Background
British Petroleum, also known as BP, is one of the key players in the energy sector in the United States. The importance of this sector to the country’s economy is very clear, given that all other sectors of the economy depend on it for energy. According to Cuthbert (65), British Petroleum is one of the most important companies in the United States economy. However, it is raising a lot of concern how this company has been conducting its operations over the last twenty years.
The company has been accused of a series of crimes that involve its operations within the country. For instance, Texas City Refinery explosion and the Deepwater Horizon Oil Spillage are some of the worst accidents in this industry that the country has ever experienced in history. What is worrying is that the management of this firm does not seem to be concerned. The mistakes that this firm committed five years ago are still the same mistakes it is committing today, leading to massive negative environmental impact. The environment is delicate, and how we treat it today will determine its sustainability tomorrow. In some instances, the environmental pollution may be irreversible (Lyon and Maxwell 56)
Every human life is precious and must be treated as such. Lives being lost in avoidable accidents, in this firm’s plants within the country can never be replaced. Socially, those families whose loved ones die in such accidents will spend the rest of their lives moaning. In other families, breadwinners will be lost. Environmental and human rights activists have been asking how long this will continue. They have been concerned of how this firm can be made to appreciate that the environment defines the very existence of the future generation. Fines paid by this firm may not be enough to reverse some of the negative effects that its activities has on the environment and to families that lose their loved ones (Zoltan and Laszlo 53).
The United States government, through the United States Environmental Protection Agency, must act now in order to protect the environment. The action must go beyond fines because this firm has proven beyond any doubt that it can pay these fines without its operations being significantly affected.
Analysis
It is important to analyze the trend that this firm has taken in violating the law and paying fines as a result of this. In 1999, British Petroleum was found guilty of irresponsible waste disposals in Alaska North slopes. The company paid $ 22 million in fine for this criminal offence. The Texas City Refinery explosion in 2005 remains one of the worst industrial accidents in the United States in the recent times. It left 15 people dead, and over 170 others seriously injured. The environmental impact of this was devastating. The company paid over $ 65 million in fine for violation of rules set by various environmental agencies, including the regulations set by the United States Environmental Protection Agency.
In 2006, the company was accused of polluting farmlands in Columbia, and millions of dollars were paid because of this. In 2006, a BP exploration in Alaska led to a massive oil spillage at Prudhoe Bay. The company was found guilty of a number of offences, and had to pay a fine of $ 45 million. In 2008, one of the company’s plants in Caspian Sea experienced a serious gas leak that lead to blowout (Commander and Svejnar 23).
The 2010 Texas City Chemical leak is another act of negligence on the side of this company that led to massive environmental pollution (Kamieniecki, and Kraft 67). However, the recent Deepwater Horizon Oil Spillage is one of the most memorable accidents involving this firm that had a massive impact to the environment. Many aquatic plants and animals in this region were destroyed, tourism in various states was affected, agriculture on many farms along the shore interfered with, and fishing stopped in many regions. Once again a series of fines were paid by the firm after it became clear that it contravened a series of regulations. The table below is a summary of fines that this company has paid based on the readily available data discussed above.
Table 1: Fines Paid by BP since 1999
This information is best presented using the following graph. It shows a consistent increase in payment of fines by this firm since 1999.
From the above graphical presentation, it is clear that BP has been paying high fines in several occasions. In 1999, the firm paid 22 million in fine for its violation of environmental policies and safety regulation. This amount of fine has been consistently rising for the same mistakes, and in 2010, the firm had to pay a record of $ 42.2 billion dollars. According to Kew, and Stredwick (87), fines should not be considered as sources of income to the country. They are supposed to deter a given undesirable behavior among players in various sectors of the economy. If this fine fails to correct a given behavior, then it is a clear indication that such fines are not effective enough.
The United States Environmental Protection Agency’s expenditure has been on the rise over the last ten years, a clear indication that environmental degradation is one the rise. The similarity in the pattern of this agency’s expenditure and the fines paid BP demonstrates that this firm’s operations have significantly large negative impact on the environment. The graph below shows the expenditure of this agency from 2001 to 2011 as a percentage of the country’s GPD.
Some recent reports have indicated that the irresponsible behavior by some of the leading firms in the energy sectors has brought a negative impact on other industries. According to Peng and Dominici (34), the Deepwater Horizon oil spillage had series negative consequences on the tourism sector, the fishing and farming industries. The figure below shows sea bird that was affected by this high sea oil spillage. This is a clear indication of how terrible the sea was affected by this oil spillage.
This is a clear indication that things are not getting any better despite the fines that this firm has been paying over the years. Its high profits make this firm ignore all the laid down procedures and codes of conduct because it can pay the fines if there is a need.
Options
The United States Environmental Protection Agency has a number of options that it can take to address the issue of pollution caused by British Petroleum in this country. As Fernando (45) says, we owe the future generation a sustainable environment where they will be able to conduct various development projects befitting their survival. One of the best options that would be available for this agency would be a suspension of the operating license of this firm. Suspending the license for some time will mean that the firm will have to halt its operations for some time. This option will help send a message, but the problem is that it may meet resistance from several stakeholders who may view it as an attempt to scare away investors (Nijsen 67).
Another alternative that this agency can take to curb the increasing negative impact that this firm has on the environment would be to hire experts to monitor the firm’s operations at all its facilities in the United States at its own expense. This means that the agency will hire these experts who will make regular inspection of the facility to ensure that they adhere to the rules. The company will pay the agency the equivalent of all the expenses of maintaining these experts. If this fails to yield the desired result, then the last option would be to cancel the operating license of this firm, and stop it from operating in the United States.
Recommendation
The options given above have their advantages and disadvantages. It is important to understand the strategy that would yield the best results in managing BP’s negative impact on the environment. I believe that the best approach would be to hire external experts to inspect operations of this firm in the country. Cancelling or suspending its license may meet resistance from many stakeholders, especially due to the economic significance of the firm in the country. This will ensure that all the operations within the firm comply with the regulation of the industry. The external experts will also advise the management of the firm of necessary changes in their operations that will improve safety to the environment and their employees.
Works Cited
Cuthbert, Daniel. Applications of Statistics to Industrial Experimentation. New York: Wiley, 1976. Print.
Commander, Simon, and James Svejnar. “Business Environment, Exports, Ownership, and Firm Performance.” The Review of Economics and Statistics 93.1 (2011): 309-337. Print.
Fernando, Charles. Business Environment. New Delhi: Pearson, 2011. Print.
Kamieniecki, Sheldon, and Michael Kraft. Business and Environmental Policy: Corporate Interests in the American Political System. Cambridge: MIT Press, 2007. Print.
Kew, John, and John Stredwick. Business Environment: Managing in a Strategic Context. London: Chartered Inst. of Personnel and Development, 2005. Print.
Lyon, Thomas, and John Maxwell. Corporate Environmentalism and Public Policy. Cambridge: Cambridge University Press, 2004. Print.
Nijsen, André. Business Regulation and Public Policy: The Costs and Benefits of Compliance. New York: Springer, 2009. Print.
Peng, Roger, and Francesca Dominici. Statistical Methods for Environmental Epidemiology with R: A Case Study in Air Pollution and Health. New York: Springer, 2008. Print.
Prasad, Vishwajeet. Business Environment. Delhia: Gennext, 2010. Print.
Zoltan, Acs, and Laszlo Szerb. “Entrepreneurship, Economic Growth and Public Policy.” Small Business Economics 28.3 (2007): 109-122. Print.