Cleaning up the oil industry after the Macondo spill
The oil spill lends itself to puns, and at the plenary discussion this morning there was talk of drilling deep into our consciences, and tapping into human potential. But the conversation went well beyond verbal dexterity, as the three panelists offered up very different takes on the crisis at the Macondo well in the gulf.
It’s now 65 days since the initial explosion in which 11 BP employees lost their lives, and somewhere between 40,000 and 100,000 barrels of oil per are pouring into the Gulf of Mexico every day. The panel’s moderator, Good Morning America’s JuJu Chang described the tragedy succinctly when she said, “This is clearly a disaster of epic proportions that is still unfolding.” The political, economic and environmental implications stretch into the long-term.
Whatever way you look at it, the US still relies on oil, and with the Gulf of Mexico supplying about 8% of petroleum to American consumers, stopping production is not a real option. “Energy is like squeezing a balloon,” Marc Lipschultz, from Kohlberg Kravis Roberts & Co said. “Demand hasn’t changed in the last 65 days so it’s got to come from somewhere. If we shut off supply in one location we’re going to have to get it from another, or watch prices rise.”
Lipschultz said energy is starting to come from other sources, with oil finds in Brazil and West Africa, and higher demand for natural gas. “The tectonic plates of supply and demand were already shifting and are continuing to shift,” he said.
Increased regulation of the oil industry is one obvious consequence of the spill. This will also raise prices and increase the costs borne by consumers. All of the panelists welcomed regulation of some kind, but they had differently nuanced views about the form it should take. James Tisch, CEO, Loews Corporation, thought that experienced industry experts should have a big role in creating the new rules. ‘We need to start from people that know offshore drilling,’ he said, adding that non-specialists could then challenge the industry view. ‘But we need people who’ve been in this all their lives to make the first proposals.’
For Dov Seidman, CEO of LRN, ethics have a large part to play, and corporate culture itself needs to reform. In a hyperconnected, globalized world, crises and disasters are ever more likely, especially if human beings don’t change their ways. “We need to drill deeply inside ourselves right around now, and rethink the fundamentals of how we govern our companies and how we behave,” Seidman said.
He added that in a culture of fear, employees will not act as whistleblowers, even if the system allows for it, and for this reason, regulation alone won’t solve anything. A few hours ahead of the US World Cup victory over Algeria, Seidman suggested that people think behavior is about goalkeeping. “We need to decide what is core -– respect, truth, transparency,” he explained. “My bottom line answer is behavior can’t be part of what the goalkeeper does –- rules, and regulations –- it has to be part of the other side of the goal.”
Regarding the spill itself, it’s clear that the most pressing issue is to plug the hole. And when it came to this bewildering task, there was some sympathy for BP. “BP was just about as good a corporate citizen as they could be,” Tisch said. “Yes, they should have apologized earlier, but the reality is they were stuck with a miserable miserable situation. My sense is that they were doing everything that was humanly possible to control the oil.”
