Some of the corporate costs of the environmental catastrophe in the Gulf of Mexico are now bubbling up from the depths. Yesterday BP announced a $17bn loss – the largest in British history – and the departure of its chief executive, Tony Hayward.
Does this signal closure for the Deepwater Horizon disaster? The answer has to be no. The Macondo well, which has pumped thousands of tonnes of oil into the Gulf in the past three months, has stopped gushing, but it is still not yet fully fixed. The extent of the environmental damage is still extremely uncertain. And US investigations into the negligence of BP and its commercial partners in the original construction of the well are ongoing.
Meanwhile, it is hard to be confident that BP has drawn the appropriate lessons from this disaster. The signs are that the company's board is removing Mr Hayward not because it recognises that his performance was grossly inadequate, but because of the intense political pressure for him to go in the US. It is widely suspected that Bob Dudley has been chosen as the successor to Mr Hayward primarily for his American accent. And Mr Hayward is apparently being lined up to take over BP's Russian operations. This suggests a reshuffling of management, rather than a new start.
Will BP take issues of safety more seriously in future? We must certainly hope so because the company is about to start drilling in the Mediterranean off the Libyan coast at depths even greater than those in which it was operating in the Gulf of Mexico. And have American legislators, who have been so hostile towards BP, joined the dots and understood the urgent need for the US to kick its addiction to oil? The recent suspension of efforts to push a cap-and-trade bill through Congress suggests not.
Yet, despite these reservations, there is still a positive story that can be told about the response to this spill. BP registered yesterday's loss because it is being compelled to pay for the costs of the disaster that it has created. The final compensation and clean-up bill might turn out to be more or less than the $32bn that BP has set aside. But this is a serious sum, even for a vast multinational oil company. The principle that the polluter pays has been upheld. BP has also ceased paying dividends and is selling $30bn of assets over the next 18 months to cover the expected bill. These are not measures any firm takes willingly. And the financial pain should be some incentive (if not an overwhelming one) for the company's management to place a bigger emphasis on safety in future operations. Also, with Mr Hayward's departure, the principle of personal responsibility has been upheld. BP has removed its chief executive grudgingly and perhaps cynically. But it amounts to the acceptance of some sort of personal responsibility nonetheless. The contrast with the official treatment of the insolvent banks two years ago, when virtually no senior heads rolled, is stark.
It is important to recognise that all this has happened, in part, because the White House took a hard line on BP. At times President Barack Obama's rhetoric might have come across as excessive, but it succeeded in forcing BP to face up to its responsibilities.
As for the wider picture, a crucial legacy of this oil spill is the moratorium that the US has imposed on off-shore oil drilling in the Gulf of Mexico. And a spotlight has been shone on the deficiencies of the US regulatory framework in which oil companies operate.
It is premature to judge the overall impact of the Deepwater Horizon disaster, but amid the ecological despoliation and threatened livelihoods, it is possible to discern some encouraging signs of greater corporate and environmental responsibility.Reuse content