Beyond petroleum or bottom line profits only? An ethical analysis of BP and the Gulf oil spill

• Date: 01 March 2020
• Published date: 01 March 2020
• DOI: http://doi.org/10.1111/basr.12194
• Author: Mark S. Schwartz

Bus Soc Rev. 2020;125:71–88.

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71

wileyonlinelibrary.com/journal/basr

Received: 4 February 2020

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Accepted: 6 February 2020

DOI: 10.1111/basr.12194

ORIGINAL ARTICLE

Beyond petroleum or bottom line profits only? An

ethical analysis of BP and the Gulf oil spill

Mark S.Schwartz

© 2020 W. Michael Hoffman Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc., 350 Main Street, Malden,

MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

School of Administrative Studies, Faculty

of Liberal Arts & Professional Studies,

York University, Toronto, Ontario, Canada

Correspondence

Mark S. Schwartz, School of

Administrative Studies, Faculty of

Liberal Arts & Professional Studies, York

University, 4700 Keele Street, Toronto,

Ontario, M3J 1P3, Canada.

Email: schwartz@yorku.ca

Abstract

On April 20th, 2010, an incident was to take place 49 miles

off the Louisiana coast at the Macondo Prospect location in

the Gulf of Mexico that would potentially change the future

of offshore oil drilling. On that day, 11 men would lose their

lives when the 33,000 ton Deepwater Horizon rig, owned by

Transocean but leased by BP PLC, exploded. As a result of

the explosion, millions of barrels of oil would be released

into the Gulf of Mexico, leading to widespread environ-

mental harm and devastation to the shoreline communities.

To better examine the underlying reasons for how such an

event could take place in 2010, this paper will unfold as fol-

lows. First, we provide context to the oil spill by discussing

the history of BP, including its transformation into an “en-

vironmental” firm in 1995. Second, we explore and analyze

the catastrophe through the lens of ethics. Finally, we ana-

lyze the disaster through a comparison with the U.S. 2008

financial crisis with a view to identify the root causes of the

disaster and the string of ethical failures that have scarred

the market economy over the past three or four decades.

KEYWORDS

BP, corporate governance, Deepwater Horizon, ethical analysis, Gulf of

Mexico oil spill, leadership

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SCHWARTZ

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INTRODUCTION

Eleven crew members died, and others were seriously injured, as fire engulfed and ulti-

mately destroyed the rig. And, although the nation would not know the full scope of the

disaster for weeks, the first of more than four million barrels of oil began gushing uncon-

trolled into the Gulf—threatening livelihoods, precious habitats, and even a unique way

of life. A treasured American landscape, already battered and degraded from years of

mismanagement, faced yet another blow as the oil spread and washed ashore. Five years

after Hurricane Katrina, the nation was again transfixed, seemingly helpless, as this

new tragedy unfolded in the Gulf. The costs from this one industrial accident are not yet

fully counted, but it is already clear that the impacts on the region’s natural systems and

people were enormous, and that economic losses total tens of billions of dollars. [Report

to the President, 2011 January, p. vi)]1

On April 20th, 2010, an incident was to take place 49 miles off the Louisiana coast at the Macondo

Prospect location in the Gulf of Mexico that would potentially change the future of offshore oil drill-

ing. On that day, 11 men would lose their lives when the 33,000 ton Deepwater Horizon rig, owned by

Transocean, but leased by BP PLC, exploded. The Deepwater Horizon drilling rig had nearly completed

its work of sealing the well in order for a production rig to begin pumping the oil. As a result of the ex-

plosion, millions of barrels of oil would be released into the Gulf of Mexico, leading to the widespread

environmental harm and devastation to the shoreline communities.2

Despite the provision of a $20 billion

compensation fund by BP, legal and moral responsibility for the incident continues to be debated and

shared between BP, Transocean (the owner of the rig), Halliburton, (the subcontractor responsible for

the well cementing process), as well as U.S. government regulators. While the share price of BP on the

London Stock Exchange was 644 pence on April 20th, 2010, it dropped below 300 pence on June 25,

2010, raising concerns among its shareholders (including British pensioners) that the firm might not be

able to financially handle the costs of the disaster.3

There has already been significant discussion, commentary, and analysis of the BP Gulf oil spill.

For example, a number of books have already been published including: Fire On The Horizon: The

Untold Story of the Gulf Oil Disaster (Shroder, 2011); In Too Deep: BP and the Drilling Race That

Took it Down (Reed & Fitzgerald, 2011); A Sea in Flames: The Deepwater Horizon Oil Blowout

(Safina, 2011); Black Tide: The Devastating Impact of the Gulf Oil Spill (Juhasz, 2011); and In Deep

Water: The Anatomy of a Disaster, the Fate of the Gulf, and Ending Our Oil Addiction (Lehner &

Deans, 2010), and Deepwater Horizon: A Systems Analysis of the Macondo Disaster (Boebert &

Blossom, 2016). Even a Hollywood movie portraying the events was released in 2016 earning over

$60 million at the worldwide box office (IMDb, 2016).

A collection of academic literature has also arisen regarding the BP Gulf oil spill. There are already

dozens of articles focusing on the incident, for example, in terms of legal liability (e.g., Viscusi &

Zeckhauser, 2011), insurance implications (e.g., Abraham, 2011), the political response following the

tragedy (e.g., Aldy, 2011), and the environmental impact of the spill (e.g., Suran, 2011). In terms of

business management, one study focuses on the BP reaction to the oil spill with respect to the nature of

corporate apologies (O’Connor, 2011). Another study explores the oil spill in terms of risk assessment

and the influence of corporate culture on decision making (Jennings, 2010). Others have addressed the

BP oil spill in terms of the notion of “ethical corporate marketing” (Balmer, Powell, & Greyser, 2011).

But what appears to still be lacking in the academic literature is a discussion that focuses on an ethical

analysis of the oil spill, a gap which we seek to address in this article.