BP Oil Spill: Economic and Social Impacts

This assignment examines the multifaceted impacts of the BP oil spill, delving into its economic repercussions on industries like fishing and tourism, as well as its broader social and environmental consequences. It analyzes various sources, including news articles, academic papers, and company reports, to provide a nuanced understanding of the spill's long-term effects.

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Executive Summary
It is the duty of the organization to look after the environment so that the resources are conserved
for the future. Hence, sustainability is the need of the hour as it not only plays a determining role
and enhances the company’s profit. In this report, the major emphasis in on the case of BP oil
spill as it led to huge devastation. It was a collective failure and the failure was observed on the
part of regulators, authorities, and ethics. The report stresses on the analysis of the oil spill and
financial outcomes. Moreover, the role of the regulator is brought to the forefront.
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Contents
Introduction.................................................................................................................................................3
Analysis........................................................................................................................................................3
Financial outcomes......................................................................................................................................4
i. Response from BP................................................................................................................................4
ii. Cleanup process...................................................................................................................................4
iii. Corporate responsibility......................................................................................................................4
iv. Environment........................................................................................................................................4
Regulators...................................................................................................................................................5
Encouragement of the politicians as major regulators................................................................................6
Relevant actions that are needed................................................................................................................6
Recommendation........................................................................................................................................8
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10
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Introduction
Throughout the history of UK, the deepwater horizon or BP oil spill is regarded the biggest
because the explosion near the Gulf of Mexico destroyed many lives. Further, it also destroyed
many businesses including the tourism and fishing industry. As a result, the responsible
companies of this disaster faced major financial difficulties, as they had to compensate for the
same. Moreover, an attorney group was also framed so that the proceedings related to the same
can be conducted and the affected people could be offered necessary aid. The impact of the spill
was so huge that even other states were badly affected and many lawsuits were initiated against
the company (Broder, 2012). Due to such massive destruction, protection and conservation of the
environment are being significant importance. Further, the disclosure mechanism is also required
in the current scenario so that an enhanced performance can be obtained.
Analysis
BP was the prime player in such disaster and thus, it had to tackle every consequence related to
the same. Therefore, the stand of BP and inefficiency on the part of regulatory authorities will be
done. Besides, this report also intends to evaluate the environment so that impact of such disaster
causing mass destruction can be determined. In addition, the financial situation will be also
evaluated through this study. The prime intention of this research is to shed light into the
inefficacies prevalent in the statutory authorities that resulted in the degradation of ethics and
corporate governance practices as a whole (Cleveland, 2010). This study also focuses on the fact
that the prevalence of several regimes could have safeguarded such a situation.
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Financial outcomes
i. Response from BP
Due to the spill, it became compulsory for the company to restore the entire affected area and
economy as a whole. For such purpose, it spent huge resources that could compensate for the
same. This can be proved by the fact that the company for addressing such requirement kept
$37.4 billion separately (Mason, 2010). The reason behind such huge amount can be attributed to
the fact that there were various activities that required huge resources that would ultimately
enhance the public image of the company and minimize the impact of the spill as a whole. The
company also expended $20 billion for the trust formed in relation to the same. Nevertheless,
when the goodwill of BP came at stake, it was forced to take relevant steps and prudence was not
undertaken before the disaster (BP Gulf Update, 2012).
ii. Cleanup process
It was the prime responsibility of BP to initiate the cleanup process so that the impact can be
minimized. The response could be observed in the form of tools and strategies that were framed
to collect the oil from the water. For such purpose, BP engaged more than 90,000 individuals and
5000 vessels so that the process could be rapidly undertaken. This process of skimming resulted
in the collection of 8,27,047 vessels that depicts the fact of the prevalence of massive amounts of
oil in the water (Jacobson, 2013).
iii. Corporate responsibility
CSR or corporate social responsibility is that tool or framework that assists a company in
adherence with all moral or ethical standards. Besides, various oil organizations like Marathon,
Chevron have incorporated CSR activities into their affairs and in the present situation,
regulatory authorities must take effective steps to ensure that corrective actions are taken in the
event of such disastrous situation (Upton, 2011)
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iv. Environment
BP was indulged with many federal agencies so that the restoration process could be maximized.
Such agencies assisted the company in carrying out Natural Resource Damage evaluation so that
the real picture of the situation can be highlighted and corrective actions in relation to the same
can be undertaken. For such purpose, it spent more than $600 million so that no problems could
incur especially in relation to financial outcomes (Mason, 2010). Nonetheless, this evaluation
came out to be the biggest NRD evaluation ever undertaken under the Oil Pollution Act.
In relation to the restoration of wildlife habitats, the company also implemented various surveys
and measures. Besides, more than 12000 observatory surveys were also conducted so that birds
can be safeguarded. Further, in order to safeguard the sea animals, several rehabilitation centers
were opened for protection of the turtles (CBS Chicago, 2013). This can be proved by the fact
that around $22 million was spent for the purpose of wildlife habitat.
Regulators
A powerful strategy was not present that resulted in a huge chain of events. Further, the
management did not focus towards competing interest; the inefficacy can be associated with the
rules of the environment and the federal government that were highly violated. The theory of
public interest also highlights the institutions that play a very significant part in safeguarding the
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economic effectiveness. Further, it is the agency’s role to implement proper measures in relation
to the emergence of any contingencies. Besides, it must also be ascertained when such decisions
must be allotted to the independent statutory bodies. However, government trustees found it
inappropriate to analyze the items and services lost from the ecosystem.
Based on the oil spill scenario, it could be found that the statutory system was not proper in
nature that resulted in the downfall of the tragedy. Besides, based on various surveys, it was
observed that the prevalence of a regulatory system could have prevented such a tragedy. Such
misbalance depicts that the theory of public interest was not properly taken into account (Cherry
& Sneirson, 2010). Furthermore, corporate governance and ethics were also inefficient that
enhanced the problem. On a whole, the agencies did not pursue proper tools that were necessary
to safeguard the environment and public as a whole. The enforcement resources were also not
entirely available in this scenario.
Encouragement of the politicians as major regulators
The politicians as major regulators assist in offering firmness to the company’s affairs, as the
regulatory strategies are formed with efficiency and flexibility. As a result, the significant
impacts can be properly known. Besides, this is associated with the normative ideologies because
such politicians frame the rules to safeguard public interest as a whole. Further, regulations also
assist in assuring that the common people are highly at advantage (BP Plc, 2014). On a whole,
politicians play a key role in the formulation of relevant plans and policies that can assist in the
smooth functioning of the company.
Relevant actions that are needed
BP oil spill resulted in the development of new and efficient plans and policies. Further, the
inefficacies prevalent in the case of BP clearly highlight the insufficiencies of CSR (corporate
social responsibility). It must also be noted that BP took relevant actions to restore the tragedy
only after the occurrence of oil spill and investigation thereafter. On a whole, the criminal
charges and fines were not adequate in nature and punishment cannot alone create a valuable
impact. The statutory operations must be strengthened by the emergence of innovative rules and
ethical standards (Broder & Krauss, 2012). Further, the function and responsibility of the agency
must also be concise so that immense pressures could be handled. In addition, monitoring and
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enforcement must also be given prior consideration so that production and exploration activities
can be done after prior approval.
On a whole, appropriate disclosures must be adequately offered in the annual report. This can
offer an update on the condition to the organizations that can assist them in having a reference on
the ecological matters before the arrival of adverse situations. Nevertheless, a proper statement
of charges, liabilities, and revenue associated with the environment must be properly considered
so that a sufficient estimate can be ascertained (Jefferson & Bowling, 2011).
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Recommendation
British Petroleum endeavored to become the biggest market player but it disregarded due to
focus on social and environmental conservation. Besides, there was no framework for the
fulfillment of required regulations. This makes it clear that it is the duty of government to
supervise the functioning of such petroleum companies so that future scenarios can be prevented.
Furthermore, it is the duty of companies to operate in a moral way by submitting every policy
associated with the hazardous program so that corrective actions can be implemented during any
uncertain event. Moreover, the setup of advisory board can also be undertaken so that it operates
independently and assists in providing relevant emphasis upon the matters.
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Conclusion
A lawful team is always needed to look after the financial losses especially when it is related
with bigger players like BP. The amount of resources spent by the company clearly portray that
major issues were encountered by it and even its share prices went drastically down. This is the
reason why CSR activities must be duly considered so that adverse situations can be prevented in
the initial stages (Fodor & Stowe, 2010). Hence, to safeguard such a tragedy, proper committee
and provision are required to supervise the matter and without accounting for such sensitive
matters, companies like BP cannot aim to attain the largest share of the market.
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References
BP Gulf Update 2012, BP Protecting Wildlife, viewed 21 September 2017,
http://www.bpgulfupdate.com/external/content/document/4699/1469631/1/
WILDLIFE_Fact_Sheet_FINAL_2-23-12.PDF.
Broder, J. M 2012, Ruling Favours Owner of Rig in Gulf Spill, The New York Times, viewed 21
September 2017, http://www.nytimes.com/2012/01/27/business/energy-environment/transocean-
not-liable-for-some-gulf-spill-claims-judge-rules.html.
Broder, J. M., & Krauss, C 2011, Regulation of Offshore Rigs Is a Work in Progress, The New
York Times, viewed 21 September 2017,
http://www.nytimes.com/2011/04/17/us/politics/17regulate.html?pagewanted=all&_r=0
BP Plc 2014, Annual report and accounts 2014, viewed 21 September 2017,
http://www.bp.com/content/dam/bp
country/de_de/PDFs/brochures/BP_Annual_Report_and_Form_20F_2014.pdf
BP Plc 2012, Annual report and accounts 2014, viewed 21 September 2017,
http://www.bp.com/content/dam/bp/pdf/investors/bp-annual-report-and-form-20f-2012.pdf
CBS Chicago 2013, BP Settles Class-Action Lawsuit Over Tainted Gasoline, CBS Chicago,
viewed 21 September 2017, http://chicago.cbslocal.com/2013/08/21/bp-settles-class-action-
lawsuit-over-tainted-gasoline/
Cleveland, C. J 2010, Deepwater Horizon Oil Spill, viewed 21 September 2017,
http://www.eoearth.org/article/Deepwater_Horizon_oil_spill?topic=50364.
Cherry, M.A & Sneirson, J.F 2010, ‘Beyond Profit: Rethinking Corporate Social Responsibility
and Green washing after the BP Oil Disaster’, Tulane Law Review, vol. 85, no.4, pp. 983-1038
Fodor, A & Stowe, J.D 2010, The BP Oil Disaster: Stock and Option Market Reactions,
Working Paper, Ohio University.
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Jefferson, J & Bowling, N 2011, The Economic and Biological Impacts of The BP Oil Spill, NDS
372.01 Environmental Studies Capstone Seminar.
Jacobson, M 2013, By the Numbers: The Oil Spill and BP's Legal Troubles, PBS News Hour,
viewed 21 September 2017, http://www.pbs.org/newshour/rundown/2013/07/gulf-oil-spill-by-
the-numbers.html.
Mason, J.R 2010, The Economic Cost of a Moratorium on Offshore Oil and Gas Exploration to
the Gulf Region, Working Paper :Louisiana State University.
Upton, H.F 2011, The Deepwater Horizon Oil Spill and the Gulf of Mexico Fishing Industry,
A look at Europe’s Financial Crisis, viewed 21 September 2017,
http://hosted.ap.org/specials/interactives/_business/greece_imf/content.swf.
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