Latest effort to capture oil stalls
UPDATE: Hayward apologizes for “hurtful and thoughtless comment.”
Rep. Charlie Melancon (D-LA) called on the tone-deaf chief of the untrustworthy and reckless oil giant to resign yesterday. He specifically cited Hayward’s absurd statement “I’d like my life back,” which even UK newspapers are now mocking.
While Hayward, who became CEO in 2007, has tried to pass the buck on the safety issue to his predecessor, in fact, he became “Chief Executive of exploration and production in January 2003.” Hayward created whatever safety culture the explorers and producers have today (see Is BP the Goldman Sachs of Big Oil? CEO Hayward says to fellow executives: “What the hell did we do to deserve this?” Let’s see: How about a spotty safety record, insistence on voluntary ‘trust me’ self-regulation, a drilling plan that ignored key risks, and failure to use best shut-off technology to save a few bucks?)
Hayward’s “ruthless” cost-cutting, as the UK media labeled it, was obviously a key driver of the reckless corner-cutting (see “The three causes of BP’s Titanic oil disaster: Recklessness, Arrogance, and Hubris“). The UK’s Times Online ran a November 2009 story, with this amazing headline:
Tony Hayward makes his mark on BP
Ruthless cuts by the new boss have produced results in higher than expected profits
“¦ More than 6,500 jobs have been eliminated and overheads have fallen by a third”¦.
Having already cut $3 billion from costs, he predicted that another $1 billion will be eliminated by the year end.
Yes, BP has apparently slashed $4 billion in costs, ruthlessly. But that could never impact safety, could it? The story ends with yet another uber-ironic quote from Hayward:
“My whole focus has been to recognise that at its heart we’re an operating enterprise. The question is how do we create a BP that 10 years from now doesn’t end up back in the ditch.”
While the latest effort to capture some of the oil from the spill fails — see WashPost‘s Effort to contain Gulf oil stalls with stuck saw — Hayward is destroying shareholder value almost as fast as he is destroying the Gulf of Mexico.
As I wrote on May 9, “My suggestion: Fire Hayward.”
I’ll end with an excerpt from TP’s The Progress Report on BP’s Credibility Gap:
Six weeks ago, BP’s Deepwater Horizon oil rig located nearly 40 miles off the Louisiana coast exploded and sank, killing 11 workers. Since then, 20 to 100 million gallons of oil have spewed into the Gulf of Mexico, soaking Gulf Coast shoreline with crude, killing thousands of wildlife, endangering public health, and unleashing untold environmental and economic damage in the region. At the same time, BP is doing everything in its power to mislead the public about the realities of the spill — from wildly underestimating the amount of oil that has leaked into the Gulf, to denying media outlets access to report on the scene. Last week, President Obama acknowledged BP’s credibility gap. “I think it is a legitimate concern to question whether BP’s interests in being fully forthcoming about the extent of the damage is aligned with the public interest,” he said, adding, “Their interest may be to minimize the damage and, to the extent that they have better information than anybody else, to not be fully forthcoming.” Now, the White House is stepping up its public criticism. Attorney General Eric Holder announced yesterday that the Justice Department has launched criminal and civil investigations into the spill. But BP’s lack of public trust requires the Obama administration to do more, including taking over management of what has become the worst oil spill in U.S. history.
BP’S DECEPTION GAME: While numerous attempts to stop the leak have failed, in the meantime, BP is trying to bolster its public image, even hiring Vice President Cheney’s former press secretary to help out the effort. But the facts don’t favor the British oil giant. Scientists from several universities have independently identified “plumes of what appears to be oil far from the site of BP’s leaking wellhead” based on “video images and initial observations of water samples taken in the Gulf over the last several weeks.” Yet on Sunday, BP CEO Tony Hayward — who had initially said the oil spill’s impact would be “very, very modest” — denied those reports. “The oil is on the surface,” he said. “There aren’t any plumes.” Experts criticized Hayward’s remarks. “There’s been enough evidence from enough different sources,” said marine scientist James Cowan of Louisiana State University. Other top BP executives have tried to minimize the scale of the disaster or just feign ignorance. “It’s almost impossible to get a precise number” of barrels leaking in the Gulf, said BP COO Doug Suttles. Even before the rig explosion, BP lobbied federal officials to expand drilling without conducting environmental impact analyses. But in addition to its damage control and deception operations since the oil leak began, reports have surfaced that BP has not provided adequate protective equipment for clean up workers and that the company is trying to cover-up evidence. As such, BP has lost the public’s trust. Seventy-six percent of Americans disapprove of how the company is handling the spill. Even Fox News hosts have lost confidence. “We can’t trust BP,” one anchor said. And at the same time, the enormous impact of the oil spill seems to be an inconvenience for Hayward. “I would like my life back,” he said on Sunday.
WHITE HOUSE ACTION: The Obama administration has begun to publicly acknowledge that its confidence in BP to handle the spill has eroded. In addition to the President’s remarks last week, his top energy adviser Carol Browner noted on Sunday what BP is trying to do. “It is important for people to understand BP has a vested financial interest in downplaying the size of this,” she said. Moreover, after frustrations with BP’s lack of transparency, the administration recently decided that Admiral Thad Allen, national incident commander for the spill, will be giving solo daily press briefings — without BP executives — in order to “give the government’s response a reassuring, authoritative face.” And in launching criminal and civil investigations, the White House has indicated that it is serious about holding BP, and other companies involved, accountable for the disaster. “We will prosecute, to the fullest extent of the law, anyone who has violated the law,” Holder said yesterday. Obama vowed “full and rigorous accounting” of the causes of the oil spill. BP — which lost 15 percent of its market value during yesterday’s trading — has previously been implicated in accidents that involved the company ignoring safety violations in order to cut costs. In 2005 at a refinery in Texas City, TX, 15 BP employees died and 170 were injured after a unit that manufactured jet fuel exploded. A panel led by former Secretary of State James Baker III concluded that BP had a “false sense of confidence” about safety. And in 2006, BP pleaded guilty to criminal negligence and paid a $20 million fine after one of its pipelines in Alaska burst, spilling hundreds of thousands of heavy crude. The DOJ investigation comes on top of the Minerals Management Service-Coast Guard investigation, the work of the independent Presidential commission, and several oversight investigations by Congress.
To paraphrase what I often say about climate action, the best time for BP to fire Tony Hayward was weeks ago, but now is much better than later. The same goes for Obama even more clearly taking the reins away from BP, particularly in the cleanup.