Tag Archives: oil spill

Congress’s Oil Industry “Reforms” = Election-Year Greenwashing

This morning’s Washington Post reports on efforts in Congress to strengthen regulation of oil companies. 

Two key Senate committees approved legislation Wednesday that would change the way the federal government regulates offshore oil drilling and penalizes companies for oil spills…Both measures passed on bipartisan voice votes. One approved by the Energy and Natural Resources Committee would raise the civil and criminal penalties for a spill, require more safety equipment redundancies, boost the number of federal safety inspectors and demand additional precautions for deep-water drilling. The other, passed by the Environment and Public Works Committee, would remove oil companies’ $75 million liability limit and retroactively remove the liability cap for BP and the Deepwater Horizon explosion.

The Post says that these measures “demonstrat[e] lawmakers’ eagerness to respond to the disaster in the Gulf of Mexico.” They might more accurately say that the measures demonstrate lawmakers eagerness to look like they are responding to the disaster. In the real world, the proposed measures will serve mostly as election-year greenwashing, with little genuine impact.

Just about everyone at this point knows that liability awards will be determined not in the hallowed halls of Congress, but by knock-down, drag-out court fights. More safety precautions can gradually be rolled back or ignored, just as the current safety regulations were in the years leading up to the BP spill.  And none of this goes to the basic dilemma of whether drilling at these depths should be allowed at all, when the dangers are so great and the stakes so high. Members of Congress can see the heat the White House has gotten for daring (in an uncharacteristic move) to impose even a partial moratorium on deepwater drilling: a federal judge declared the move illegal, while right-wingers attacked it as something just short of a Communistic plot to destroy the nation’s economy. As long as Congress tinkers around the edges of the issue, they can avoid the explosive core. As a character in a famous Italian political novel once said, “If we want everything to stay the same, everything must change.”

Let’s talk about the overriding fact that no one, apparently, sees fit to mention: The great bulk of our domestic oil lies in public domain territory along the outer-continental shelf of the United States. Since it is already owned by the public, and is supposed to be held in trust for our well-being, the threat of “nationalizing” oil is nothing more than a strawman. Oil is already nationalized in the United States–it is owned by the nation, and by the people. But we have basically turned over this huge asset  to the energy industry, especially the oil and gas companies. We have done this through a huge system of undervalued, underregulated leases that give companies a free hand to exploit the wealth of the public domain. And we have placed the disposition and oversight of this valuable resource in the hands of the federal Interior Department, with its long history of connivance with the extractive industries.

In sum, the citizens of the United States have given over the greatest natural resource wealth of our nation to private business interests–who naturally run it for their own profit, rather than for the public good. In return, we have demanded virtually nothing. And the little we have demanded–the most basic of safety precautions, the most modest of demands for fair pricing–have been ignored and derided by companies that regularly top the Global 500 list for profitability.

Keep in mind that these are not the mythological “Main Street” American business interests, the scrappy entrepreneurial spirits so beloved by conservatives and libertarians alike. These are not hundreds and thousands of little companies duking it out in the free market. They’re a few big multinational companies, whose hold on the world’s energy resources dates back a hundred years or more. They operate in secret through cartels to determine how these resources are parceled out, priced, and used.

One of many obstacles to any real change in this system is the absence of transparency and reliable information. For example, the oil companies, not the government, have been tasked with mapping oil and gas reserves on the public domain. This stands in the way of any real public scrutiny, and any impartial scientific judgement on how to administer the public trust. It also serves to obscure from view the massive ripoff that constitutes the leasing system. Historically, disagreements over this system—over whether reserves are over- or under-estimated, details of environmental impacts, disputes over fair costs–all have come down to information.

In the last energy crisis in the 1970s, I wrote a book called New Energy together with Bettina Conner, a colleague at the Institute for Policy Studies. At that time, there was a move in Congress to make knowledge of oil  reserves transparent. My book includes an excerpt from the Joint Economic Committee of the Congress in its investigation of the energy crisis in 1974. That report said: 

The lack of accurate,well-analyzed data regarding energy sources and uses has placed the United States government in a ludicrous position.When those officials directly charged with administering energy policy are unable to determine accurately the extent of the present fuel shortage or to estimate reliably its potential impact on the economy.  Nor can they determine fuel production costs with anything approaching the degree of accuracy necessary to administer the price control program.The government knows almost nothing about the extent of the vast mineral fuel resources contained in public lands.  Tax policy formulation is hampered by the lack of analysis of existing special tax provisos for mineral fuel extraction  and consequent ignorance of their impact.

William Simon, Nixon’s administrator  of the Federal Energy Office, acknowledged the situation before the joint economic committee in January 1974 when he declared, “Let me say right at the outset that there has never been in existence an adequate energy data  system…Today and in the years ahead we need better data on everything from reserves to refinery operations to inventories…Data we can check, verify, and cross check.’’

Despite all the study and debate, the Congress never did anything to remedy the situation. The late Wisconsin Democratic senator Gaylord Nelson introduced legislation to create independent public libraries of basic information. Under his bill, failure to make public such details would make officials liable to prison sentences and fines. The legislation was bottled up in committee and died a silent death at the hands of powerful energy interests in Congress.

Then there was a move to establish a Federal Energy Corporation to conduct research on alternative energy and new uses of fossil fuels. This Federal Energy Corporation would have been empowered to gather and decipher data on oil and gas holdings, and even produce a limited amount of oil and gas itself, for our strategic reserve. The government would control no more than 20 percent of total oil from public territories offered for leasing, and would be a supplier of last resort. In effect,it would act as a yardstick against which to measure the private petroleum industry. It would be a hedge against the unrestrained power of this industry, which periodically gouges the American public at the pump, even though the public owns the very oil and gas it is buying from these companies. Needless to say, that initiative, too, died a sudden death.

In the 1970s these measures may have failed; today they would never even be proposed. Set against the national debate that took place four decades ago, the current discussion in Congress and the proposed remedies, the passive stance of Obama and his administration, are extraordinary. It seems like our members of Congress don’t know recent American history–or, when it comes to the older members, even remember it. But they seem to know, by instinct, well that adage from the Italian novel: “If we want everything to stay the same, everything must change.”

After BP’s Disaster and Obama’s “Malaise,” Coal Is the Big Winner

No sooner had Obama made his Oval Office energy speech last week  than the pundits were comparing him to Jimmy Carter, saying his Debby Downer message was just like the so-called “malaise speech” in which Carter tried to wise up the populace to the energy mess. The Sunday morning pontificators were falling over each other to make the comparison yesterday, and even Der Spiegel ran an article asking “Will Obama Be the ‘Jimmy Carter of the 21st Century’?”

I’m not even going to try to weigh in on that question. But I am old enough to remember the “malaise speech,” which was not quite the speech that’s now being depicted by the pundits. Carter’s speech in July 1979 decried American reliance on foreign oil and proposed fresh departures into alternative energy. One of its main points was to seek creation of a new energy corporation to back alternatives fuels. There were some nods to solar energy and other renewable sources, but the real push was toward the oxymoronic “clean coal” in the form of coal gasification and liquefaction, along with the mining of oil shale, which is one of the most environmentally destructive energy extraction methods ever invented.

Carter’s speech followed the Three Mile Island nuclear accident, and as much as anything else was occasioned by the pressure he was under from the public outcry which followed that near-catastrophe. In addition, the OPEC oil embargo of the early 1970s was still a not-too-distant memory. So nuclear energy was effectively shelved, oil held more or less steady, and the biggest winner was the cheap and plentiful homegrown energy source: coal. Once scorned for its destructive strip-mining and filthy emissions, coal suddenly didn’t look so bad when compared with the risk of radiation poisoning–especially if it could be greenwashed and rebranded as a “clean” energy source.

The upshot of it all was hardly an energy “malaise’,” nor did it result in a major change in energy policy. Instead, it was a slight shift in strategy–a reshuffling of the cards. And in the end, it was the same old same old: The fossil fuel solution in a slightly different package. 

There, most likely, is where we’ll see a real parallel between Carter and Obama: If the BP spill is Obama’s Three Mile Island and the Iraq War his OPEC embargo, his reaction to these crises will probably echo Carter’s: coal, coal, and more coal. The president has long declared himself a fan of  coal, and back in February–before BP’s well exploded–he issued a presidential memorandum ordering a special task force to move forward with the questionable technologies that are supposed to render coal “clean.” As David Sassoon wrote at the time on SolveClimate:

Obama’s executive office memorandum looks like a big victory for the coal industry, which was already handed $3.8 billion in last year’s stimulus act for carbon capture and storage (CCS) research and development and deployment. He did not simultaneously order a similar plan for a big roll-out of solar or wind energy to level the playing field.

Making good on campaign promises, the president is throwing the full weight of his administration behind a moonshot effort to make coal the “clean” energy technology of choice and open a federal pathway to a profitable future for one of the nation’s most polluting industries.

Three factors have cemented Obama’s support for carbon capture and sequestration technology: political necessity, economic opportunity and the backing of some of the most powerful mainstream environmental organizations operating inside the Beltway.

If Obama’s support for coal was “cemented” before the BP disaster, I’d be willing to bet he loves it even more after spending some time with the dead birds and tar balls on the Gulf Coast.

New Orleans Jail Makes Room for BP Execs

OK, not quite. It’s true that New Orleans is floating plans to expand its local jail, the notorious Orleans Parish Prison, even though it already has the largest number of jail beds, per capita, of any city in the nation. It’s also true that most of us would like to see some BP executives there, languishing in pre-trial detention along with the hundreds of poor New Orleanians who can’t make bail after committing minor offenses. Unfortunately, we are unlikely to see this happen. But its good to know that there will be plenty of room for Tony Hayward and his entourage if it does.

Yesterday, the ACLU of Louisiana issued the following statement:

The ACLU of Louisiana calls on the New Orleans City Council to reject Sheriff Marlin Gusman’s plan to expand Orleans Parish Prison (OPP) to 5,832 beds, large enough for 1 bed for every 60 residents. OPP, currently being investigated by the U.S. Department of Justice, is already the largest per capita jail in the nation and the City’s own Planning Commission has recommended a smaller sized jail. The Sheriff’s request is scheduled to be heard by the Council this week…

[T]he Sheriff has been unable or unwilling to reveal what types of crimes people in his jail are charged with. “The scary thing is that he can’t even tell us who he is housing in the jail. Public drunkenness? Marijuana possession? He simply won’t tell us or doesn’t know,” said Katie Schwartzmann, Legal Director for the ACLU of Louisiana.

What is known is that from January 2007 until June 2009, on average just 2.24% arrests in New Orleans were for violent felonies. 86% of arrests were for misdemeanors, municipal, traffic violations, and other arrests. At the same time, roughly a third of the prisoners held at OPP are federal and state prisoners who have already been sentenced and should be held at state or federal facilities.

The expanded jail would provide one bed for every 60 residents of Orleans Parish. In comparison, the ACLU points out, the ratio in New York City is one jail bed for every 413 residents; in Los Angeles it is one for every 504; and in Chicago it is one for every 542.

Louisiana is known for its swift–if frequently unfair–justice. After Hurricane Katrina, New Orleans Mayor Ray Nagin warned “looters” that they would be sent “straight to Angola.” Instead, the warden of the Louisiana State Penitentiary, Burl Cain, hurried down to New Orleans to set up a temporary jail in the bus station, known as “Camp Greyhound.” Any people suspected of stealing a quart of milk for their starving children were summarily locked up–if they weren’t simply shot by cops or vigilantes.

Don’t expect anything of the sort for those BP execs. Eric Holder says “nothing is off the table,” but there’s little chance we’ll ever see them behind bars. Here’s what McClatchy’s Scott Hiaasen wrote on the subject last week:

U.S. Attorney General Eric Holder promises an aggressive criminal investigation of BP and its contractors for their actions leading up to the massive Gulf of Mexico oil spill, already the worst environmental disaster in U.S. history. But if history is any guide, don’t expect to see the CEO of BP in handcuffs.

Over the years, the Justice Department has repeatedly pursued criminal charges in major environmental accidents, from the Exxon Valdez oil spill in 1989 to the Three Mile Island nuclear accident a decade earlier. But in most high-profile environmental cases, criminal charges are brought mainly against the companies involved, while corporate executives typically escape punishment.

If BP is prosecuted and convicted of crimes, the company could face millions in criminal fines as well as civil penalties. But that won’t be nearly as satisfying as seeing its leaders in a cell at Angola.

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The U.S. Government, Brought to You By Big Oil

Long may she wave: The flag of the United States of Oil

Oil companies have begun to “weigh strategies to fight off tougher regulations” in the wake of BP’s spill to end all spills, the New York Times reported earlier this week. Supposedly, the companies are nervous because of President Obama’s angry takedown of the oil industry last week, as well as rumblings in Congress, where there are now efforts “to extend bans on new offshore drilling, strengthen safety and environmental safeguards and raise to $10 billion or more the cap on civil liability for an oil producer in a spill.”

Frankly, I don’t buy it. I’m quite willing to believe, as the Times story says, that the petroleum industry’s lobbyists have kicked into high gear. But I can’t believe the companies are really all that worried. Ever since John D. Rockefeller founded Standard Oil in 1870, the federal government has pretty much given the oil men exactly what they wanted, when and where they wanted it–from oil depletion allowances to tariff protection to cheap leases on the federal public domain (which includes the outer-continental shelf in the Gulf of Mexico, site of the Deepwater Horizon disaster). Periodic government attempts to contain or regulate the industry have been little more than temporary annoyances, rather than major obstacles to Big Oil’s power or profits. This is hardly surprising, considering the kind of influence the oil companies wield at all levels of the U.S. government.

In 1911, for example, the U. S. Supreme Court found that Standard Oil, which was then controlling 85 percent of the industry, had violated anti-trust laws and conspired against the public good. “For the safety of the Republic,” the Court declared, “we now decree that this dangerous conspiracy must be ended” within six months. Standard Oil was broken up into a few dozen closely related smaller companies–the only result being that the nation’s energy lifeline was controlled by a cartel instead of a monopoly.

Another serious stab at regulation began in 1938 with the passage of the Natural Gas Act, which again tried to combat monopolistic pricing by giving the Federal Power Commission (predecessor to Federal Energy Regulatory Commission) the authority to set “just and reasonable rates” for the transmission or sale of natural gas in interstate commerce. In 1954, in the Phillips decision, the Supreme Court held that the federal government should also regulate the price of natural gas at the wellhead–that is, at the point where the gas comes out of the ground. For the better part of a decade, the government fiddled around doing nothing, but then in the early Kennedy administration, the FPC came up with an area pricing plan. Although the focus here was on gas, everyone knew it was a warning shot at the oil industry, which owned and controlled most of the natural gas. To price gas, it would be necessary to get at the oil industry internal documents, revealing such things as the amounts of reserves, costs, and the like.

Immediately, the big oil and gas companies warned we would run out of gas if prices were not raised to stimulate greater production. In 1974, during the (largely manufactured) energy “crisis,” the FPC took the first steps to undercut its own proposed regulations by giving in to industry and hiking prices. Under Jimmy Carter, the government began the formal process of deregulating gas, a policy which carried forward under Reagan and both Bush’s as part of the Republican right wing’s drive against regulation. Once the government gave in, the gas shortage disappeared and today we are supposedly awash with gas. All this was accomplished by industry manipulation of production and reserve figures—the same thing that has happened during all oil “shortages.”

In the wake of the BP disaster, it’s become abundantly clear that the oil industry itself has been writing the rules for offshore drilling, and not federal regulators at the Interior Department’s Minerals Management Service. “Nearly 100 industry standards set by the American Petroleum Industry are included in the nation’s offshore operating regulations,” McClatchy reported last month. “The API asserts that its standards are better for the industry’s bottom line and make it easier to operate offshore than if the Minerals Management Service set the rules.”  

The Washington Post reported on Thursday that the MMS approved “categorical exclusions’’ from environmental review for BP’s offshore wells in the Gulf, including the Deepwater Horizon. Congressional probes already suggest Minerals Management worked in collusion with BP and other oil firms to increase offshore production without regard to safety or environmental standards. Over the last month, the litany of MMS’s failures, and its more than “cozy” relationship with the oil industry, has been extensively documented by the press (including MJ’s Kate Sheppard, here and here).  With government oversight of this caliber, we ought to stop wondering how a disaster like the Deepwater Horizon spill could happen, and start wondering where it’s going to happen next.

Failure to devise any sort of meaningful regulation of the oil and gas business means that we really don’t know what the industry does, or where or how. Information on the country’s reserves are left in the hands of the companies, not the federal government. Since the US Geological Survey, which is supposed to map the public domain never had the money to do the job right, large parts of the public lands have not been thoroughly mapped by anyone but the companies that exploit it. Relying on industry data has resulted time after time in false information–as in the case of gas in the 1970s energy crisis–to inflate or deflate the amounts of oil and gas reserves.

Beyond failing at its own oversight function, the workings of the MMS also make it difficult for independent analysts to assess what is really going on. Earlier this week, a coalition of scientific societies underlined the problems in a letter to Interior Secretary Ken Salazar:  

Without a transparent and ethical process for dealing with scientific research and scientific conduct, the science that is performed at DOI may be called into question. This will not only harm the reputation of DOI, but will threaten the conservation of the nation’s treasured natural resources.  To ensure that science is being used properly to implement natural resource decisions, science should not be suppressed, scientific misconduct should be punished, and scientists who report suppression or other scientific misconduct should be afforded whistleblower protections.  Additionally, the science that informs natural resource decisions must be clear, transparent, and subject to independent peer review.

Such changes are unlikely to be implemented even in the wake of the BP spill. The secrecy surrounding federal energy policy was underscored by the confidential meetings organized by Dick Cheney with the oil and gas industry, as part of the Vice President’s “task force” to design a new national energy policy in the early years of the Bush Administration. Those meetings, the details of which remain hidden from the public—their confidentiality supported by the courts—are the most glaring recent example of energy policy formed in secret, and in collusion with the energy industry. In other words, in America, the oil companies not only write their own regulations and perform their own oversight; they also set energy policy and draft laws.

In addition to having their way with the executive and legislative branches of government, the oil companies have largely triumphed over the judicial system as well. Government policy plays into oil company interests not only by letting them do as they please, but also in limiting their liability when things inevitably go wrong. On “Meet the Press” last Sunday, White House energy advisor (and former Clinton EPA head) Carol Browner repeated the pledge that BP would pay all cleanup costs for the spill. This is true, as far as it goes, and BP too has promised to pay for the cleanup. But you can just see lawyers haggling in court over what constitutes a cleanup cost.

In addition to the outright cleanup costs, BP also  faces cost of  up to a total of  $75 million for damages not associated with the oil spill itself—such things as fishing and tourism. That amount would be woefully insufficient in this case. Finally, some of the $1.6 billion stashed in Oil Spill Liability Trust Fund could be spent in a cleanup. This fund is made up of industry taxes of 8 cents per barrel, and there is a cap of $1 billion on how much of that can be withdrawn. The House  recently undertook efforts to raise the cap and increase the industry taxes going into  the Oil Spill Liability Trust Fund. But since this Trust Fund is created by taxing oil, you can be sure that one way or another, the cost will be passed on to consumers, rather than coming out of oil company profits.  

Finally, the Supreme Court could decide to give a special parting gift to BP, as they did to Exxon following the Valdez spill. In that case, an Anchorage jury brought in a verdict of $5 billion in punitive damages against Exxon. In 2008, after nearly two decades of litigation, the Supreme Court reduced the damages to $500 million–a tenth of the original verdict. The decision, written by Justice Souter, cited ”the need to protect against the possibility…of awards that are unpredictable and unnecessary, either for deterrence or for measured retribution.” It’s hard to believe five Supreme Court Justices believed that $5 billion wouldn’t be a more effective “deterrent” to future negligence than $500 million. But apparently, the highest court in the land wanted to make sure that a jury of citizens didn’t go overboard in demanding responsible behavior from America’s favorite industry.

Obama’s “Revelations” and the Oil Industry’s Slimy History

“What’s been made clear from this disaster is that for years the oil and gas industry has leveraged such power that they have effectively been allowed to regulate themselves,” President Obama said last week in his press conference on the BP oil spill. “I was wrong,” he declared,  “in my belief that the oil companies had their act together when it came to worst-case scenarios.”

Ya think? If this isn’t a textbook example of closing the barn door after the horse is out, I don’t know what is. In fact, it isn’t even closing the door so much as acknowledging that the barn actually has a door, which we might want to consider using once in a while if we don’t want the horses running wild. What the President’s statement reminds me of most is Alan Greenspan’s admission, after the economic meltdown took place, that there just might be a tiny “flaw” in his approach to financial regulation. “I made a mistake,” Greenspan told Congress in October 2008, “in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.”

In the aftermath of his press conference, political pundits seem to be focused on whether Obama–and by implication the federal government–was taking too much responsibility for the spill, or not enough. Only a few have pointed out the patent absurdity of believing in the first place that the oil companies could be trusted to “have their act together” when it came to either preventing or dealing with massive spills. The history of global oil spills over the last half-century shows a pattern of carelessness and ineptitude on the part of the industry–and of failure on the part of governments who tried to intervene after the fact.

When the tanker Torrey Canyon drove straight into the rocks off Land’s End in Britain in 1967, spilling its 31-million-gallon cargo, chemical dispersants were spread on the expanding slick with no result. According to the “Report to the Committee of Scientists on the Scientific and Technological Aspects of the Torrey Canyon Disaster,” the British Air Force was called in to set the oil afire by bombing it. Some of it eventually caught fire; most of it did not. A Dutch salvage team  thought they could fix things by pulling the ship off the rocks, but the tow cable broke. The spill ended up killing marine life and spreading glop all over the beaches of Southern England and some in France as well.

In 1969, a well on the outercontinental shelf six miles off Santa Barbara, California, went out of control. All initial efforts to control the spilling oil were as futile. When the flow was finally stopped after 11 days, 3 million gallons had escaped and coated the pristine beaches of Santa Barbara channel. (At the time it was considered a devastating disaster, and helped fuel the fledgling environmental movement in California–though the numbers sound almost quaint compared with the current BP spill.) After the Santa Barbara spill, the U.S. government came up with a plan to keep teams of experts from different parts of government on standby, so they could fly in and assess damage in the event of a spill.

In 1969 alone, the Coast Guard was reporting 1,007 oil spills in U.S. coastal waters. Many others were not reported. (It was standard practice for ships to pump waste oil into the water on approaching port.) That same year, a Woods Hole Oceangraphic research project in the Sargasso Sea, reported “quantities of oil-tar lumps up to 3 inches in diameter were caught in the nets…It was estimated that there was three times as much tar-like material as Sargasso weed. Similar occurrences have been reported worldwide by observers from this as well as other institutions.’’

In 1970 an Onassis tanker called the Arrow hit Cerberus Rock off Nova Scotia.  It was the Torrey Canyon all over again. Detergents were sprayed with no effect. The U.S. Army dispatched teams armed with  flame throwers to burn it up, which didn’t work. Chemists from Pittsburgh Corning Glass arrived with bags of little glass balls intended to act as wicks for burning the oil, but these did not ignite. Fiberglass collars set up to keep the spreading oil out of a fish processing plant also failed. Attempts to pull the ship off the rocks were futile. Eventually a gale broke the tanker’s back and the stern sank in one hundred feet of water with one million gallons of congealed crude oil aboard. In this case, by pure luck, the remaining oil stayed inside the tanker until a salvage team pumped it out a few months later.

In 1979, Pemex’s Ixtac oil well, in the Gulf off of Campeche, Mexico, suffered a blowout. Through various measures–some of them similar to those currently being used on the Deepwater Horizon spill–the flow of oil from the blown well was slowed from 30,000 to 10,000 barrels a day, but it took nearly ten months for it to be stopped completely. By that time, an estimated 3 million barrels had reached the U.S. Gulf coast. 

The 1970s through the 1990s saw more than a dozen spills larger than the Exxon Valdez, pouring oil into the waters off Trinidad, Uzbekistan, Iran, Angola, South Africa, France, Italy, Greece, Spain, Portugal, Turkey, Ireland, Scotland, Wales, Mozambique, Chile, and Sweden.

As for the Valdez disaster itself, its effects still linger nearly two decades after the 1989 spill. During that time, suits against Exxon made their way through courts, resulting in a $5.5 billion jury trial settlement. But the Supreme Court later thought this was too much money, and cut the settlement to $1 billion. No fine ever levied against the oil industry has seriously inhibited its ability to keep doing business as usual–or employing lobbyists, or making campaign contributions. And to my knowledge, no oil company executives have ever gone to jail for the environmental devastation caused by their negligence or greed.

This, perhaps, is the real lesson of history when it comes to oil spills: It isn’t enough, even, to close the barn door, if you allow the horses to keep making hay.

BP’s Image Coated in Sludge After Years of Greenwashing

For the last decade, BP has been busily engaged in a multi-million dollar greenwashing campaign. Changing its name from British Petroleum to just BP, the company adopted a new slogan, “Beyond Petroleum,” and began a “rebranding” effort to depict itself as a public-spirited, environmentally sensitive, green energy enterprise, the very model of 21st century corporate responsibility.

It’s going to take more than a name change and a clever ad campaign to erase the image of oil spreading across the Gulf Coast from BP’s offshore rig, and dead wildlife washing up onto its beaches. Even as it magnanimously agreed to cover the costs of cleaning up the mammoth spill, BP on Monday was still insisting that it wasn’t at fault for the accident that caused it–blaming it instead on the offshore drilling contractor that operated the rig, which exploded and then collapsed. So much for corporate responsibility.

Even before the Deepwater Horizon disaster, BP’s green image was nothing more than a scam. While making miniscule investments in things like solar power, biofuels, and carbon fuel cells that backed its PR claims, BP continued to work relentlessly to expand its oil and gas operations. In the last decade, the world’s second largest producer of fossil fuels, the company drilled (and spilled) vast quantities of oil and gas on Alaska’s North Slope and in the North Sea. It positioned itself to rip up Canada’s tar sands to extract its dirty oil, and grabbed a 50 percent interest in Iraq’s rich Rumaila oil field. BP boasted the highest number of explosions and other accidents at its U.S. refineries (several of them deadly), and made the Multinational Monitor’s 10 Worst Companies lists in 2000 and 2005, based on its environmental and human rights record.

But BP clearly believed that green was in the eye of the beholder. The company’s move toward green marketing began in 1997, when it quit the industry’s climate change denial group, the Global Climate Coalition, and acknowledged a possible link between global warming and the use of fossil fuels. By 2000, the vertically integrated multinational—which explores, extracts, transports, refines, and sell fuels through its myriad gas stations–had bought up Amoco, Arco, and Burmah Castrol. It united them under the BP brand with a feel-good flowering sun logo, and hired the advertising firm of Ogilvy & Mathers to launch a $200 million rebranding campaign.

As Ogilvy executive John Seifert described it in 2002, then BP CEO John Browne—or, to use his full title, Lord Browne of Madingley–“came to me with a dream proposal. He said, ‘I want this company to be a force for good in this world. Build that image and I will hold the company accountable to it,’” The problem, Seifert said, was, “No other industry is more loathed and distrusted by the public than the energy industry, and yet no other industry is more critical to modern survival. The reality is that no matter how much consumers resent energy companies, they still drive their cars and leave on the lights and turn the other cheek.” His solution was a campaign that “bridges the us/them barrier, that brings the consumer into the debate so that we can address the problem together.”

By 2004, BP was running its “BP on the Street” nationwide ad campaign, featuring of what one BP executive described to Adweek as “a radical conversation with consumers about the paradox of the need for energy and the cost for getting it.” TV spots showed ordinary looking people being asked questions like, “What would you rather have, a car or a cleaner environment?” Says one woman, “I can’t imagine being without my car. But that compromise is very hard to make where we are.” Then the punch line flashes on the screen: “We voluntarily introduced cleaner fuels, six years before EPA mandates … these low-sulphur fuels reduce ozone pollution….It’s a start.” Whew. Thank goodness for BP, saving us from making those tough choices between preserving the polar ice caps and taking the bus.

Other ads had the appearance of being hard-hitting—including one that asked people what they would like to say to oil company executives. “Think about your children,” one woman says. “They’re breathing the air I’m breathing, that you’re breathing, and it’s bad. And down the line, they will suffer. And you know, think about that. You know, if you have alternatives, invest the money in alternatives. You’ll still make money. It won’t make you a Communist. It’ll just make you a better human being.”  The television and print ads always ended with a plug for BP as “a global leader” in clean energy production. (Some examples appear at the end of this post.)

Accompanying the ad campaign was a series of public pronouncements from Lord Browne, who had been dubbed the “sun king” and the “green oilman,” and was also reputed to be Tony Blair’s favorite businessman. Browne announced a plan to reduce company-wide greenhouse gas emissions, and another to invest $8 billion in alternative energy and greenhouse gas abatement projects–an impressive figure that was actually a pittance relative to BP’s overall budget.

The gimmicks appeared to work. In 2001, BP had already been chosen as the “company that does most to protect the environment” in a survey by the Financial Times that polled not only corporate executives but also activist groups and the media. “There appears to be near consensus,” the paper reported, that BP “has made exceptional efforts to replenish environmental resources, develop alternative fuels and communicate with stakeholders.” As for the general public, a 2007 “green brands survey” found that BP was perceived as more green than any of the other petroleum companies, and also headed the list of companies that had “become more green” in the previous five years.

And what else was going on at BP while it was supposed to be “becoming more green”?

  • In 2004, BP engaged in a “massive manipulation” of the U.S. propane market. The Commodity Futures Trading Commission ordered the company to pay $303 million in criminal penalties and restitution to victims of its trading abuses.
  • In 2005, a devastating explosion and fire at a BP refinery in Texas BP killed 15 workers and injured 170 others. In 2007, BP was fined $50 million for environmental damage causes by the refinery blast. In 2009, the Occupational Safety and Health Administration levied an additional fine of $87 million fine–the largest in OSHA’s history–for the company’s “failure to correct potential hazards faced by employees.”
  • In 2006, more than 260,000 gallons of crude poured onto the Arctic tundra from a BP pipeline near Prudhoe Bay—the worst onshore spill in Alaskan history. Whistleblowers had already revealed that BP ignored warnings about leaking and corroded pipelines and had tried to cover up earlier, smaller spills, and Congressional investigations found that negligence and cost-cutting were factors in the 2006 disaster. BP was fined more than $20 million.
  • In 2007, the U.S. Justice Department announced a fine of $303 million against BP for “massive manipulation” of energy markets in 2004.
  • Also in October 2007, the U.S. Minerals Management Service fined BP for a series of violations related to a near-blowout at an offshore rig in 2002. The violations included inadequate training of BP workers in “well control.”

During the period that all of these human and environmental catastrophes were going on, BP sales rose from $192 billion in 2004 to $240 billion in 2005, and then to $266 billion in 2006. The company’s profits fell in 2007 following the disasters and fines, but began rebounding as soon as BP announced massive layoffs. The dapper Lord Browne of Madingley, however, resigned after reports faulted his leadership in contributing to the accidents–and after he was found to have lied to a court about his relationship with a former male escort.

BP’s new CEO, Tony Hayward, had been head of Exploration and Production for BP since 2003. According to the New York Times, Hayward “promised to refocus the company and change the culture, emphasizing safety.” In the last few years, BP has spent less time promoting itself as a green company and more time depicting itself as safe, competent, and forward-thinking–a claim that has now proven even more preposterous than the greenwashing was.  

The Times article remarked that for Hayward, “the accident threatens to overshadow all of the efforts he has made to burnish the tattered reputation of the company.” In a meeting with BP executives in London following the spill, Hayward reportedly asked, “What the hell did we do to deserve this?”

Tony Hayward himself has the answer, since according to the Times, “He also expanded the company’s already aggressive exploratory efforts in the deep waters of the gulf.” In fact, “last year, the same platform that has now sunk to the sea floor drilled the deepest well in history, opening one of the largest new fields in the world.” New information is emerging every day on the many ways in which BP cut corners when it came to safeguards on the rig–some of them implicated in the current disaster. 

Hayward got a 40 percent pay increase in 2009 based on BP’s “improved performance.” And just recently, the company announced earnings of $5.6 billion for the first quarter of 2010, more than double the same quarter last year. The disaster in the Gulf, of course, has not been good for BP’s share prices. But a Morningstar oil stock analyst blithely told the New York Times that the worst oil spill in U.S. history “will test Tony and his ability to respond to this situation.” She confidently concluded, “Certainly, BP will survive this.” 

Whether the Gulf Coast will survive it is, of course, another question. If it were up to me, I’d gladly trade the future of BP for the life of one sea turtle.

Dude, where’s my fuel? 2006 ads from BP’s greenwashing campaign.

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