Beyond petroleum, beyond the Gulf
Deepwater is only one slice of BP's plentiful global assets. As many mistakes as it has made, the company is very difficult, if not impossible, to kill. Any oil company would be, because even though they must work harder for their oil, the commodity is both extremely profitable and in increasingly greater demand. The Energy Administration Association's international energy outlook predicts that global energy consumption will jump by about 53% between 2008 and 2035. While renewable sources of energy will make up the fastest-growing segment of the fuel mix in the future, fossil fuels will remain the dominant source.
It seems like any company with its hands on enough petroleum can afford to spill millions of gallons of crude with upsetting, but nonfatal, corporate consequences, even if that company is playing in one of the world's most volatile markets.
In fact, huge, integrated oil companies can adjust to the volatility in the market. When the price of oil is low, exploration and production is expensive, but companies can rely on retail assets such as gas stations to benefit from the high profit margins at the pump. When the price of oil is high, then the exploration and production arms become the main moneymakers. The price of oil has been so high for so long that ConocoPhillips is planning to spin off its refining arm in 2012 and focus only on exploration and production.
Out of sight, out of mind
Financial stability aside, the flurry of bad press around BP has died down, despite the skeletons in its safety record that the spill revealed. Though there was over 5 million barrels worth, the oil that spilled in the Gulf entered an ecosystem that, though damaged, is full of petroleum-consuming bacteria. The oil that wasn't dissolved by chemical dispersants or microbes fell to the bottom of the ocean, out of sight to the public.
BP's new CEO Bob Dudley says the company has righted its course. Only time will tell, but Big Oil is capable of change. Exxon is a good example. Remember the Exxon Valdez? A drunk Exxon oil tanker captain ran the ship aground, spilling 11 million gallons of oil in Alaska's formerly pristine Prince William Sound. It was ugly and inexcusable. But then, Exxon restructured itself.
Outwardly, the oil giant was stand-offish to the press about the incident. But it made internal changes, and the company now has some of the highest safety standards in the industry. Perhaps BP will follow suit. It's progress should be carefully watched, after such a big mistake.
But the bar for mistakes at Big Oil companies is so high, it's hard to imagine how big an error would have to be to actually take one of them down.
