Culpable decision in BP Texas city case
BP explosion accident in Texas City resulted to death of 15 workers and injury of 170 people. A short time prior to the accident, James Baker the US secretary of state had published a report detailing the unprofessional mission BP was undertaking (Hopkins 2008, p. 101; Hendershot 2008, p. 34). The report indicated that the company made several culpable decisions that contributed to this fate.
BP oil was accused of having initiated the deepwater drilling, but had failed to adhere to the drilling regulations. It had adapted a new strategy of cost-cutting that resulted to it sub-contracting most of its services to cut down on expenses to maximize on production in order to realize higher profits. It outsourced its drilling and well construction activities to Transocean and Halliburton companies respectively. Cameron international was assigned the task of making the blowout preventer which was also greatly compromised. Even though BP had subcontracted these services, it was their responsibility to ensure that these services were being carried out accordingly. It was the duty of BP to bear the liability in case they failed to observe the recommended drilling standards as in the resultant case of the explosion that translated to loss of life and great damage of the environment due to the oil spill (Hoffman & Jennings 2010, p. 74).
The second wrong decision that occurred was brought about by the Halliburton and Cameron international companies that failed to follow the set standard when building the well and the blowout preventer. When constructing the blower, they decided to replace the recommended drilling fluid with seawater (Hopkins 2008, p. 101). The consequence was that the blow-out preventer could not hold the pressure and it gave in causing blast and leakage of oil. This was because the seawater adapted was not heavy enough to prevent leakage of gas. Thus the continuous leakage of the explosive gas triggered that explosion (Freudenburg & Gramling 2010, p. 41).
The Texas explosion resulted to some workers losing their lives, others being injured and oil spill polluted the ocean destroying marine habitat. Culpability of the BP was as a result of their negligence to honour the recommended international drilling rules and regulation in the US despite them being prior warned and fined (Hendershot 2008. P. 37).
Another example of its culpable decision was its cost cutting strategy that resulted it to maximizing on production at the expense of the safety measures. The BP Company concentrated on drilling the oil regardless of the risk (Hendershot, 2008. P. 37). When the company outsourced its services, the Halliburton Company constructed a cheap well that was initially designed by BP in order to save. The BP management was very negligence such that they failed to supervise the construction of the well, but later blamed its contractors for the substandard jobs that resulted in an accident (Hendershot 2008, p. 37).
The US did not have in place drilling standards set by the government that ware to be observed by every drilling company. This may have contributed to the flawed gamble with workers’ and environment’s safety (Steffy 2010, p. 102). BP seems to have been drilling Deepwater Horizon rig without regard of its consequences and this was a not a wise decision. The company criminally overlooked its duty and responsibility to provide common safety for disaster prevention (Lehner & Deans 2010, p. 95).
BP accepted to clean up the oil leak in the Gulf of Mexico as it surfaced under spotlight following the Texas oil disaster to clean its mess. When being interviewed Hayward had accepted the responsibility of cleaning up its jumble (Lehner & Deans 2010, p. 95). He declared that the company would compensate clear out expenses and reimburse genuine claims of property damage, personal injuries and business losses. Hayward’s declaration clearly showed that the company was responsible for the accident, but not for causing the blast. According to BP’s CEO the cause of the explosion was to be blamed on the subcontracted companies (Bower 2010, p. 213).
Placing Blame, Avoiding It, Interpreting Culprit’s And Critic’s Defences
Almost immediately after the deadly BP oil explosion in Texas, the management realised that it was going to face a lot of questions from critics, media and lawyers (Bower 2010, p. 213). Among its major concerns was to explain whether their cost-cutting strategy contributed to the safety hiccup that resulted into the explosion. The BP Oil Company decided to go offensive, and Hayward began asserting immediately that the company was not guilty for the lapses of its contractors (Reed & Fitzgerald 2010, p. 81). In spite of the fact that the company was the one that designed the exploded well, it approved the deepwater rig and sent its supervisors to the ground and had the ultimate say on the process the drilling had to progress (Steffy 2010, p. 186). Hayward insisted that the company was not responsible for the accident and declared that it was certainly not the company’s workers fault, the systems nor its processes (Lehner & Deans 2010, p. 95).
There were a lot of attempts to shift blame by all the alleged culprits (Bower 2010, p. 213). Hayward stated on an interview with The UK’s Sunday Telegraph newspaper that the investigation should concentrate on the blow out preventer. The safety device that was set to provide safety to the well workers was supposed to be the last line of defence (Steffy 2010, p. 186). This devise belonged to Transocean according to Hayward. The rig operator, Transocean, had previously sent for modification in China, a measure that was approved by BP oil, but it had not been assessed for over ten years by the original manufacturer the Cameron International. During the entire time, BP oil struggled to shift the attention away from the decision it made to drill (Khan & Amyotte 2007, p. 388).
Evidence showed that the BP oil was to blame because even the fundamental design was a nightmare. The two firms Transocean and BP oil were faced with a critical problem of controlling pressure and the result was a phenomenon known as circulation. Case hearing revealed that BP oil may have chosen to use cheaper layer so as to save about 7 million US dollars and it also disregarded tying the down to the top of the well casing because this would have taken a lot of time probably several days and the company was running behind schedule with a budget of over 29 dollars. Experts like Greg McCormack argued that the only possible reason why BP used single layer instead of the recommended two was to cut on cost (Kaszniak & Holmstrom 2008, p. 109).
From this case there were several actions that have been criticised by critics. One of them is that the BP Company failed to test the integrity of the cement it used on its well, it also failed to use heavy drilling fluid to keep pressure down, but instead opted to use sea water in order to cut on the cost (Cherry & Sneirson 2010, p. 2011). Generally, BP oil did not carry out risk analysis for safety- a process that is mandatory in North Sea and also a set standard requirement set for mining companies by the Royal Dutch Shell wells.
Dr Nansen Salari an expert in oil well matters claimed the accident was preventable. He argued that the entire occurrence was due to systemic failure on ostentatious extent (Cherry & Sneirson 2010, p. 2011). The reason that the accident happened was because the managers made a culpable decisions.
Ethical Standards
BP correctly concentrated on finding the culprit behind the explosion. The company also sought to cap the well in an emergency move to block recriminations. This moves were in line with their ethics of care which require that an action should be taken immediately when an incident occur to mitigate further damage regardless of the legal or moral responsibilities that could come from such moves (Fisher & Lovell 2009, p. 78).
The tragedy was a moral crisis that led to the company estrangement from humanity something that is critical for the lives of workers. Human nature ethics require that a person does not enforce power, but the decision of good and bad are based on the human view of what is good or bad actions (Beauchamp et al 2009, p. 83). BP was supposed to respond to the impeding dangers of the rig before the explosion. A holistic spiritual morality and concern to respect the sanctity of life is what could have been the motivation behind BP and Halliburton’s decision concerning the construction of the well. The company was required to protect its employees from dangerous working environment (Fisher & Lovell 2009, p. 78). Such motivation would also have inspired environmental ethics.
Kantian ethics are like deontological views that require compliance with duty and not emotions or outcomes. And as such, BP management were only driven by duty-based ethics, deontological thoughts and pluralism beliefs. The company struggled to maximise its profits and it ended up not paying attention to safety demand (Beauchamp et al 2009, p. 83). Even worse, BP fired some of its engineers in an effort to cut on expenses which it achieved, but it could not prevent a disaster. The company failed in moral rights which are the ability to put ourselves in other’s shoes and then regard everyone as a sacred being that deserves to be treated right and protected (Beauchamp et al 2009, p. 83). Ethics is a matter of interpretation, as a golden rule, BP was outsourcing in categorical imperative view to eliminate overheads and maximise the returns for the owners.
It’s assumed that the capitalist business model that BP adopted for its operations contributed more to the disaster (Fisher & Lovell 2009, p. 79). This is to say that the company focused more on building its image and portray itself to the competitors and the government of US that it was thriving well, but did not want to take the bold step in stopping the drilling and repairing the dangerous rig before continuation of the drilling.
Perhaps there was need to have been utilizing a Kantian approach that would have seen the company pay more attention to social responsibility so that it would assess the possible damage to the people, economy and the surrounding. It was a good demonstration of Kantian ethics when the BP Company accepted the responsibility of cleaning the environment where leakage had caused damage and its acceptance to compensate the injured people, business losses and damaged properties as well. This was however a strategic attempts to save the company’s image.
In a consequentialist/utilitarian reaction, BP should have instituted laws that set strict code pr practise and reward system that could have improved workers performance. Managers take the duty of developing and implementing company’s ethical culture and monitor the compliance of the firm to these values (Fisher & Lovell 2009, p. 82). There was no Consequence-based Ethics Baker’s report savaged BP oil’s management by stating in his report that the causes of the disaster were systemic, employee-management relationship deteriorated, there were inadequate safety measures and the company’s objective were myopic (Birkland 1997). Assessment of duty-based ethics show that there was no accountability, integrity and openness of the management both at corporate and refinery levels as this was not effectively demonstrated (Beauchamp et al 2009, p. 83).
External governance can protect more that ethical constraints
There have been many crises in America regarding the conduct on major companies found in corporate scandal like BP oil and Enron among others and these have sparked widespread debate over changes in regulatory measures. Underlying the debate is the fundamental policy matters that concern the role of corporate or external governance versus ethical constraints in protecting victims of corporate crimes (Jennings 2008, p. 410). In many occasions, people regard the policy issues as being simple, for instance, government regulation of oil business against self-regulation, setting strong principles versus rules or criminal consequences against civil penalties (Zimmerli et al 2007, p. 103). External governance is neither simple nor complex, but it’s not a single role either, but a number of shoes to wear including law enforcement, policymaking and overseeing a number of situations (Jennings, 2008, p. 410; Wang 2007, p. 133).
External governance can protect victims of corporate crimes because it covers a broad range of practises and policies that have legal backing (Lerbinger 1997, p. 56). These elements are further used by stakeholders and managers for managing their deals and also to ensure they meet their responsibilities. Over the past years, there have been increased attention to external corporate governance and the objective of it all has been to ensure that there is independence, accountability and diversity as in this case (Lukaszewski 1997, p. 8).
The increased attention on external governance in companies has lead to fulfilling obligations and duty to the stakeholders of that company especially investors (Ulmer 2001, p. 592). Enron collapsed because the managers chose to lie to investors even when they knew that the company was collapsing and later suffered as disaster when it was dissolved. Furthermore, when dealing with issues like profit making versus protection of the environment, corporate responsibility offers the explanation to the difference between what stakeholders expect and the obligation of the manager (Lukaszewski 1997, p. 10). A company like BP oil or Enron were obligated to offer absolute protection to the environment regardless of the cost involved, but not maximise profits for its owners even when it entails destroying the environment (Kalantarnia et al, 2010, p. 193). External governance has all the factors and channels that can be used for advocacy of the rights of the victims of corporate crimes opposed to ethical constraints (Cherry & Sneirson 2010, p. 2011).
Many companies seek to comply with ethical regulation as well as external corporate governance because they feel that is the correct thing to do so as to adhere to corporate social responsibility (Zimmerli et al 2007, p. 107). This includes safeguarding interests of the community (Bhatia 2004, p. 134). However, determining what is ethical is not always a simple work. This is the reason why ethical constraint cannot effectively protect the rights of corporate crimes victims. It is because, the perpetrators can get around by giving other reason that result in ethical dilemma when external governance has definite standard clearly laid down. Sometimes there are ambiguous rules on how business should be conducted making it impossible to be precise in decision making (Argenti et al, 2005, p. 84).
Reference List
Argenti, P. A., Howell, R. A., & Beck, K. A. 2005. The Strategic Imperative. MIT Sloan Management Review, Vol. 46, No. 3, pp. 83-89.
Beauchamp, T., Bowie, N., & Arnold, D., 2009. Ethical Theory and Business (8th Ed). Upper Saddle River, NJ: Prentice Hall.
Bhatia, S.K., 2004, Business Ethics and Corporate Governance. New Delhi: Deep & Deep Publications.
Birkland, T. A., 1997, After Disaster: Agenda Setting, Public Policy, and Focusing Events. Washington, D. C.: Georgetown University Press.
Bower, T., 2010, Oil: Money, Politics, and Power in the 21st Century. New York: Grand Central Publishing.
Cherry, M. A., & Sneirson, J. F., 2010. Beyond Profit: Rethinking Corporate Social Responsibility And Greenwashing After The BP Oil Disaster. Tulane Law Review, Vol. 85, No. 4, pp. 2011.
Fisher, C., & Lovell, A., 2009, Business Ethics and Values (3rd Ed). Upper Saddle River, NJ: Prentice Hall.
Freudenburg, W., & Gramling, R., 2010, Blowout in the Gulf: The BP Oil Spill Disaster and the Future of Energy in America. Cambridge, Mass: MIT Press.
Hendershot, D., 2008. Learning from Experience. Journal of Chemical Health and Safety, Vol. 15, No. 2, pp. 34-35.
Hoffman, A. J., & Jennings, P. D., 2010. The BP Oil Spill As A Cultural Anomaly? Institutional Context, Conflict And Change, Ross School Of Business Paper No. 1151.
Hopkins, A., 2008, Failure to Learn: The BP Texas City Refinery Disaster. Sydney: CCH Australia Limited.
Jennings, M. M., 2008, Business Ethics: Case Studies And Selected Readings. Boston, Mass: Cengage Learning.
Johnson, G., Scholes, K., & Whittington, R., 2008, Exploring Corporate Strategy, 8th Ed. Harlow, England: Financial Times Prentice Hall.
Kalantarnia, M., Khan, F., & Hawboldt, K., 2010. Modelling Of BP Texas City Refinery Accident Using Dynamic Risk Assessment Approach. Process Safety And Environmental Protection, Vol. 88, No. 3, pp. 191-199.
Kaszniak, M., & Holmstrom, D., 2008. Trailer Sitting Issues: BP Texas City. Journal of Hazardous Materials, Vol. 159, No.1, pp.105-111.
Khan, F., & Amyotte, P. R., 2007. Modelling Of BP Texas City Refinery Incident, Journal Of Loss Prevention In The Process Industries. Vol. 20, No. 6, pp. 387 – 395.
Lehner, P., & Deans, B., 2010, Deepwater Horizon: The Oil Disaster, Its Aftermath And Our Future. New York: OR Books.
Lerbinger, O., 1997, The Crisis Manager: Facing Risk And Responsibility. Mahwah NJ: Lawrence Erlbaum Associates.
Lukaszewski, J. E., 1997. Establishing Individual And Corporate Crisis Communication Standards: The Principles And Protocols. Public Relations Quarterly, Vol. 42, No. 3, pp. 7-14.
O’Regan, N., & Ghobadian, A., 2010. Revitalising An Oil Giant: An Interview With Dr Tony Hayward, Chief Executive Of BP. Journal Of Strategy And Management, Vol. 3, No. 2, pp. 174 – 183.
Reed, S., & Fitzgerald, A., 2010, In Too Deep: BP And The Drilling Race That Took It Down. New Jersey: John Wiley Publishers.
Regester, M., & Larkin, J., 2008, Risk Issues And Crisis Management In Public Relations: A Casebook Of Best. London: Kogan Page Publisher.
Steffy, L. S., 2010, Drowning In Oil: BP & The Reckless Pursuit Of Profit. New York: McGraw-Hill Professional.
Tyler, L., 1997. Liability Means Never Being Able To Say You’re Sorry. Management Communication Quarterly, Vol.11, No. 1, pp. 51-74.
Ulmer, R. R., 2001. Effective Crisis Management Through Established Stakeholder Relationships. Management Communication Quarterly, Vol. 14, No. 4, pp. 590-615.
Wang, A., 2007. Priming, Framing, And Position On Corporate Social Responsibility. Journal Of Public Relations Research, Vol. 19, No. 2, pp. 123-145.
Zimmerli, W. C., Richter, K., & Holzinger, M., 2007, Corporate Ethics and Corporate Governance. Berlin: Springer- Verlag.