signs of a possible disaster were present for
several years, but company officials did not intervene effectively to prevent it.”
40
Slocum, Tyson. (2010-05-05) “Cost of Doing Business: BP’s $730 million in fines/settlements + 2
criminal convictions”. Public Citizen
41
Ibid.
7
• December 2009: a Texas jury returned a $100 million award against BP on behalf
of
• October 2007: MMS fined BP $41,000 for various safety violations.
• October 2006: MMS fined BP $25,000 because “operations were not performed
in a safe and workmanlike manner. While making an assessment of the unsafe
conditions on the platform that needed repairing, the construction crew did not
barricade a 3’4″ x 3’4″ opening in the stairway landing. Later, one of the crew
members was injured when he fell through the open hole approximately 20 feet and
into the Gulf of Mexico.”
• October 2009: OSHA determined that BP was in non-compliance with the
settlement agreement, finding 270 “notifications of failure to abate” and 439 new
willful violations, resulting in the $87.43 million fine.
workers injured in 2007 at the Texas city refinery while making repairs after the
2005 blast.
• April 2010: BP paid a $3 million fine to OSHA for 42 willful safety violations at
one of its refineries in Toledo, Ohio.
• May 2010: BP paid a $69,000 fine for 13 "serious" safety violations at its Cherry
Point refinery near Ferndale, Washington 42 .
6.2 Environmental Violations

BP has paid out $153 million in penalties/settlements, plus a guilty plea to an
environmental felony and one criminal misdemeanor with respect to environmental
violations 43 :
• February 1995: BP paid $3.9 million to settle charges related to a tanker accident
that spilled 400,000 gallons of oil into California’s coastal waters.
• March 1999: BP paid $1.75 million to settle allegations it violated the Clean Air
Act at its Toledo, Ohio refinery.
• February 2000: BP paid $22 million to settle criminal and civil charges arising
from illegally discharged waste oil and hazardous substances at the company’s
North Slope drilling operations. BP was also placed on 5-year probation and was
required “to establish a nationwide environmental management system designed to
prevent future violations.”
• January 2001: BP paid $10 million to resolve allegations it violated the Clean Air
Act at 8 of its refineries.
• May 2002: The Alaska Department of Environmental Conservation required BP to
pay a $150,000 fine for pipeline leaks.
• March 2005: The South Coast Air Quality Management District forced BP to pay a
$25 million penalty and $6 million in past emissions fees for air quality rule
violations at BPs Carson refinery.
• May 2005: BP paid a $58,687 fine to settle allegations it violated the Clean Air
Act at its Whiting, Indiana refinery, and paid an additional $13,203 fine in
42
43
Slocum, Tyson. (2010-05-05) “Cost of Doing Business: BP’s $730 million in fines/settlements + 2
8
December 2006 for an illegal release of anhydrous ammonia at this same Indiana
refinery.
• June 2005: BP paid a civil penalty of $115,138 for violations of the Clean Water
Act, Safe Drinking Water Act and Oil Pollution Act on the Lander and Winkleman
Dome Oil Fields in Fremont County, Wyoming within the boundaries of the Wind
River Indian Reservation of the Eastern Shoshone and Northern Arapaho Tribes.
• In August 2005, BP paid a civil penalty of $28,360 for violating EPA’s gasoline
detergent additive regulations.
• October 2006: BP paid a civil penalty of $900,000 for producing and distributing
gasoline that failed to meet Clean Air Act standards.
• 2006: The Texas Commission on Environmental Quality fined BP $130,625 for
unlawful releases of harmful pollutants at its Texas City refinery.
• October 2007: BP paid a $6,350 fine for failing to perform adequate corrosion
protection inspections at three underground gasoline storage tanks.
• June 2007: The Michigan Department of Environmental Quality fined BP
$869,150 for leaking underground gasoline storage tanks.
• November 2007: the EPA cited BP for numerous Clean Air Act violations at its
Whiting facility, and amended this notice of violation in October 2008. In June
2009, the EPA revived additional allegations of Clean Air Act violations at the same
refinery.
• October 2007: BP plead guilty to one misdemeanor of the Clean Water Act, agreed
to serve three years probation, pay $4 million to the National Fish and Wildlife
Foundation to support research and activities on the North Slope, pay $4 million in
restitution to the State of Alaska and a $12 million fine for spilling 200,000 gallons
of crude oil onto the Alaskan tundra in March 2006. Investigators determined the
leak was caused by a build up of sediment in the pipe, and that BP failed to properly
inspect or clean the pipeline, which is required by law to prevent pipeline corrosion.
The investigation revealed that in 2004, the company became aware of increased
corrosion in the pipeline.
• October 2007: BP agreed to pay a $50 million fine and plead guilty to a felony
violation of the Clean Air Act and will serve three years of probation for the Texas
City refinery explosion.
• March 2008: BP was one of several oil companies found to have contaminated
drinking water with MTBE. The companies collectively were required to pay
$423,963,564.67 in March 2008. It is unknown what share of this settlement BP
was required to pay.
• February 2009: BP paid a $12 million civil penalty for “noncompliance with a
2001 consent decree and Clean Air Act regulations requiring strict controls on
benzene . . . generated during petroleum refining” at BPs Texas City refinery.
• March 2009: Additionally, the EPA required BP to pay $785,662 to resolve
Emergency Planning and Community Right-to-Know Act violations at its Texas
City refinery.
• March 2009: The Department of Justice filed a civil lawsuit against BP for failing
“to comply in a timely manner with a Corrective Action Order” involving this oil
spill.
9
6.3 Price Gouging Consumers and Taxpayers
BP has paid out $363 million in penalties and settlements 44 :
• July 1997: BP’s oil traders were found to have colluded with two other firms to fix
the price of commissions.
• April 2000: the Department of Justice forced BP to pay $32 million “to resolve
claims under the False Claims Act and administrative claims that the corporation
underpaid royalties due for oil produced on federal and Indian leases since 1988.”
• In two separate actions, the Federal Energy Regulatory Commission fined BP a
total of $21 million for manipulating the California electricity market, Enron-style.
• October 2007: BP paid $303 million to settle allegations it manipulated the US
propane market. The feds might still be investigating BPs broader role in
manipulating crude oil markets: in a filing with the Securities and Exchange
Commission on August 9, 2007, BP revealed that “The US Commodity Futures
Trading Commission and the US Department of Justice are currently investigating
various aspects of BP’s commodity trading activities, including crude oil trading
and storage activities, in the US since 1999.”
• October 2007: FERC ordered BP to pay a $7 million civil penalty for engaging in
anti-competitive practices with its operation of natural gas pipelines.
• BP has legally escaped paying $172,508,633 in royalties to US taxpayers on leases
it operates in the Gulf of Mexico.
44
Ibid.
10
6.0 Bibliography
1.Wilson, Elizabeth (2010-09-27). “Oil Spill’s Size Swells”. Chemical and Engineering News.
2. Welch, William; Joyner, Chris (2010-05-25). "Memorial Services Honors 11 Dead Oil Rig Workers".
USA Today. http://www.usatoday.com/news/nation/2010-05-25-oil-spill-victims-memorial_N.htm.
3.Associated Press (2010-09-19). “Blown Out BP Well Finally Killed". WWL-TV.
http://www.wwltv.com/news/Blown-out-BP-oil-well-finally-killed--103237684.html.
4. Wilson, Elizabeth (2010-09-27). “Oil Spill’s Size Swells”. Chemical and Engineering News.
5. (2010-04-30) “Gulf Oil Slick Endangering Ecology”. CBS Broadcasting.
6. Tharp, Paul (2010-06-25). "Stormy weather: BP's stock hits new low". New York Post.
7. Brenner, Noah and Guegel, Anthony (16 June 2010) “BP Coughs Up $20B for Spill Fund”.
Upstreamonline.com. http://www.upstreamonline.com/live/article217880.ece.
8. Oxford Economics (2010-07-21). "Potential Impact of the Gulf Oil Spill on Tourism"
9. "Bryan Walsh. (2010-05-01). Gulf of Mexico Oil Spill: No End in Sight for Eco-Disaster. Time.
10. Goldenberg, Suzanne (2010-06-17). “BP oil spill: Tony Hayward stonewalls Congress”. Guardian.
http://www.guardian.co.uk/environment/2010/jun/17/bp-oil-spill-tony-hayward-congress
11.0 Mauer, Richard. Tinsley, Anna M. (2010-05-08) “Gulf oil spill: BP has a long record of legal, ethical
12. (2010-07-26) “Global 500 - Full List". Fortune.
13. http://www.bp.com/subsection.do?categoryId=2313&contentId=7060027
18. Exxon Valdez Oil Spill Trustee Council (2007-06-30) “Frequently Asked Questions Aboput The
Spill". http://www.evostc.state.ak.us/facts/qanda.cfm.
19. Lyon, Susa. Weiss, Daniel J. (2010-05-26) “Making Money on Oil Disasters: Will BP Take
Responsibility, or Squeeze This Disaster for Profits?”. Center For American Progress.
http://www.americanprogress.org/issues/2010/05/exxon_bp.html
20. Associated Press. (2010-05-25) “BP Played Central Role in Exxon Vavldez Disaster”. CBS News
21. Avro, Samuel R. (2010-05-25) “Alaska Pipeline Partly-Owned by BP Shut Down After Oil Spill”.
Consumer Energy Report. http://www.consumerenergyreport.com/2010/05/25/alaska-pipeline-partly-
owned-by-bp-shut-down-after-oil-spill/
23. (2010-11-04) “BP’s Alaska Pipeline System Poses Oil Spill Risk”. NewsInferno
24. (11 March 2006) “Alaska hit by 'massive' oil spill". BBC News.
26. (October 26, 2007) “BP fined $20 million for pipeline corrosion". Anchorage Daily News
27. Lyall, Sarah. (2010-07-12) “In BP‘s Record, a History of Boldness and Costly Blunders”. New York
Times.
28. (2009-11-12) “OSHA Levies a Record Fine Against Oil Giant BP”.
http://www.texascityexplosion.com/site/headlines?post_id=803
29. BP’s “Annual Reports and Accounts 2009, p 4. www.bp.com/annualreport
11
30. Tobin, Maryann. (2010-06-05). “BP CEO Tony Hayward: The most hated man in America?”.
National Examiner
31. Ibid
32. Korosec, Krtisten. (2010-05-07) “BP’s History of Oil Spills and Accidents: Same Strategy, Different
Day”. CBS News
33. Ibid.
34. Cooper, Helene; Baker, Peter. (2010-06-01) U.S. Opens Criminal Inquiy Into Oil Spill”. New York
Times
35. Baker, James A. III Chairman. (2007-01). The Report Of The BP U.S. Refineries Independent
Safety Panel Review”. U.S. Government Printing Office
36. "U.S. Chemical Safety And Hazard Investigation Board. (2007-03) “Investigation Report: Refinery
Explosion and Fire”. U.S. Government Printing Office
37. Mauer, Richard. (2010-07-15) “BP has a history of safety failures”. Anchorage Daily News
38. Slocum, Tyson (2010-05-05) “Cost of Doing Business: BP’s $730 million in fines/settlements + 2
criminal convictions”. Citizen Energy
39. Mauer, Richard. Tinsley, Anna M. (2010-05-08) “Gulf oil spill: BP has a long record of legal, ethical
40. Slocum, Tyson. (2010-05-05) “Cost of Doing Business: BP’s $730 million in fines/settlements + 2
41. Ibid.
42. Mauer, Richard. Tinsley, Anna M. (2010-05-08) “Gulf oil spill: BP has a long record of legal, ethical
43. Slocum, Tyson. (2010-05-05) “Cost of Doing Business: BP’s $730 million in fines/settlements + 2
44. Ibid.
12

Beyond The Gulf Oil Spill

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Beyond The Gulf Oil Spill

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Michael Busby

1.0 Executive Summary ...................................................................................................... 1

Cover photo credit: unknown

2.2 BP’s Environmental and Safety Record

2.2.3 Alaskan Oil Pipeline

2.2.2 Prudhoe Bay Oil Spill

2.2.4. Texas City Refinery Explosion

3.0 Issues of Ethical Significance

6.1 Worker Safety

6.2 Environmental Violations

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