Sample Management Essays on Ethics in the Gulf of Mexico Oil Blowout

Ethics in the Gulf of Mexico Oil Blowout

Part A

Question 1

I believe that it is possible to develop a universal set of business ethics. Although doing so would be made difficult by cultural differences in the respective societies where the set of business ethics would be applied, it would ultimately be possible to get businesses to exercise universal ethics. Ideally, universal business ethics would be based on universal principles like respect for human rights, justice, and utilitarianism. Businesses would be judged based on the extent to which they demonstrate the intent to do greater good for society.

Question 2

Businesses have the right to influence the ethics of the countries in which they operate. Although this is not a mandatory requirement, any company that feels that the ethics of its country of operation are insufficient should do everything in its capacity to change the situation. Doing so would demonstrate that the company is keen on upholding its ethical mandate even under difficult circumstances. Nonetheless, any company which commits to change the ethics of the host country must be keen on respecting the culture and traditions of the people in that country.

Part B

Section 1: Introduction

The 2010 Gulf of Mexico (also known as the Deep Water Horizon oil spill) well blowout was an industrial disaster which is remembered as the largest marine oil spill in history. The oil spill, which started in April 2010 continued until mid-September of the same year, during which time an estimated 4.9 million oil barrels were discharged into marine waters. The drilling operation was commissioned by British Petroleum (BP), which had secured the lease of a piece of land on the seafloor of the Gulf of Mexico in 2008. While BP owned the lease, the company did not have the drilling expertise needed for a deep-water operation like this and thus contracted Halliburton, the company responsible for cementing and sealing operations as well as M-I SWACO, which supplied the fluids necessary for regulating pressure. It has been noted that BP had a federally-approved oil spill response which indicated the plan to handle the damage on walruses and sea lions, despite that neither of these exist in the Gulf of Mexico. It would emerge that the company merely copy-pasted the response plans it had used on Arctic drilling operations. Despite having had two years to prepare for the drilling operation, it was observed that BP had not put in any measures to avert disaster. For instance, neither the company nor its contracted parties had any equipment for sealing a leaking pipe one mile deep. Safina (2011) notes that the only response equipment available was similar to that which had been used in drilling operations in the 1970s. In fact, rather than attempting to contain the oil spill, all that the workers did was to attempt to dilute the oil with dispersants, with 2 million gallons of chemical dispersants being added to the surface and at the base of the well.

There is also sufficient evidence to suggest that there was limited expertise in deep sea oil drilling at the time the blowout occurred. Just over a decade ago before this disastrous event, merely a dozen of these operations occurred but by 2010, 300 such operations had been carried out (Safina, 2011). With growing complexity in drilling operations was a greater prevalence of risk, yet no measures were being put to avert these risks. Drilling technology had certainly improved during this period but accident preparedness had not improved in a proportionate manner. Problem response technology had also been stuck in time and the United States law remained modelled around the Exxon Valdez–type tanker leak. Some of the factors that led to the blowout included: loose walls of Macondo Well; the cement mixture meant to seal in hydrocarbons failed; highly irregular spacer material blocked a key pressure gauge; rig workers misjudged disparity between pressure gauges; workers deliberately overlooked various protocols in assessing pressure gauges; audio alarms, which would have activated automatic computer emergency shutdown were inhibited; and problems over chains of command led employees to overlook the problem (Safina, 2011).

The Deep Water Horizon oil spill serves as evidence to a common phenomenon in contemporary times – the lack of legal frameworks to regulate corporations that prioritize profitability over the welfare of the public, the environment, and the very employees that work for them. It is not until events like the Deep Water Horizon oil spill grab public attention that policymakers rush to investigate the matter, to identify gaps in policy, and to require such corporations to put in place relevant measures for averting the crisis in future. The fact that the oil continued to leak profusely for months (with some sources citing that oil was leaking as late as 2013), with disastrous impacts on marine life, fisheries, reefs, and even communities living nearby, this event sheds light on the dangers posed by similar expeditions by corporations. The multiple oil spills that go unreported in the Niger Delta are already causing calamitous impacts on human and marine populations and as long as ethics are not used to govern governments and corporations, life on our planet will be under constant threat (Vidal, 2010).

Section 2: Rationale

The Gulf of Mexico well blowout raises a number of ethical issues that concern the U.S. government, British Petroleum, and other contractors involved in the drilling operation. On the government’s part, the idea behind authorizing a project that laid out inaccurate disaster preparedness plans shows negligence by those in charge. It is evident that the big money paid out by BP for leasing the piece of land on the Gulf of Mexico blinded those charged with going through the company’s plans (Bozeman, 2011). The prospect of earning from the contract and the long-term benefits of drilling oil, both for BP and for the government served as the motivation to overlook the possibility that the drilling operation could fail at the expense of the marine life in the region, the tourism industry, fisheries, and the human communities that resided nearby. These ethical issues can be assessed based on the utilitarian, rights, and justice ethical framework discussed by Lawrence and Weber (2018).

Utilitarian Framework  

The utilitarian framework assesses the ethical nature of an action based on the outcomes of choosing one action over the other (Lawrence & Weber, 2018). Utilitarianism is helpful in comparing the advantages and disadvantages of a policy or decision, especially when if the action affects the general public or the environment at large (Lawrence & Weber, 2018). A utilitarian approach is preferred on the grounds that it moves beyond the personal interest of the person or organization making the decision and considers the interests of others. In analyzing the costs and benefits of the Gulf of Mexico operation, a utilitarian framework is helpful in evaluating the possible long-term benefits that the oil drilling mission would have on the public before analyzing the costs. Assessing the Gulf of Mexico oil exploration and drilling project, it evident that the U.S. government hoped to use the oil to meet the demand for crude oil byproducts. The government would potentially benefit by earning substantial revenue by supporting industries that relied on the oil which would be mined from the site. The government would supply oil to petroleum companies in the country, which would, in turn, be taxed, with the tax money being pumped back to the country’s economy. The other beneficiary would be BP. The company would potentially earn large sums of money through the drilling operation as it would charge the government a significant percentage of revenue per (a predetermined) unit of oil drilled. The other companies involved in the drilling operation would also be directly compensated by BP. The drilling operation provided employment for over 100 individuals, each of whom would be able to support their families with the proceeds earned from this operation.

While these benefits may seem substantial, they are meager compared to the overall costs of the project. Firstly, the drilling operation came at a time when governments and corporations were under pressure to seek alternatives for petroleum owing to its direct role in accelerating global warming. The combustion of hydrocarbons which are generated from crude oil generates carbon dioxide and heat, the accumulation of which accelerates global warming. Thus, the idea behind drilling oil in the first place is ethically questionable. Secondly, the site of exploration is not ethically justifiable. With or without an accidental oil spill, deep-sea oil drilling is not ethically justifiable as it disrupts marine life. The human activity in the site, including the vibration caused by machines, the extremely high temperatures generated by the drilling activity, and disturbance of the seabed disrupts marine life. Drilling in the Gulf of Mexico, a region with a wide variety of marine life, including some endangered marine species was not ethically justifiable. The failure to take precautionary measures in case of an accident raises even more questions on the ethical grounds upon which the activity ensued. The accident led to deaths of personnel, extensive damage of the region of the gulf, death of marine creatures, loss of revenue for families that relied on the fishing industry, and an unknown extent of long-term damage on the composition of marine waters in the region. Based on the utilitarian model, it is justifiable to claim that the benefits which would come about from successful exploration are by far outnumbered by the costs of the actual exploration.

Justice

Justice, on the other hand, necessitates fair distribution of benefits and burdens, based on an accepted policy or guideline (Lawrence & Weber, 2018). In order to uphold justice, it is pertinent that there is a set of legal frameworks in place to guide the actions of corporations and other powerful entities (Lawrence & Weber, 2018). Assessing this activity in terms of justice, it is fair to state that at the time, the government had failed to put in place the legal frameworks necessary to protect its waters’ biodiversity, the fisheries from interference by mining activities, and to stop corporations from using their financial authority to undermine the welfare of the general public. The failure by lawmakers to regularly revise laws governing deep water exploration led BP and other oil companies to accelerate deep-water drilling operations at the expense of marine life. Moreover, negligence by both BP (in writing its oil spill response plan) and the government personnel (who authorized the plans despite the errors) is unjust (Arora & Lodhia, 2017). In a just setting, the oil exploration activity would not ensue and even if it did, the companies responsible would be required to have a proper disaster preparedness strategy, so that the oil spill would not have the consequences it had.

Rights

The third framework, rights, entails respecting people’s entitlements and providing them with what they deserve (Lawrence & Weber, 2018). This framework does not acknowledge the rights of non-human entities such as the marine creatures that were directly affected by the oil spill and subsequent blowout. However, it acknowledges the rights of personnel who suffered the fate of the blowout. These include the personnel (those who died and those whose physical and psychological health was affected by the accident), the fishers who relied on the gulf as a fishing resource, and residents who lived nearby, whose crops were affected by the oil that was blown to farms by winds, thus undermining yields. Although BP made compensations exceeding $65 billion, the monetary compensations do not equate to the guarantee of a sustainable livelihood that comes with permanent employment and a successfully running business (Bousso, 2018; Kelly, 2014). It is not surprising, therefore, that many of those who were directly and indirectly affected by the blowout feel that the company can hardly compensate them (Bousso, 2018).

Of the three methods for analyzing the ethics of the Gulf of Mexico oil blowout, I feel that the utilitarian method is the most helpful for assessing the ethical issues that relate to the problem. The utilitarian method is helpful in identifying actual costs and benefits that relate to the crisis, particularly because the problem not only affects people but also the environment. It is based on this assessment that it emerges that the costs by far outweigh the benefits of the oil drilling operation.

Section 3: Impacts (What does this mean to my family?)

This issue affects my family indirectly. Although we were far away from the site of the blowout at the time and were not directly exposed to the disaster, we were still aware of the crisis and it took a toll on our mental wellbeing. The panic that came with knowing that the blowout was releasing toxic fumes to the environment was no good for a family that tries its best to keep the environment clean and to support environmental protection initiatives. The idea that the fish our family purchased could have come from the Gulf of Mexico and could have traces of oil or the chemical dispersant used to lessen the oil led to a loss of appetite among family members. Without a doubt, my family lost trust in BP, a company that had always prided itself in upholding environmental welfare. This also led my family to question the trustworthiness of any corporation that claims to do good without being radically transparent. The blowout also led my family to ask questions about the government’s dedication to the welfare of the public because by authorizing the drilling operation, the U.S. government sought profitability at the expense of public welfare.

Section 4. Impacts (What does this mean to my community?)

My community draws direct benefits from the safety and cleanliness of our oceans. The fishing industry provides a consistent and reliable source of income for a large number of people in my community and the oil blowout not only undermined the profitability of fishing activities but also led to panic about the future of the industry. As Safina (2011) observes, panicky predictions were made following the blowout, with some fearing that beaches and fisheries would be permanently ruined, not just at the site of the blowout but in extensive regions across the world. During the months when efforts to seal the site of the blowout were failing, it was feared that massive methane releases would eventually lead to the intoxication of the troposphere and stratosphere, leading to the death of every living being on the planet. The blowout led more and more people in my community to be increasingly environmentally conscious and to ask questions about companies before purchasing products or services. Based on the outcomes of the Gulf of Mexico oil blowout, it emerged that ethical accountability is imperative for companies and governments in the 21st Century.

Section 5: Impacts (What does this mean to my country?)

At a time when the population of people on earth is closing on the 10 billion mark, my country ought to be at the forefront in mitigating the environmental damage contributed by its citizens. While it may be difficult to hold every citizen accountable for every single action that may affect the environment directly or indirectly, it is possible for the government to hold corporations responsible for providing products and services that undermine the welfare of the planet (Hoke, 2013; Arora & Lodhia, 2017). In upholding its mandate to the people, the government ought to ensure that profitability is not used as a justification for any unethical activity conducted by an organization. By putting in place relevant legal guidelines and requirements, the government is well-placed to limit the manufacturing of vehicles that rely on gasoline. Creating a deadline for the abandonment of petroleum fuels would diminish the market for crude oil and excavation activities, such as the one that led to the Gulf of Mexico blowout would cease to exist (Arora & Lodhia, 2017). On the part of corporations, showing ethical accountability would ensure that all business processes are aligned with the need to protect the welfare of the masses as well as the environment. Eventually, citizens would be accustomed to a culture of ethical accountability and would reject any corporation or government that overlooks its ethical mandate.

 

 

 

References

Arora, M. P., & Lodhia, S. (2017). The BP Gulf of Mexico oil spill: Exploring the link between social and environmental disclosures and reputation risk management. Journal of cleaner production140, 1287-1297.

Bousso, R. (2018). BP Deepwater Horizon costs balloon to $65 billion. Reuters. Available at: https://www.reuters.com/article/us-bp-deepwaterhorizon/bp-deepwater-horizon-costs-balloon-to-65-billion-idUSKBN1F50NL#targetText=BP%20paid%20around%20%2463.4%20billion,11%20rig%20workers%20were%20killed.

Bozeman, B. (2011). The 2010 BP Gulf of Mexico oil spill: Implications for theory of organizational disaster. Technology in Society33(3-4), 244-252.

Hoke, T. (2013). A Question of Ethics: Fostering a Culture of Safety. Civil Engineering Magazine Archive83(1), 38-39.

Kelly, J. (2014). 4 Years after BP’s Gulf Oil Spill, Compensation Battle Rages. Reuters. Available at: https://www.scientificamerican.com/article/4-years-after-bps-gulf-oil-spill-compensation-battle-rages/

Lawrence, A. T., & Weber, J. (2018).  Business and society stakeholders, ethics, public policy,    15th edition. United States : McGraw-Hill Education.

Safina, C. (2011). The 2010 Gulf of Mexico oil well blowout: A little hindsight. PLoS biology9(4), e1001049.

Vidal, J. (2010). Nigeria’s agony dwarfs the Gulf oil spill. The US and Europe ignore it. The Guardian. Available at: https://www.theguardian.com/world/2010/may/30/oil-spills-nigeria-niger-delta-shell