Wednesday, June 2, 2010

Tangled Web

Worldwide, British Petroleum employs approximately 92,000 people. It has nearly 200 competitors, many of whom drill for oil in the United States or in American waters. Estimates of the total number of people employed by the petroleum industry are hard to come by, but the number undoubtedly runs into the millions. These companies have conducted offshore drilling from platforms since 1947; BP's offshore drilling projects go back to at least 1965, when it struck oil in the North Sea.

The company has long enjoyed a comfortable relationship with the United States government. In 1951, Iran sought to renegotiate its arrangement with what was then called the Anglo-Persian Oil Company (AOIC). Iranian workers operated in horrific conditions for little pay and the country itself received comparatively small royalties for the resources extracted from its own land. When negotiations broke down, Iran nationalized oil production; in 1953, the United States -- with support from Great Britain -- engineered a coup in Iran that installed Shah Reva Pehlazi, who ruled the country as a close U.S. ally until his ouster by the Ayatollah Khomeini in the late 70s. Although the new oil agreement with Iran improved conditions and royalties, Iran was not given seats on AOIC's board, nor were its auditors allowed to review the books.

The special relationship between BP and the United Stated continues today. As is well-known, the Bush Administration made a concentrated effort to install career employees in permanent agency positions, with the idea of leaving its ideology in place after the close of its term. Although this practice came to light during investigations of the Bush Justice Department, it extended across the executive branch, notably in the Department of the Interior.

Though the Bush Administration often gave lip service to the notion of small government, in practice it expanded the power of the executive branch and viewed government as a means to support and grow plutocratic power, particularly in the energy sector from which both George Bush and Dick Cheney hailed. Thus, the Interior Department's Minerals Management Services (MMS) became, instead of a regulator, what amounted to the oil industry's representative in government.  MMS Lake Charles (LA) Larry Williamson shrugged off reports of fraternizing with industry representatives:
Obviously, we're all oil industry. We're all from the same part of the country. Almost all of our inspectors have worked for oil companies out on these same platforms. They grew up in the same towns. Some of these people, they've been friends with all their life.
One is struck by the word "obviously," as if Mr. Williamson believed it a matter of course that his agency should endorse oil company wishes and can't understand why anyone would think otherwise. Nonetheless, "obviously" is not what comes to mind in a scathing September 2008 New York Times report entitled "Sex, Drug Use, and Graft Cited in Interior Depart" that summarized three inspector general reports about the MMS. The reports, the Times said, portrayed a "a dysfunctional organization that has been riddled with conflicts of interest, unprofessional behavior and a free-for-all atmosphere for much of the Bush administration’s watch." Allegations included:
  • substance abuse;
  • sexual relations with oil industry representatives and between management and immediate subordinates;
  • fraternizing with industry representatives at concerts, athletic events, and social gatherings all paid for by the industry;
  • acceptance of gifts from oil and gas representatives with "prodigious frequency."
Some work, of a fashion anyway, appears to have happened amidst the fun and games. One employee conducted an inspection of an oil company's rigs at the same time that he considered a job offer from the same company. Other inspectors "allowed oil and gas company personnel to fill out their own inspection forms in pencil. Then the inspectors would trace over the pencil markings in pen before submitting the forms." 

Several MMS employees moved on to lucrative positions within the oil industry. Others, though, remained behind and undoubtedly played a key role in the April 6, 2009 decision to exempt BP from the
National Environmental Policy Act's requirements including a detailed environmental analysis, concluding the spill risk in that part of the Gulf was “minimal or nonexistent.”
Although such exemptions are apparently routine, one can't help but wonder whether they've become routine because the MMS abdicated its responsibilities as a regulator to please its masters in the Bush Administration.
 
Shortly after he assumed office in January of 2009, Interior Secretary Ken Salazar. He pledged to investigate the MMS and to take any action necessary to clean up the department. But initial agency head Elizabeth Birnbaum did not take office until July 2009 (after the exemption), and it turns out that it's hard to fire a federal employee under just about about any circumstance: Typically, it takes up to a year. The Bush Administration had already declined to pursue legal action action against MMS managers, and the problem is more endemic than a few bad apples, anyway. In short, no matter who runs the show, it's liable to take a while to straighten out the MMS.

Some of BP's 90,000+ employees -- especially those in its risk and safety management divisions -- must have expressed concern over the company practice of drilling ever deeper into the ocean floor while cutting safety corners. These employees undoubtedly composed memos describing both the increased dangers of a spill and the lack of serious contingency plans to contain it. Some of them likely expressed doubts that the technology existed to seal off a leak a mile deep in the ocean. A few of their managers read the memos and few of them may have passed them up to the next level. But the memos died a quiet death in a organization dedicated to profit above all, no doubt having convinced itself that that an uncontainable accident could never occur.

Because, despite what the Supreme Court has ruled, corporations are not people: They are sharks out for blood in the water, whether in the form of a new product opportunity, a quick buck, a wounded competitor, or oil thousands of feet under an ocean location a mile from the surface. When a corporation detects the blood, it will move to it heedless of consequences or implications. In a sense, anger at BP is misplaced: Anger implies that it is a person, a moral actor in this catastrophe when it is not. It simply did what it does, with all of the awareness of the Borg in Star Trek.

Which is why we need government regulation of all industry. Contrary to the Randian fantasies of Alan Greensberg (who actually believed that the market could be trusted to police itself against fraud), the free market is not an unfettered Eden in which rational actors always make decisions with beneficial results for all. The market has winners and losers, and when our regulatory agencies feed on the regurgitations of sharks, it's no surprise that the losers include the aquatic life of the Gulf of Mexico.

Because it seems to me that the birds, fish, plants, and microorganisms of the Gulf are the only innocent victims here. Thirty years ago, a majority of the American people bought into the Reagan myth that everything would be fine if only government was removed from the doings of business. Reagan scrapped the efforts of three previous administrations, which had attempted, in the wake of the OPEC embargo of 1973,  to develop a comprehensive national policy that stressed conservation, innovation, and regulation. The Reagan policy relied on deregulation and a strong military presence in the Persian Gulf, an approach that contributed to two wars and the Bush Administration's brazen transformation of the federal government into a whore for the oil industry.

Despite it all, Americans continue to mistrust government regulations even when they screech angrily at the consequences of unregulated business, as with the financial industry and now the oil industry. We continue to support an expansion of offshore drilling, which means going into deeper and even unsafer waters. We're hooked on oil and we're willing to take the risks even when the consequences gush in our faces daily. We're neck deep in the Big Muddy, and we don't even need a fool to tell us to push on...

Attorney General Eric Holder has launched a criminal investigation into the spill. The progressive punditry, whose performance during the spill has by and large been dismal, will no doubt express dissatisfaction if Holder decides to pursue anything less than the death penalty for BP executives. So let me say up front that Holder will do what any prosecuting attorney would do. He and his staff will review all statutes that might possibly apply, take depositions, subpoena company paperwork (they've already told BP, Halliburton, and TransOcean to retain all company documents), and accumulate any other evidence regardless of its strength. Based on which statutes best apply and what evidence is the strongest, they'll build a case and bring it court. In other words, the Justice Department will bring a case that it thinks it can win based on evidence and law, not James Carville's desire for revenge and not on a paranoid progressive delusion that the Obama DOJ is in league with Big Oil...

Carville and Chris Mathews are among the loudest shouters of the "do something" crowd. This gang seems to believe that President Obama should run around in a blind panic to show that he cares, then adopt a solution along the lines of he and Steven Chu donning wet suits, sticking a giant wine cork on the end of a mile-long piece of pipe, hopping into the Gulf and personally jamming the cork into the hole. Mathews actually suggested that Navy submarines drop off frogmen to seal the leak. Even if the submarines could go that deep (they can't), he pressure of 5,280 feet of water would crush divers like an empty beer can between the hands of a drunken football player...

What comes of drinking martinis dirty...

Foxessa puts Blood and Sand in context with other historical epics and finds it wanting...

Delaware Democrat Ted Kaufmann explains reality to Mitch McConnell and tears him a new one in the bargain...

BP predicted Oil Man River in 1999...

One fish, two fish, dead fish...

To preserve your right to remain silent, you have to...talk...

BFF...

7 comments:

Foxessa said...

BP and all these oil trans nationals, like so many other corps, are nothing more than eco-Mafias, organized crime syndicates.

Love, C.

Roy said...

Big Business as the Borg is the best analogy I've seen of the situation; great metaphor! "Resistance is futile!"

And ol' Pete rocks on!

tnlib said...

Thanks for the link. Dry dirty marinis - yum, yum, yum.

Will return tomorrow to really read your post. Too tired tonight to remember my name - and because of a DDM.

K. said...

I spent my career in the corporate world. It was for the most part exciting and fulfilling. But the companies I worked for had the conscience of a sociopath, which is to say none whatsoever. I'm not making a moral judgment; it's the nature of the beast.

That corporations make rational decisions is a myth. Decision-making is almost 100% aimed at short-term profit and market dominance, neither of which are inherently congruent with rationality.

Regulatory authority evolved for a reason, and was dismantled in the name of a theory with no supporting empirical evidence. Not a single social good has come from it, other than cheap airplane tickets. And even they are mitigated by the fact that the seats are torture chambers that would have been too sadistic for the Spanish Inquisition.

tony said...

An Interesting & Important Backstory.But ,remember, these blokes are fireproof.The worst thing that could happen to BP is that it might (oh Irony!) be taken over by a larger(& i presume) American Oil Company!

K. said...

Tony, BP is definitely a behemoth. In 1978, it acquired a controlling interest in Standard Oil of Ohio (John D. Rockefeller's original company, and merged with Gulf in 1984. Since 1990, it has contributed over $5mil to American political campaigns. Which sounds like a lot until you find out that in 2009 alone it spent $16mil lobbying Congress.

Prosecution will be a long haul, which is another reason why Holder will bring as iron clad a case as possible, even if it means limiting it. The Exxon Valdez civil suit is still in litigation, and the Supreme Court has been very helpful to them.

On the other, if the government brings the case as soon as possible, it might be able to strike while the political iron is hot. And, it's possible that a strong criminal case against BP (and Halliburton) could force a more just civil case settlement. We'll see.

Rastamick61 said...

Excellent piece of work here. Obviously. These guys really have had it perverted for so long they simply don't connect the reality of regulation as something that translates into life or death for workers. The high quality of life stolen by a small handful of people while regulators were smoking meth and watching porn has lead to funerals for people who didn't get to sit at that big table with the corporatists,