BP on trial: There are three sides to every argument

Posted on: 23 June 2010 by Gareth Hargreaves

The starkly different reactions in the UK and US over the BP oil disaster brings two sayings to mind:”There are three sides to every argument: your side; my side; and the truth”; and “Where you stand depends on where you sit”, says Gerald Lewis.

Ex BP boss Tony HaywardMy 50connect report of June 9th traced BP’s checkered record since they entered the US market by acquiring three oil companies all of which had formerly been part of John D Rockefeller’s Standard Oil Trust. My premise was that the reason the resulting organization has stumbled here is because its British top management failed to understand that the US is different than anywhere else in the world.

As other UK based companies have also learned the hard way, things such as management style, marketing methods, logistics and commercial arrangements, that have led to great success elsewhere, often don’t work in this intensely competitive, judgmental and unforgiving business environment: a single country comprised of 50 states, each with their own laws, tax codes, governments and characteristics; with vast distances, and an extraordinarily diverse population. Another current example of an internationally successful British company that is having significant problems by misreading the US market is Tesco, whose recent entry into food retailing in the Western states is having difficulty establishing itself and is currently losing money at a quite alarming rate.

Responses to my column BP disaster: How the US views disgraced British giant from UK readers have been based on the underlying premise that the US is blowing the matter out of proportion, that BP is being unfairly scapegoated and that a lot of political posturing is involved.

The prevailing view here in the US is that BP seems to have been totally unprepared for a disaster of this scale and then grossly underestimated the extent of the problem at the start. Once they found out how bad it was and realized that they didn’t know how to solve it, they seem to have tried to cover it up.

This is where BP’s top management’s misunderstanding of the US is evident. In problem situations here, the cover-up is always more harmful than the original event (think of Watergate and Monica Lewinsky); and, all along, BP have tried to cover-up … with an advertising campaign featuring Tony Hayward mouthing soothing platitudes and looking a little foolish; with statements minimizing the seriousness of the problem; by failing to fully explain the situation; by making estimates and promises which always turn out to be understated and unmet; and by alienating the press through limiting their access to what is happening.

George Bernard Shaw’s statement that England and America are “two countries separated by the same language” springs to mind, but it is not as simple as that, because there are also huge differences of viewpoint within the US. For example, President Obama’s recent meeting with top BP executives, that resulted in their agreeing to put up an independently administered $20 billion escrow fund to cover financial losses from the disaster and its recovery, has been widely acclaimed.

Some right-wing Republicans are reluctant to concede anything good to the Obama administration and one, in particular – Rep Joe Barton of Texas – the ranking Republican on the House Committee on Energy & Commerce, actually apologized to BP for the “Oval Office shakedown”. While he was immediately disavowed by the Republican leadership, and forced to withdraw his apology, his view actually seems to represent a faction of the party, who oppose any kind of government regulation. In addition, it seems to be more than a coincidence that Rep Barton received more contributions to his re-election campaign from BP than any other congressman – or that, prior to his election to Congress, he was a consultant to Atlantic Richfield Company, which is now a division of BP.

So if you sit in the UK and your view is that the whole thing is being overblown – that BP is being treated unfairly for political reasons; and I sit in the US and think that this is a devastating environmental disaster that will have impact on the US economy and environment for a long time, is the truth really a Mid-Atlantic view that is somewhere in the middle? I don’t think so, but it is unfortunate that BP’s cover up has prevented us from knowing so many answers.

We can only begin to imagine how much oil has so far poured into the Gulf? How much is currently escaping the capture mechanisms now in place? (50% of what?)  How long will it be before the flow is stopped? What I do know is that the closer you get the worse it looks – and that those who are on the scene feel that even the view from where I sit is too optimistic. So the truth is not necessarily somewhere between your side and my side. It could be even worse; or, on the other hand, it could shock us into beginning to end our addiction to oil and seriously developing a future based on renewable green energy.

Only time will tell, but, in the meantime, it would help if BP would too.  

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