Updated: July 4, 2015 12:00:47 am
In April 2010, a major explosion on the Deepwater Horizon rig killed 11 people and dumped millions of barrels of crude oil into the Gulf of Mexico, devastating its ecology and destroying livelihoods. In the months after, not only was BP, the offshore driller conducting the operation, exposed for its lack of a contingency plan, the Obama administration too struggled to respond effectively. The well was finally capped only in July. The scale of the damage done in the intervening months is still being parsed. So, for all that BP’s settlement with the US justice department, for a headline-grabbing $18.7 billion, is a record in terms of an environmental fine, it may yet turn out to be a gross underestimation of the long-term costs of the catastrophe.
The gulf oil spill, the worst in US history, stands as a cautionary tale against unbridled corporate adventurism. By holding BP accountable for its negligence, American regulators have the opportunity to deter future misconduct by other corporations as well. But is the amount punitive enough to send a signal to the industry? BP’s contingency fund, set up to cover costs related to the spill, is now said to total $53.8 billion. Though BP’s deep pockets mean that this figure is manageable, it was not without pain: it had to sell off assets around the world to be able to defray the expenses and become much leaner.
Still, there are signs that the lessons from the disaster have not been learnt. Though experts believe today’s oil industry is better prepared to prevent a similar disaster, and regulators are more observant, corporations are continuing to foray in deeper waters without recognising that they may not have the technological capacity to prevent an event like Deepwater Horizon. Hopefully, they now have $18.7 billion reasons to be more cautious. India, which has a shameful record on penalising corporations for misconduct and recklessness — see Bhopal — should learn from the US’s aggressive approach towards BP.
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