Business ethics is an important aspect in the attainment of organizational success. Businesses follow certain rules that govern their activities and processes in order to avoid involvement in unethical business practices. However, despite the existence of business regulations and legislation, businesses still engage in unethical practices due to factors such as negligence and financial greed.
In 2010, BP Oil Company was involved in an ethical incident dilemma that led to huge fines that affected the company’s bottom line. The BP oil spill refers to an oil spill that occurred in the Gulf of Mexico. It was so severe that it was described as the worst oil spill in the history of the United States’ oil industry. It occurred after a Deepwater Horizon oil rig exploded, sank, and spilled oil for more than two and half months. The accident caused severe environmental damages and led to the demise of 11 people. According to government estimates, more than 4.9 million barrels of oil leaked into the Gulf and the effects of the spill are evident years later. BP acted unethically because it implemented cost-cutting changes that were projected to increase profits. The company failed to implement the required safety measures that could have protected the workers and avoided destruction of infrastructure. The company suffered financially for the accident by paying heavy government fines and compensating people who were affected by the spill. The company deviated from standard industry ethics and as such disregarded the risks associated with oil drilling activities.
British Petroleum Deepwater Horizon Oil Spill
The BP oil spill took place in 2010 and caused severe consequences on both the environment and the lives of people living around the region. The spill’s environmental effects were so severe that the accident has been named as the largest oil spill in the history of the petroleum industry. Prior to that incident, the largest oil accident was the Ixtoc oil spill. The BP spill occurred after a Deepwater Horizon oil rig burst and sank causing oil leak that continued for 87 consecutive days.
According to the United States government, the incident spilled approximately 4.9 million barrels. Several stakeholders including the company and the government tried unsuccessfully to seal the leak several times. However, the leak was successfully sealed and the spill stopped after efforts by the company’s engineers. After the incident, several programs were initiated to protect natural ecosystems, estuaries, and wetlands because the oil was spreading. The cleanup process took several months and resulted in severe environmental damages. For instance, marine ecosystems and wildlife habitats were destroyed, and the spill’s ripple effects were experienced in the fishing and tourism sectors. The damages caused by the spill originated from the effects of the oil on the environment and the damaging effects of the cleanup activities. For instance, during the cleanup process, more than 4.6 million pounds of oily substances was retrieved from beaches along the Louisiana shoreline, which was among the most affected areas. The effects of the spill continued for several years after the incident. For example, in 2013, scientists reported that dolphins and other marine animals were still dying due to the destruction on marine ecosystems that occurred after the spill. Another report released in 2014 showed that certain marine species that were exposed to the oil developed deformities that could affect their life span. Several studies were conducted to find the cause of the spill.
According to government reports, the spill was mainly caused by defective cement on the well which could not withstand the high pressure of the rig. The government blamed both BP Oil Company and Transocean, the company that was responsible for operating the oil rig. The oil company had implemented several changes that were aimed at reducing costs and maximizing profits. The changes were insufficient because they did not include safety measures that could have prevented the accident. The spill was an ethical issue because BP declined to act appropriately in accordance with the standards of the oil industry. According to a New Orleans federal judge, the company acted unethically based on gross negligence and misconduct that resulted from the actions taken before the spill in efforts to cut costs. The company’s reckless behavior led to deaths and massive fines that could have been avoided had the company implemented recommended safety measures.
After the ruling, the issue turned into a blame game with each of the involved parties blaming the other. For instance, BP blamed the operator of the oil rig, Transocean for negligence. According to the judge the three involved parties were to blame in varying degrees. 67 percent of the blame was laid on BP and 30 percent on Transocean. The third party, Halliburton, received 3 percent of the blame. The judge’s ruling initiated several penalties that were awarded to each of the three companies. For instance, Transocean agreed to pay $1 billion for its negligence and an additional $400 million in penalties. The judge criticized the company for carelessness because the management was aware that many of its workers were unskilled in the proper use of certain equipment and application of safety measures. For instance, the workers were incompetent with regard to the use of tools that could have diverted hydrocarbons from the rig and as such prevent the explosion. In addition, Transocean had not fixed the diverter properly, which contributed to the explosion. Halliburton was accused of doing shoddy cement work on the rig. According to the judge, the cement should have prevented the oil from spilling from the rig. However, it did not because the work was poorly done.
Negligence was the dominant reason attributed to the accident that destroyed people’s lives, the environment, and property. Even though BP acted unethically, it agreed to pay government fines and compensate the people who were affected by the spill. In addition to the heavy fines, the incident destroyed the company’s reputation that was already soiled by past cases of unethical and legal violations.
How British Petroleum Handled the Issue
The company handled the situation through several activities that include environmental cleanup and compensation of affected individuals. The three strategies used during cleanup included containment, dispersal, and removal (Landau 38). After the explosion, the company tried to seal the blowout preventer valves in order to stop the spill. However, their efforts were unsuccessful. After this strategy failed, the company’s personnel tried to pipe oil to a storage container but the attempt failed too. The gas mixed with cold water and formed crystals that prevented the flow of oil into the storage vessel. The company also tried to use a containment system that involved pumping the oil into service vessels. This attempt was also ineffective because the rate of oil spill was double the rate of oil pumping into the vessels. After these failed attempts, the company considered using nuclear explosives. However, the option was withdrawn because it was highly dangerous and could cause total destruction of the rig.
The leak was sealed after Transocean drilled several relief wells into which the oil was pumped. After the oil was pumped from the well head, BP sealed the destroyed section of the flow channel using cement and thus stopped the flow successfully. Apart from stopping the spill, the company also handled the severe financial outcomes of the accident. It paid government fines and created the Gulf Coast Claims Facility (GCCF) to compensate anyone who was affected by the spill, rectify environmental damages, and cater for response costs incurred by the federal and state governments. The extent of the damage was evident from the more than 220,000 claims received from people who were affected by the spill.
The Outcomes of the Oil Spill
Environmental Effects
The oil spill had severe environmental effects that led to destruction of wildlife, natural habitats and marine ecosystems. In addition, several lives were lost and businesses were destroyed. After the incident, studies revealed mass deaths of wildlife and marine animals. Birds were unable to fly because they were coated with oil and could not fly to find food. Many marine animals ingested the oil and died.
Deep water sea corals died and oil covered the surfaces of wetlands and beaches causing destruction of vegetation. Corexit was a dispersant used to clean up oil from the water. However, it led to emulsification of oil into droplets that sank into the floor of the sea causing destruction of marine ecosystems.
Scientists projected that the effects of the oil on birds could ultimately cause developmental and reproductive problems that could adversely affect the population of various bird species in the region. In addition, they argued that the oil could have destroyed microscopic microbes and planktons that form an important part of the marine ecosystem. The oil also killed fish larvae and other marine animals such as fish and turtles.
The destruction of marine animals was projected to cause gaps in species populations in future. For instance, a fish species known as tuna was adversely affected because the spill happened during a critical period in the species’ reproduction cycle. Numerous plant species died and the entire ecosystem was affected.
Economic and Health Impact
The oil spill had severe economic consequences. It affected the financial status of BP and the economic status of the Gulf Coast’s towns. BP incurred costs in the form of cleanup expenses and government fines. The cleanup process involved costly activities such as containment, drilling of relief wells, and emergency responses. Other expenses include federal costs, penalties, fines, and money paid trough claims presented by affected civilians. In 2012, the total costs of the spill were estimated at $90 billion.
The decision by the Environmental Protection Agency (EPA) to bar BP from working on government contracts affected its revenues. The expenses led to significant decline in the company’s revenues. The spill adversely affected the economies of communities along the gulf coast because thousands of jobs were lost. In addition, the fishing and tourism industries were affected.
For instance, the fishing industry incurred losses that were approximated at $2.5 billion. Several cases of individuals affected by the spill were reported in different health facilities. Among those affected were individuals involved in the cleanup process. The negative health effects were caused by the dispersant that increased the toxicity of the oil. The accident caused severe chemical poisoning that mainly affected the workers and people living near the location of the spill. Blood tests conducted on workers revealed high compositions of volatile organic compounds in their blood that originated from prolonged exposure to oil.