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BP can’t do business as usual in US: Goldsmith

Last Updated: Monday, August 16, 2010 - 17:53

As Mumbai fights its own oil spill, a similar but bigger accident off the US coast has captured the attention of the world for over three months now. The spill that occurred after an explosion on British Petroleum’s deep water drilling rig is considered the biggest marine oil spill in the history of oil industry, with thousands of barrels of oil gushing out in the Gulf of Mexico everyday.

Though now about to be capped after many failed efforts, the accident has thrown up many questions about the industry and the oil economy. Shashank Chouhan of Zeebiz.com put a few of them to Dr Marshall Goldsmith, who was recognized as one of the fifteen most influential business thinkers in the world in 2009 by Forbes and Time. He was also named as one of 50 great thinkers and leaders who have influenced the field of management over the past 80 years by the American Management Association.

Excerpts:

What’s the most shocking thing for you in the spill disaster apart from the huge quantity of oil gushing out?

Most shocking thing for me has been how environment and jobs are inter-connected at so many levels. The tourism business, its supporters, oil industry etc. How so many people have been affected by oil gushing in deep water is quite shocking.

How do you think has BP’s response been to the spill and its consequences so far? What do they need to do?

BP just got rid of the CEO and have a new person- its better late than never. I think BP is in a tough situation. It’s easy to criticize, but the fact is that they are in high risk business. It is symptomatic of a larger question about regulatory laws in the US. Everyone involved underestimated the risk. They got over-confident. But I doubt if we can ever avoid accidents completely. I don’t think this happened out of some maliciousness either.

Do you think this incident points out that a major overhaul is needed in the drilling sector?

I think this is an issue of using high-risk technology with under-estimation. Much like in a plane crash, there have been multiple failures at many levels in this case. So, I think a re-examination of the scenario is in order quite like it is required in the financial sector.

What about the responses of the Federal and State governments? Are you satisfied?

I think the governments are doing what they can do- making economic gains for those who have lost and stand to lose due to the explosion. The reality is that in the US, the governments don’t have a lot of money right now and they are not going to make us pay for what has happened. Now how much can BP be asked to pay for, is a question that can not be answered. It is just impossible to accurately calculate the damages because they are very wide spread. So it’s going to be impossible to compensate everyone. Another danger is that the bureaucracy may just force BP to cough up more than the losses.

Some say Obama is being too harsh on BP even though the President addressed the issue very late…

I don’t think President Obama has been too harsh on BP, he is doing what he thinks is best right now. This is much like President Bush being blamed for Hurricane Katrina. We need to understand that the President of the US has no control over unforeseen disasters when they occur. No one can be prepared enough for disasters because then all our lives we would just be doing that!

Is preservation of environment anywhere on the radar of big companies? Is sustainable development possible in today’s scenario?

Preservation is very much on the radar of companies these days. It would be an over-statement to say they don’t care about the environment at all. Companies today are much more aware about environmental risks and preservation issues than they ever were.

How will this impact the oil industry?

I don’t believe that this will have a major impact across the world on drilling as such apart from evaluation of existing standards. Even in Louisiana, the most hit state, the majority of people do not want to stop offshore drilling permanently. We can’t escape oil use until we replace it with a cleaner energy like nuclear energy. Even that has far more serious dangers attached to it.

What about the cost to BP?

This will have – and has had – a huge cost to BP. They are still doing business, though. BP`s U.S. operations will need to be sold, spun off or the name will need to be changed because the brand doesn`t look salvageable in this country. They have sacked the CEO now, but how far this move will go one can’t say.

While the US has gone after BP, it has refused to investigate Union Carbide and Dow for the gas leak that killed over 20,000 and maimed lakhs in Bhopal.

I feel that the US government’s lack on responsiveness on this tragedy was (and is) a mistake. Such an attitude is unacceptable.

Governments seem to be siding with the powerful corporations more often…

It would be wrong to say the governments always side with big corporations. They do sometimes, no doubt, but the reality is that the governments are more answerable to the people.

How do nations find a balance between economic needs and social and environmental needs?

This is a very difficult question and there is no ‘exact answer’. I believe that a healthy dialogue between all parties can help maintain a balance.

First Published: Monday, August 16, 2010 - 17:53

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