Rupert Cornwell: Spillages and scandals: an 'annus horribilis' BP would like to forget

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The Independent Online

For BP and its North American operations, 2006 has truly been the annus horribilis - a series of setbacks, accidental and self-inflicted, which have defeated every attempt by the company to restore its reputation after the calamity at the Texas City oil refinery.

Even if it had not put a foot wrong, this would have been a difficult period for a major energy company seeking to put the accident behind it, while it was reporting record profits on the back of the same soaring oil and gas prices bringing misery to ordinary consumers. BP unfortunately couldn't put a foot right.

First came a crude oil leak on Alaska's North Slope, discovered in March and involving the equivalent of 200,000 barrels of oil. Soon after, corrosion problems crippled its Prudhoe Bay field that produces 400,000 barrels of crude per day. The company was also blamed for a separate, far smaller, spill of refined products in Long Beach.

At hearings in Washington in September, Congressmen mocked BP's pretensions to be a defender of the environment. "Shame, shame, shame," thundered Joe Barton, the chairman of the House Energy and Commerce Committee. So much for the "Beyond Petroleum" slogans, launched by the eco-friendly behemoth created after the mergers with Amoco in December 1998 and Arco in 2000.

Three months before that, in June, BP was embroiled in allegations of price gouging, seeming to confirm every public suspicion about the behaviour of profit-laden oil companies. Regulators charged it with trying to corner the market in propane, driving the price up by 50 per cent during the winter of 2004.

Prosecutors produced recordings of BP traders saying, among other things: "What we stand to gain is not just that we'd make money out of it. But we would know from thereafter that we could control the market at will." The company denied the allegations, but fired several traders.

Regulators also reopened previous investigations of alleged crude oil price manipulation at the oil group, and investigated possible irregularities in petrol futures contract trading, dating back to 2002 and 2003. Whether or not the moves were, as widely believed, a tactic to step up pressure over the propane charges, the victim, once again, was BP's reputation.

The scandals even drew civil rights leader Jesse Jackson's Rainbow Coalition into the fray. Pickets have demonstrated at some of the company's petrol stations, accusing it of price gouging and racial discrimination, by not appointing black people in its senior management.

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