BP does the right thing
BP has spent millions of dollars over recent years advertising its 'green' credentials, and it's easy to be cynical. So it's good to see that the company has done the right thing, closing down the Prudhoe Bay pipeline after a leak of only 4 to 5 barrels. (Not surprisingly all the news coverage is of rising oil prices.)
A company spokesman said: "We don't know how long the field will be down but we will not resume operation of the field until we and government regulators are satisfied that they can be operated safely and pose no threat to the environment".
Of course, there are still criticisms that can be leveled at BP: earlier spills are under investigation, questions are being asked about why the pipeline has been allowed to deteriorate to such a level. All valid concerns.
But hopefully public opinion (and prospection!) are starting to make environmental protection a higher priority, in actions and not just words.
Comments
This is a great example of the functional value of a strong brand.
BP is becoming very competent at crisis management. Because of the strength of their brand and their financial and strategic positions, the actions of the last few days are more for cost minimization than for brand preservation.
BP had many warnings of problem with the pipeline, but never need to consider what might happen to the brand or reputation for individual incidents like this.
With the rise in oil and gasoline prices, the net affect of the problem will probably be less than the cost of building and maintaining the pipeline.
In a way, this points to the relevance of brand.
In long run, the investment in the brand is more than offset by the cost of having to maintain the pipeline. Therefore the brand investment is delivering a nice ROI.
Posted by: Kent Chadwick | August 9, 2006 05:06 AM
While BP "did the right thing" this week, they apparently have been under investigation since March for ongoing corrosion issues and concerns about failure to maintain the pipeline. Internal whistle-blowers have been pointing out problems for a while. If BP really wanted to be "green," why did they wait to deal with this so long?
If being green is all about the PR, unsupported by company actions, BP's brand position does not hold any water (or oil, apparently).
Posted by: Deborah M. Budd | August 10, 2006 03:15 AM
IS BP REALLY RIGHT. BP CLAIMS THAT THEY ARE CLOSING THE ALASCAN PIPELINE SUPPLYING 400,000 BARRELS A DAY BECAUSE OF CORROSION. THAT MEANS
1. OIL PROMOTES CORROSION, OR IS IT CONTACT WITH WATER OR AIR WITH MOISTURE THAT CAUSES CORROSION? IF OIL CAUSES CORROSION, THEN NO LONGER SHOULD WE USE OIL TO PREVENT CORROSION
2. THE REALITY AS I SEE IS ELSE WHERE. THE OIL THAT WILL NOT FLOW WITH CLOSURE OF THE PIPELINE WILL REMIAN TO BE PUMPED LATER. THE CURRENT REVENUE OPPORTUNITY OF THE LASKAN OIL IS AROUNG $75 PER BARREL. BUT BASED ON PRICE FORECASTING AND EXTRAPOLATION OF THE AVAILABLE INFORMATION SHOWS THAT THE SAME OIL IN AN YEAR OR TWO WILL HAVE REVENUE OPPORTUNITY COST OF NEARLY $100 PER BARREL. ALSO BY MAKING THE STATEMENT THAT THE LINE HAS TO CLOSE ALONE CAUSED THE PRICE TO LEAP BY ABOUT 2 DOLLARS. IN AN ALREADY OVERHEATED MARKET WHERE THE CONSUMERS ARE BEING FLEECED BY OIL COMPANIES, IF BP WAS THAT SOCIALLY RESPONSIBLE, THEY COULD HAVE KEPT THE LID ON THE MATTER TILL ALL ISSUES PERTAINING TO THE MATTER INCLUDING HOW LONG IT WILL TAKE TO CLOSE THE PIPELINE WAS DETERMINED. INSTEAD IT FIRST SPOKE OF NEED TO CLOSE THE LINE AND THEN SAID DO NOT KNOW HOW LONG IT WILL TAKE, TWO NEWS ITEMS THAT CAUSES SPIKE IN PRICE OF OIL. COMING ON TOP OF THE MID EAST CONFLICT WHICH HAS PUSHED THE PRICES UP THIS WAS ICING ON THE CAKE FOR THE OIL INDUSTRY
3. THUS IN ADDITION TO CAUSING THE CURRENT MARKET TO GO UP FATTENING THE BOTTOMLINES OF OIL COMPANIES, BASED ON FORECASTING AND OPTIMISATION, IT SEEKS TO BENIFIT IN THE FUTURE BASED ON REVENUE OPPORTUNITY COST OF OIL.
4. THE AMERICAN PUBLIC ARE ALREADY IN DEBT TO BANKS AND OTHERS TO TUNE OF TRILLIONS OF DOLLARS AND EACH DAY THE NUMBER OF INDIVIDUAL BANKRUPTCIES ARE INCREASING AT AN EXPONENTIAL RATE. HOW CAN BP BE SOCIALLY RESPONSIBLE AS THIS $2+ HIKE IN PRICE WILL MEAN HIGHER PRICES AT THE PUMP CAUSING CONSUMERS TO PAY MORE AND BECOME BANKRUPT FASTER.
5. WHERE IS RIGHTEOUSNESS AND SOCIAL RESPONSIBILITY?
ALL THESE THINGS ABOUT GREEN AND OTHER ARE REALLY AN ILLUSION
Posted by: Sugath Rajapakse | August 10, 2006 04:46 PM