Please Do Not Copy and Paste anything from this report, this is just history of the case BP: Example of an Unethical Trifecta Posted on September 17, 2013 by mensah_henry       From the dawn of time, human beings have relied on the environment to provide with the all the things we need to survive and be successful. It has also helped us develop civilizations and founded industries where there was none. Our exploitation of our environment is part of what makes us successful. The more we have been able to conquer and manipulate our environment, the more we have developed culturally, socially, and economically (Kareiva and Marvier, 2012). The three tenets of culture, society, and economy has been our biggest source of influence in dealing with the environment. Ever since the discovery of oil by the ancient civilizations of Babylonia and Greece, great importance has been placed on our ability to utilize it and the products we get from it (Totten, 2007). Today, the oil industry has grown from nothing to become one of the world’s biggest and most important. British Petroleum (BP) is one of the largest oil companies in the world and a major stakeholder in the United States oil industry.       Although BP has been operating in the United States for a long time, its history and operations have not always been worthy of praise. The company has been in the middle of several issues and held accountable for several incidents that have resulted in the loss of life, property, and massive environmental damage. The United States government has always placed a premium on the environment and its safety and Americans in general are conscious about the environment and what needs to be done to protect it. The purpose of this paper is to discuss the BP Pipeline case (Case 6.25 on pp. 411-422) and to address the following topics: • Discuss in detail the ethical, negligence, and environmental issues you see in this case. • BP had rented the rig from Transocean for $500,000 per day. Transocean had been recognized by the U.S. government for its safety record. Can companies distance themselves from liability and responsibility through the use of contractors? • Discuss how BP got into the position in which it found itself in late 2006 and what might have prevented the spill, the financial fallout, and the loss of reputation. Be sure to factor in the financial implications of any decision made during the period from 2001 to 2006. • What was the impact of the emphasis in cost cutting on BP’s culture? What was the influence on the company’s performance? • Evaluate the social responsibility positions of BP in light of the refinery explosion and the pipeline issue. What can companies learn from the BP experience?        British Petroleum has a large operation in the United States and it has made investments to ensure that it develops these operations to maximize its production and increase profits. One such investment was the acquisition of the vast oil field at Prudhoe Bay, .

1. Please Do Not Copy and Paste anything from this report, this is
just history of the case
BP: Example of an Unethical Trifecta
Posted on September 17, 2013 by mensah_henry
From the dawn of time, human beings have relied on the
environment to provide with the all the things we need to
survive and be successful. It has also helped us develop
civilizations and founded industries where there was none. Our
exploitation of our environment is part of what makes us
successful. The more we have been able to conquer and
manipulate our environment, the more we have developed
culturally, socially, and economically (Kareiva and Marvier,
2012). The three tenets of culture, society, and economy has
been our biggest source of influence in dealing with the
environment. Ever since the discovery of oil by the ancient
civilizations of Babylonia and Greece, great importance has
been placed on our ability to utilize it and the products we get
from it (Totten, 2007). Today, the oil industry has grown from
nothing to become one of the world’s biggest and most
important. British Petroleum (BP) is one of the largest oil
companies in the world and a major stakeholder in the United
States oil industry.
Although BP has been operating in the United States for a
long time, its history and operations have not always been
worthy of praise. The company has been in the middle of
several issues and held accountable for several incidents that
have resulted in the loss of life, property, and massive
environmental damage. The United States government has
always placed a premium on the environment and its safety and
Americans in general are conscious about the environment and
what needs to be done to protect it.
The purpose of this paper is to discuss the BP Pipeline case
(Case 6.25 on pp. 411-422) and to address the following topics:
• Discuss in detail the ethical, negligence, and environmental

2. issues you see in this case.
• BP had rented the rig from Transocean for $500,000 per day.
Transocean had been recognized by the U.S. government for its
safety record. Can companies distance themselves from liability
and responsibility through the use of contractors?
• Discuss how BP got into the position in which it found itself
in late 2006 and what might have prevented the spill, the
financial fallout, and the loss of reputation. Be sure to factor in
the financial implications of any decision made during the
period from 2001 to 2006.
• What was the impact of the emphasis in cost cutting on BP’s
culture? What was the influence on the company’s performance?
• Evaluate the social responsibility positions of BP in light of
the refinery explosion and the pipeline issue. What can
companies learn from the BP experience?
British Petroleum has a large operation in the United States
and it has made investments to ensure that it develops these
operations to maximize its production and increase profits. One
such investment was the acquisition of the vast oil field at
Prudhoe Bay, Alaska. This acquisition represented a good
increase in the percentage of oil production in the United States
and ensured that the company could increase its production and
further its goals and objectives for the United States market. As
early as 2001 there were incidents at the facility that the
company internally accounted for and management was made
aware of the safety concerns that existed. The March 2006 oil
leak represented a culmination of various factors that showed
that a disaster was bound to happen. 260,000 gallons of oil
leaked from a pipeline into the ocean. It represented the North
Slope’s worst spill ever. A few months later, another spill
occurred that forced the company to shut down operations at the
behest of federal agencies. The environmental issues in this
case are very obvious; massive destruction to the ocean
ecosystem of the North Slope, and danger to the health and
survival of plant and animal species both in the ocean and
ashore. On the topic of negligence, it was easily discovered that

3. the pipes had sediment buildup in them. The inspectors failed to
do their job because most of them were not certified. The reason
why this was an issue can both be attributed to negligence and
unethical decision making. The facility’s management should
have ensured that proper maintenance was being conducted on
all their equipment, especially the pipelines. If there was a
company requirement for inspections, not conducting them
represents an unethical decision by management (Jennings,
2012). If the problem had been brought up by employees and
management failed to make the right decision, it is still not
ethical. These were glaring problems management refused to
address. The further problem of BP’s overall management not
enforcing company policy means that there is a culture of
unethical decision making where economics gains far outweigh
the adherence to safety regulations (BP’s Troubled Past, 2010).
With BP renting the rig from Transocean for $500,000 per
day, the company was sharing liability with Transocean as well.
Transocean would be held liable according to the provisions of
the contract that the two companies signed. Because the law of
vicarious liability is very vague, BP cannot distance itself from
liability and responsibility through the use of a contractor
(Conn, 2009). The provisions of the contract should have stated
exactly what BP would be responsible for, and what Transocean
would be responsible for. That said, Conn (2009) pointed out
several factors that come into play when sharing liability and
addressed the problem with the following points:
(a) Companies usually seek the help of experts to perform
particular tasks. BP had contracted Transocean because the
company had expertise in rigging and had an excellent safety
record. BP realized the importance of getting that expert help
because it could not perform the same function and maintain
that level of safety.
(b) Companies can “obtain a full indemnity from the
independent contractor for any liability that may result from the
independent contractor’s activities” (p.192). Despite this fact,
the level of damage done by the oil leak was not based on the

4. actions of Transocean employees alone since BP was supposed
to provide certified inspectors but failed to do so.
(c) Hiring another company does not always provide full
indemnity for major incidents. The oil spill (the worst ever on
the North Shore) was a major catastrophe and BP should have
included an indemnity clause in the contract if it did not want to
be held liable in any way. That said, even if there was such a
clause, the federal government, its agencies, and the general
public will still hold BP responsible because they are the
company in charge.
There are a number of factors that led to BP falling into the
position it found itself in late 2006. These include:
(a) BP’s board of directors vote to build a pipeline in China in
2001, despite concerns that were expressed about the
environmental risks of such project.
(b) An independent audit in 2002 that showed that BP’s
compliance with safety procedures was virtually nonexistent. It
was also shown that much needed maintenance and training was
not being conducted both for the facility and its employees.
(c) The company’s lack of commitment to safety. When Walter
Massey, BP’s environmental committee chairman, reported that
there was “accelerated corrosion” which was “creating the
possibility of a catastrophic event” (Jennings, 2012, p.415), it
did not create a sense of urgency in the company. Even after an
independent consultant found out there was at least twenty-two
miles of pipeline with problems and in danger of leaking
(Jennings, 2012), with six miles of those twenty-two actually
found to have leaks (Schwartz, 2006), the company refused to
budge. Instead, company executives decided to cut the budget
for safety support.
This degree of negligence and unethical behavior created an
environment that led to the company’s 2006 crisis. There is not
much that could have been done to prevent the spill, the
financial fallout of over five billion dollars (Schwartz, 2006),
and the loss of reputation because BP was already notorious on
that front. From the 2001 accident at Prudhoe Bay that left an

5. employee severely injured to the explosion and loss of life at
Texas City which cost the company over eighty-seven million
dollars, BP proved over and over again that the safety of its
operations, facilities, and employees played second fiddle to
economic rewards. One thing that could have been done was for
the federal government and its industry governing agency to
shut down the company’s operations in the United States till it
was able to prove that all safety issues had been completely
resolved. It sounds radical, but it would have forced the
company to stand up and act, and would have saved lives,
property, and the environment.
Cutting costs, especially in an industry like oil production
and refining, is a very dangerous thing to do. It is dangerous for
the company’s operations, its reputation, its employees, the
federal government and its regulatory agencies, and especially
the environment. Cutting costs in the aspects of safety and
maintenance only increases the risks of catastrophic events
happening over time. Focusing only on achieving the economic
goals of the firm at the expense of the environment, employees,
and operational facilities is surely a recipe for disaster
(Jennings, 2012). Ethically, a company would seek to combine
its economic interests with the interests of other factors as well
and push for a more balanced approach. BP, on the other hand,
did not place any emphasis on ethics. Cost cutting for economic
gains was the most important thing to them, and it negatively
impacted the company performance and reputation. The
incidents cost the company a lot of money and its public image
(goodwill) was gravely affected.
Both the refinery explosion and the pipeline issue were colossal
negatives for BP, especially since they happened back-to-back
and were caused by most of the same factors, negligence,
unethical decision making, and non-adherence to safety
regulations. If BP cared about the environment, its employees
and the United States as a whole there would have been more
done to ensure that the best result for all stakeholders is
achieved. I believe that BP’s social responsibility model would

6. have greatly changed, with most of its efforts geared towards
reclaiming the company’s image and goodwill. Following safety
recommendations/regulations and completing the proper
maintenance requirements would have saved the company from
the ills that befell it. The company has no one but themselves to
blame for all their issues. The company apparently failed to take
the much needed action to mitigate their policies and ideologies
which resulted in another oil spill in 2010 off the Gulf coast.
The lesson here for companies is that if you have an executive
board that is not willing to budge on its views and positions,
they need to be replaced. Another lesson is that there needs to
be an emphasis and company culture dedicated to promoting and
supporting safety efforts. Safety is paramount to every
organization and is a very important piece that promotes
operational efficiency. Not following safety recommendations
and regulations have risks, as BP witnessed, that can both be
very expensive and damaging to the company, its employees,
and the environment.
References
BP’s Troubled Past. (2010). PBS: Public Broadcasting Service.
Retrieved September 15, 2013, from
http://www.pbs.org/wgbh/pages/frontline/the-spill/bp-troubled-
past/
Conn, D. N. (2009). When contract should preempt tort
remedies: Limits on vicarious liability for acts of independent
contractors. Fordham Journal Of Corporate & Financial Law,
15(1), 179-219.
Jennings, M. (2012).Business ethics: Case studies and selected
readings. 7th ed. Mason, OH South-Western Cengage Learning.
Kareiva, P., & Marvier, M. (2012). What Is Conservation
Science?. Bioscience, 62(11), 962-969.
Schwartz, N. (n.d). Fortune – Can BP bounce back?. Fortune,
154(8), 90-+.
Totten, G. E. (2007). Standards. ASTM International. Retrieved
September 13, 2013, from
http://www.astm.org/COMMIT/D02/to1899

7. Tsui, K. K. (2011). More Oil, Less Democracy: Evidence from
Worldwide Crude Oil Discoveries. Economic Journal, 121(551),
89-115. doi:10.1111/j.1468-0297.2009.02327.x
This entry was posted in Uncategorized and tagged BP, British
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The BP Pipeline case (Case 6.25 on pp. 411-422) is a complex
situational case about the actions of individuals and the
practices of a large corporation. Prepare a paper that addresses
the following:
· Discuss in detail the ethical, negligence, and environmental
issues you see in this case.
· BP had rented the rig from Transocean for $500,000 per day.
Transocean had been recognized by the U.S. government for its
safety record. Can companies distance themselves from liability
and responsibility through the use of contractors?
· Discuss how BP got into the position in which it found itself
in late 2006 and what might have prevented the spill, the
financial fallout, and the loss of reputation. Be sure to factor in
the financial implications of any decision made during the
period from 2001 to 2006.
· What was the impact of the emphasis in cost cutting on BP’s
culture? What was the influence on the company’s performance?
· Evaluate the social responsibility positions of BP in light of
the refinery explosion and the pipeline issue. What can
companies learn from the BP experience?
Support your paper with a minimum of three (3) scholarly
resources in addition to your text. In addition to these specified
resources, other appropriate scholarly resources, including older
articles, may be included.

8. Length: 5-7 pages not including title and reference pages
Your paper should demonstrate thoughtful consideration of the
ideas and concepts that are presented in the course and provide
new thoughts and insights relating directly to this topic. Your
response should reflect scholarly writing and current APA
standards. Be sure to adhere to Northcentral University's
Academic Integrity Policy.