The image of the industry in terms of its contribution to the world economy and the environment has taken a severe beating despite the fact that BP alone is responsible for the current disaster. Even after weeks, the giant oil company continues to struggle to cap and clean the Gulf of Mexico spill. Against such catastrophic failure, there are serious concerns raised over the safety measures employed by other companies involved in deep-water drilling activities. All these companies are under public scrutiny as they too are prone to accidents of a magnitude one cannot even imagine.
Take the case of BP. In a filing on July 5 to US securities regulators, the company has put the cost of its response to the Gulf of Mexico oil spill at about $2.65 billion, up from $2.35 billion as on July 2. The costs include spill response, containment, relief well drilling, grants to Gulf states, claims paid, and federal costs, but not a $20 billion fund for Gulf damages the company created this month. BP has said that it has received more than 80,000 claims and made almost 41,000 payments, totaling more than $128 million. More claims are certain to follow in the coming days and weeks.
Against this background, the need to explore alternatives for clean energy options, including nuclear and clean coal, is felt more acutely as never before. Does this mean we all should give up on fossil fuels? Is it possible to survive without oil and only on nuclear and other forms of energies such as wind and solar? With no solution on the horizon the answer is obvious no.
However, it is true that much of the goodwill generated by the oil industry whether it is Shell, BP, Exxon Mobil, Chevron or Saudi Aramco — has been wiped out by the Gulf oil spill. But the situation is unlikely to unnerve them.
Whether one likes it or not the demand for over all oil production is expected to remain steady and go up in the near future notwithstanding the fall in oil prices by more than 3 percent on July 6 as fiscal problems in the euro zone and downbeat data from China and the United States compounded the problem. But the powerful oil industries will fight back knowing that these are all short-term setbacks, including the White House ire rover the Louisiana rig spill, resulting in the ban over deepwater drilling. The oil companies are aware that in the absence of credible alternative, depleting oil reserves on land and in shallow waters, the world has no choice but to look at deepwater oil reserves, perhaps with improved technology, new attitude toward environment and stricter regulations.
The world needs energy and till some other alternative is found, the oil alone stands for world energy security. Other than Gulf of Mexico-like accidents, the industry needs to be more careful about public relations fiascos like the one committed by Tony Hayward, the BP chief executive who went to the Isle of Wight for a yacht race one week after his company’s deep-water drilling platform had blown up in the Gulf of Mexico on April 20, killing 11 workers resulting in the massive leak that has caused unprecedented damage to the coastline in four US states.
The accident of this nature might be one in a million kinds like in nuclear power case studies. However, what is important is industry leaders showing concern and regret for what’s gone wrong. They simply can’t afford to project themselves as easy-going corporate czars.
