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On May 11, 2010,  U.S. Dept. of the Interior Secretary Ken Salazar announced that he would separate the public safety and environmental enforcement side of the Minerals Management Services (M.M.S.) agency from its leasing and revenue collection function. While this move eliminateed the structural conflict of interest in the agency, it might not do enough to protect the regulatory function of the agency’s public safety and environmental enforcement roles.  The regulator can all too easily be coopted, or captured, by the firms it is regulating.

According to The New York Times, M.M.S. agency has routinely overruled its staff biologists and engineers who raised concerns about the safety and the environmental impact of certain drilling proposals in the gulf and in Alaska, according to a half-dozen current and former agency scientists. Those scientists said they were also regularly pressured by agency officials to change the findings of their internal studies if they predicted that an accident was likely to occur or if wildlife might be harmed.  “M.M.S. has given up any pretense of regulating the offshore oil industry,” said Kierán Suckling, director of the Center for Biological Diversity, an environmental advocacy group in Tucson, which filed notice of intent to sue the agency over its noncompliance with federal law concerning endangered species. “The agency seems to think its mission is to help the oil industry evade environmental laws.” One scientist who has worked for M.M.S. for more than a decade, said, “You simply are not allowed to conclude that the drilling will have an impact. If you find the risks of a spill are high or you conclude that a certain species will be affected, your report gets disappeared in a desk drawer and they find another scientist to redo it or they rewrite it for you.” For one thing, the regulators rely on information from the firms–data that is hardly provided in an objective fashion.  But such reliance pales in comparison with the political muscle of the oil companies–their campaign contributions being just the tip of the iceberg.  Moreover, large concentrations of capital are inherently a threat to a viable republic.

It should be no surprise that the government would welcome the cooperation from the companies involved in the accident in the Gulf; it reduced the pressure on the officials to go after the companies (and hence risk alienating their future contributions).  According to The New York Times, “Under federal law, even in the case of a major accident, the company responsible for the oil well acts in concert with government in cleanup activities and can help put out information about the response effort.”  Shortly after the spill, government agencies and BP set up a joint information center and a Web site detailing remediation efforts. BP started to promote its attempts to “stop the bleeding” (i.e., cut off the leaking oil in the Gulf).  With a restored image, the company could resume lobbying for less regulation, even though the accident demonstrates insufficient enforcement.

Source: http://www.nytimes.com/2010/05/12/us/12interior.html?ref=us ; http://www.nytimes.com/2010/05/14/us/14agency.html?hp

Senator Kirsten Gillibrand, D-NY, claimed in July of 2010 that the UK government should investigate what role BP played in Britain’s decision to free Abdel Baset al-Megrahi in August 2009. Al-Megrahi is the only person convicted of carrying out the 1988 bombing of a Pan Am airliner in which 270 people were killed over Lockerbie, Scotland. This is not to say that he acted alone. In February, 2011, Gadhafi's justice minster, Mustafa Abdel-Jalil, who resigned in protest against Gadhafi's massacre of unarmed protesters, told a Swedish newspaper that Gadhafi had ordered the attack. Abdel-Jalil also claimed that Megrahi threatened to "spill the beans" unless his return to Libya were secured. It would appear that BP, a publically-traded stock corporation, played a vital role between Gadhafi and the British government. If so, then aside from Gadhafi's sordid role, this case presents us with an issue of business ethics. Specifically, does a corporation, which is essentially private wealth but with responsibility befitting the power that comes with such wealth, cross a line when its employees engage in foreign policy? The ethical problem inherent in interfering in a juridical sentence is troubling enough; if an unelected corporation becomes so powerful that it can affect international relations between (and foreign policies of) countries, then the issue involves not only business ethics, but also democratic governance. As the line between private and public blurs, the respective bases of legitimacy can become conflated or transposed.

In May 2007, BP signed a $900 million exploration agreement with Libya. Also that month, Britain and Libya signed an agreement that paved the way for al-Megrahi’s release from a Scottish prison. A spokesman for BP has admitted that people at the company lobbied the British government over the prisoner transfer deal with Libya in late 2007, but the company’s spokesman denied that the lobbying played any role in the government’s decision to release al-Megrahi nearly two years later. Senator Charles Schumer, D-N.Y., argued that ”the whole thing has deep circumstantial evidence that points to the fact that there was a trade-off — release the terrorist in exchange for an oil contract.” Schumer and three other US senators — Kirsten Gillibrand, Robert Menendez and Frank Lautenberg — wrote to Secretary of State Hillary Clinton asking that the State Department investigate whether BP had a hand in the release. “Evidence in the Deepwater Horizon disaster seems to suggest that BP would put profit ahead of people — its attention to safety was negligible and it routinely underestimated the amount of oil gushing into the Gulf,” they wrote. “The question we now have to answer is, was this corporation willing to trade justice in the murder of 270 innocent people for oil profits?” The answer appears to be “yes.”

In an interview with the Daily Telegraph (September 4, 2009), Jack Straw admits that when he was considering in 2007 whether the bomber should be included in a prisoner transfer agreement (PTA) with Libya, Britain’s trade interests were a crucial factor. When asked in the interview if trade and BP were factors, Mr Straw admits: “Yes, [it was] a very big part of that. I’m unapologetic about that … Libya was a rogue state… . We wanted to bring it back into the fold. And yes, that included trade because trade is an essential part of it and subsequently there was the BP deal.” In short, BP employees have admitted to the lobbying and Jack Straw has admitted that BP’s contract was a factor—the two sides meet and the knot is tied.

Analysis:

Even BP’s lobbying effort was not decisive in the exchange agreement, the involvement of BP managers even as they and BP stood to gain from an oil exploration contract evinces a conflict of interest that should have been barred by ethics guidelines at the company. Moreover, the company had no standing in the prisoner exchange matter such that it had any business in lobbying. At most, the legal person legal doctrine and the associated “money as free speech” doctrine pertain to a company’s main business. The doctrines ought not give a company all rights of citizens because corporate charters are delimited to particular domains or functions. Furthermore, to expect a company to put ethics ahead of profits is to conflate a firm with a human being.  To be sure, a company is made of people (and capital). However, the association is focused rather pointedly on one thing: maximizing shareholder value through profits. Accordingly, managers know legal requirements, whereas ought and should are more difficult to translate into cost-benefit analyses. In other words, a company is like a shark in that both are single-minded feeding machines. To expect a machine to obviate its next feeding because of an ought is to treat it as something other than what it is.  I suspect that as onlookers we tend to project our own values onto company managements—even companies themselves—instead of coming to terms with what a company is.  It is a feeding machine with one directionality and an expansive appetite, which includes venturing into other domains such as (hypothetically)  lobbying for an exchange of prisoners in exchange for a lucrative oil contract. In other words, companies are designed to transgress even their own charters. They are like Hal in the film 2001—the computer that took on a life of its own. Ideally, a company would convert anything in a given society into a commodity, with price being the universal measure. The US senators are objecting, in effect, to the commodization of the prisoner exchange, and to the “boundary issues” of BP.

The “so what” of this analysis is the following: it is particularly dangerous for a company or industry to be so powerful that it can unduly influence a government both in terms of a judicial sentence and in relation to other countries. Given the expansive nature of a company, society must have a means of keeping corporations within their proper domain of providing goods and services.  In a plutocracy (rule by wealth),  private wealth is the basis of government. This is not the case in republics, which are characterized by representative democracy.

Sources:
http://www.msnbc.msn.com/id/38256677/ns/world_news-africa/
http://www.heraldscotland.com/news/home-news/megrahi-threat-to-reveal-truth-over-lockerbie-1.1087516?utm_source=twitterfeed&utm_medium=twitter

Related (on BP): http://euandus3.wordpress.com/2010/05/17/business-society-bp-clips-societal-norms/
http://euandus3.wordpress.com/2010/06/22/bp-and-mms-complicating-the-different-demons-of-the-democratic-and-republican-parties/
 http://euandus3.wordpress.com/2010/06/17/tony-hayward-sticking-to-script-safety-is-bps-priority/ http://euandus3.wordpress.com/2010/06/10/bp-dividends-to-stockholders/  http://mole45.wordpress.com/2009/09/05/jack-straw-admits-lockerbie-bombers-release-was-linked-to-oil-well-thats-a-shock-if-we-can-go-to-war-for-it/

Even though people the world over instinctively recoiled as reports came in of Gadhafi's violent retaliation against Libyan protests on February 21, 2011, the official reaction from the US Government was muted at best. The refusal to act on an intuitive response to immediately remove the Libyan dictator's ability to wantonly kill people resisting his right to rule may have come from concerns that the mounting tumult of a change of government in a major oil-producing region of North Africa could cause even just a disruption in the supply of crude. Indeed, even the mere possibility was prompting a spike in the price of oil (and gas)--what one might call a risk premium. Even the prospect of an ensuing nasty electoral backlash from consumers having to face a possible increase in their largely non-discretionary gas expense was not lost on their elected representative in chief at the White House.  Even five days later, after some serious press on the rising price of gasoline hitting American consumers, the most the president would do is proffer a verbal "demand" from afar that Gadhafi leave Libya.  "When a leader's only means of staying in power is to use mass violence against his own people, he has lost the legitimacy to rule and needs to do what is right for his country by leaving now," the White House said in a statement. The dictator must have been shaking in his boots.  In actuality, Gadhafi had lost his legitmacy to rule five days earlier, and by the day of the statement the American administration could have been actively involved with willing EU states in stopping him inside Libya. Given the progress of the protesters-turned rebels and the behavior of Brent crude that week, the interests of the American consumer (and Western oil companies, as well as the business sector over all) were by then firmly in line with an enforced regime change in Libya.  Oddly, the old dogma of an absolute governmental sovereignty was colluding with an inherently excessive risk-averse corporate political risk methodology to hold America back from acting as midwife to a new political awareness breaking out in the Middle East.

On the day of Gadhafi's self-vaunted shooting spree, Brent crude benchmark vaulted past $108 a barrel (settling at $105.74, a two-year high).  On the following day, it rose to $111.25. On the first day of March, the Dow Jones Industrial Average dropped 168.32 points, or 1.38%, to finish at 12058.02, its third triple-digit decline in the past week. Oil futures on the New York Mercantile Exchange, already up 6% this year, jumped 2.7% to settle at $99.63 a barrel.  Brent Crude in London hit $115.42 a barrel, the highest settlement since Aug. 27, 2008.The graph below shows the change in oil, though the change looks astounding in part simply because the graph only goes to 15%; were it to go to 100%, the picture might seem less dramatic.

The Wall Street Journal had reported already on February 21st that the rise was "driven by increasing unrest in the Middle East." Specifically, worries that the turmoil in Libya was curtailing output of that country's oil were said to be driving the price climb. However, USA Today cites Darin Newsome, an energy analyst at DTN, as pointing to the role of speculators around the world as propelling the price of oil. "The flow of money plays an enormous role in the direction, speed and volatility of these markets." In fact, the market mechanism itself may be flawed because speculators could push commodity prices out of sync with the underlying supply of the respective commodities. Turmoil in Libya cannot be blamed for the ensuing “creation” of artificial value (such an increase, by the way, had fueled the housing bubble in the US that came in for a hard landing in 2008). In fact, the rise in world oil prices began before the final third of 2010—before the prospect of widespread popular protest in the Middle East was realized. Indeed, the climb during the last third of 2010 looks a lot like that which took place in the first third of 2009 (during a recession). It was not until well into February, 2011, that the turmoil in the Middle East appeared, according to MSNBC, “to pose limited risk to global oil supplies. Neither Tunisia nor Egypt produce oil or gas.” Such “limited risk,” besides being mitigated, cannot very well be projected back well into 2010 to explain the rise in the price of gas.


Incidentally, another interesting feature of this graph is the sustained drop in 2008, before the financial crisis in September (and the U.S. Presidential election in November!).  The “V” pattern at the end of 2008 is classic “electoral.” It suggests that the price of gas may be very attuned to the electoral interests of those in power, and therefore to government policy. My contention in this essay is that this dynamic was alive and well in Washington when Gadhafi was turning on his own people.

In any event, The Wall Street Journal observed on the day after the massacre that rising oil prices "could have big implications for the U.S. economy." Although perhaps overreacting from the day's news, it is true that the price of oil has a big impact on a consumer-driven economy. Energy expenses, like food, are nondiscretionary, Howard Ward of GAMCO Growth Fund told MSNBC. “And they’re now poised to take a bigger share of wages than we’ve seen in several years. That will have a dampening impact on discretionary spending. We still have an economy that is 70 percent consumer spending.” In such an economy, how could politicians turn a blind eye to domestic consumer interests, even at the expense of defending human rights abroad? Arjun Murti, an oil analyst at Goldman Sachs, told The Wall Street Journal that even as people "put so much emphasis on the U.S., . . . what is going on in the rest of the world matters as much if not more."  However, elected representatives are inclined by their desire to stay in power to put world news through the prism of their constituents' pocket-books, and thus to frame foreign policy to protect their consumers. In other words, an elected representative is apt to be more finely attuned to the grievances of his or her electorate than to stopping human rights violations abroad. Perhaps it is such politics that keeps heads of democratic governments from agreeing on an intergovernmental or international military mechanism that would act to stop a regime once it has violently turned on its own people.

Besides the political implications from consumers being even potentially shell-shocked by higher gas prices, the business sector can be expected to be averse to political instability in a region of the world in which so much oil is produced.  This aversion is, in my view, overly risk averse. As MSNBC points out, it is unlikely that any new regime in an oil-producing country would withhold supply as a matter of policy because “any new government would badly need those oil revenues.”  Libya produces only 2% of global supply of crude, and the Saudi-controlled OPEC cartel would make up for any loss.  “OPEC is ready to meet any shortage in supply when it happens,” the Saudi oil minister, Ali al-Naimi, said at a news conference after an OPEC meeting, according to The New York Times on February 23rd. “There is concern and fear, but there is no shortage.” In my view, the minister’s statement reflects the excessive risk aversion in corporate political risk departments, for while fear is perfectly understandable for a protester who is being gunned down in the streets, the emotion represents or points to an over-reaction among managers assessing the political risk in financial terms from the vantage point of their carpeted offices in the steel fortresses of the modern cities.

In another piece in The New York Times on February 23rd, Clifford Krauss put forth the argument that the relative quality of Libya’s reserves magnified its importance in the price spike.  Saudi Arabia has more than 4 million barrels in spare capacity, but it includes “heavier grades of crude that are higher in sulfur content and more expensive to refine.” Larry Goldstein, a director of the Energy Policy Research Foundation, an organization partly financed by the oil industry, argues that “Quality matters more than quantity.”  Furthermore, should Europe need to buy sweet crude from Algeria and Nigeria, that could push prices higher. “Nigeria and Algeria are already producing flat out so they can’t come up with another million barrels a day,” Michael Lynch of the Strategic Energy and Economic Research consultancy firm, said. “That means there will be a scramble for lighter crude supplies.” The last time there had been a shortage of sweet crude (in 2007 and early 2008), oil prices soared to more than $140 a barrel, although the cause then was spiraling demand. Moreover, placing quality before quantity seems questionable to me  in looking at supply as it interacts with demand. Furthermore, the analysts are discounting the impact of the Saudis and OPEC to counter for any increase in costs by increasing supply. The New York Times reported on February 23rd that “Tom Kloza, the chief oil analyst at the Oil Price Information Service, estimated that the Saudis could pump an additional 1 million to 1.5 million barrels in a matter of days.” Additionally, OPEC has “a reserve capacity to deliver an additional four million to five million barrels to the world markets after several weeks of preparation. That is more than twice the oil that world markets would lose if production were halted completely by unrest in Libya.”  In other words, in the wake of Gadhafi’s massacre as Brent crude hit $110, the business analysts should have realized that the Saudis would have to virtually agree or otherwise go along with any cost-induced spikes. Or course, the political risk analysts have also argued that the Saudi royal family could fall, given the spread of protests throughout the region. To be sure, that is a possibility, but not necessarily as the analysts play it out or with a cut off in Saudi oil.

On March 2nd, The Wall Street Journal ascribed the previous day's market jidders to fears of unrest intensifying in Saudi Arabia as authorities there arrested a prominent Shiite cleric who had been calling for political reforms. "If there are problems in Saudia Arabia, we will feel it and that's causing concern, obviously," said Marc Pado, a U.S. market strategist at Cantor Fitzgerald. Also, Iran reported clashes between protestors and security forces in Tehran. Concerning Saudi Arabia, which seems to have been the epicenter for the worry, analysts believed at the time that the political instability in Bahrain meant that Saudi Arabia itself could be at risk. Indeed, the political risk argument may have come down to this contingency.  Kloza points out that unless the unrest were to spread to the streets of Jeddah and Riyadh, “I think it’s a very manageable situation and prices are closer to cresting than they are to exploding higher.” Even he could be overstating the risk, for besides discounting the financial appetite that a republic in Arabia would have in selling oil, his analysis projects too much based on a kinship between Saudi Arabia and Bahrain. The New York Times article also points to oil experts who argued at the time that the “island nation has a majority Shiite population with cultural and religious ties to the Saudi Shiite minority that lives close to some of the richest Saudi oil fields.” However, there are a number of “ifs” that must first be satisfied before this fuse could have gone off.  For one thing, Saudi oil fields are well defended. Also, that a majority population might do something does not mean that as a minority population it would do likewise (and in a different and much larger country). Were the unrest sweeping the Middle East to hit Saudi Arabia and turn it too into a republic, it would be a part of the broader sweep. In other words, I think the analysts overstate the significance of Bahrain and, moreover, miss the bigger picture (i.e., the transformation of the Middle East into democracies from autocracies). Such a historical transformation of the entire region could well be happening. but that doesn't necessarily mean that a significant sustained cut-off in the supply of oil would result. Indeed, such a conclusion ignores a basic fixture in human nature: greed. It is ironic that political risk analysts in business would miss that element. In short, they are over-reacting via over-projecting.

Going overboard in making projections is one indication of an excessive aversion to risk in a personality.  I suspect that this bias in corporate political risk analysis comes not only from like personalities, but also from corporate culture, which eschews controversy of any sort. In the rarified corporate office, conflicting values are willowed away in favor of the hegemony of efficiency and the associated business technique. This cultural aversion to uncertainty impacts business practice, including political risk analysis. A well-run corporation would have someone in that department saying, in effect, “hey, loosen up, guys.”  When it really is bad, such as it was in September, 2008 when the financial system almost collapsed, business is typically caught off guard just like the rest of us.  In terms of the protests in the Middle East, we can take it to the bank that business was on the side of political stability, and thus, the extant regimes.

The price of oil affects so many industries that virtually any industry can be expected to lobby for foreign policies that give priority to the stability in the status quo (rather than to revolution).  That is, both consumer and business interests could be expected to have pressured elected representatives in the U.S. Government to resist giving too much support to the protesters in the Middle East. For example, President Obama’s policy was that Mubarak should stay in power through the transition even as events in Egypt were rapidly forcing him out of office. Whereas strategic interests such as the Suez canal might have been foremost in Obama’s calculation regarding Egypt, oil, and thus American consumers and business, might have been primary in his muted statements in the wake of Gadhafi’s retaliation. This sets up an interesting dilemma. While the immediate reaction of most people worldwide who were recoiled in horror at the atrocities in Libya on February 21^st was for something to be done right away to stop Gadahfi even if it meant more chaos in the short-run, business political risk analysis proffered an alternative course--that of reducing the turmoil immediately even if that meant retaining Gadhafi in power. Whereas proponents of democracy and human rights viewed the protests in Libya as a good thing, such people would be surprised to find the activity portrayed from the business standpoint in negative terms even in our midst. For example, USA Today reported Peter Beutel, of Cameron Hanover, as saying, "We have all the wrong things working together at the right time: an economic recovery, (stocks) making new highs, a lower dollar, strong seasonal demand and unrest in the heart of oil production" (italics added).  Libyans putting their lives on the line is also unrest in the heart of oil production. It is the starkness in the vector of valuation (i.e., very good vs. very bad) that is striking here. That a person in one house could have been viewing the spreading protests in the Middle East as instantiating a much overdue development in government while a person next door was disdainful of all the unrest attests to how differently the same event can be viewed.

 From the standpoint of the environment of international business, standing on human rights is not as much of a priority as an observer might want. In other words, what is good for GM is not necessarily good for the world.  The theory that increasing international business (e.g., trade and foreign direct investment) leads to or guarantees peace suddenly looks insufficient as a sufficient philosophy of international business.  An implication is that if corporate lobbyists have real sway over governments, the latter can be expected to shy away from policies and actions that would increase short-term political instability even where such turmoil were a good thing from the standpoint of democracy and human rights. Politicians who allow themselves to be controlled by corporate executives can be expected to overstate stability and shortchange leadership (and real change).  It may be that even the very existence of large corporations in a republic could thus be problematic from this standpoint. Corporations, and even ironically elected representatives, may be predisposed to advocate policies that are at odds with expanding democracy in the world.

In general terms, I contend that both toady politicians and the timid business executives who do not want to rock the boat for financial reasons are short-sighted even by their own rather narrow criteria.  In the case of Libya, were an overwhelming multinational military force to have descended on Libya as Gadhafi's men were ravaging Libyans on the streets rather than waiting for the U.N. Security Council to act, Gadhafi could have been stopped in his tracks in short order and thus order and civilians preserved (i.e., oil supplies undisturbed and a slaughter averted). Of course, as with any military action, things can go wrong.  To be sure, military action is always risky. For example, Gadhafi could sabotage the Libyan oil wells as Saddam did in Iraq in the first Gulf War (1992). However, the failure of the world to take first initiative could have given Gadhafi time to set up explosives ready at the touch of a finger in Tripoli. Indeed, there were reports on the day following the massacre of Gadhafi intending to blow up the oil wells anyway.  So the destruction of Libyan oil production could have come either from the world acting or failing to act in the wake of Gadafhi's violence against the protesters. Given the ambiguity of such risk, corporate political risk analysis would probably still come down in favor of retaining Gadhafi because the status quo is typically presumed to proffer the most stability. This I would call the fallacy of the status quo, which I believe dominates bureaucratic and state department thinking.

Instead of placing corporate political risk analysis on center stage, I submit that business is not the focal point of society (or politics). At the societal level, the hub and spokes stakeholder framework must be replaced by a web-structure wherein there is no central entity. Corporate political risk analysis from this broader perspective should be consulted without being allowed to become dominate. Therefore, governments around the world ought to overcome the presssure from their respective corporate political risk analyses in favor of human rights to place real limits on governmental sovereignty backed up by an international or multinational force on permanent stand-by, with a mechanism for activation agreed to before any occasion.  Such a leap would of course take principled leadership. Such leadership could be partially reconciled with more immediate strategic political interests by making the mechanism go into effect after the present term of office. While not optimal, this method would indeed deliver (eventually). 

Hence, even after five days of carnage in Libya and worsening volitility and price spiking of oil, as well as gasoline and jet fuel, at the expense of the American consumer and business firm, the Obama administration--the regime of real change--could only muster a statement and a freezing of assets. "When a leader's only means of staying in power is to use mass violence against his own people, he has lost the legitimacy to rule and needs to do what is right for his country by leaving now." It would be almost a month after Gadahfi had turned on his protesting people that the U.N.'s Security Council brought itself to act in authorizing all necessary means for member countries who want to step in to protect civilians in Libya. By that time, the protesters had become armed rebels and Gadafhi's military had been on the roll, killing rebels and civilians alike. A clean cut would have been better than a period of indecision.

Sources:

Jerry DiColo and Brian Baskin, "A Stealth Comeback for $100 Crude Oil," The Wall Street Journal, February 22, 2011, pp. C1, C3.

http://online.wsj.com/article/SB10001424052748704506004576173961240139414.html?mod=ITP_moneyandinvesting_0

Gary Strauss, "If Unrest Spreads, Gas May hit $5", USA Today, February 22, 2011, p. AI.

http://www.msnbc.msn.com/id/41739499/ns/business-personal_finance/

http://www.nytimes.com/2011/02/24/business/energy-environment/24oil.html?_r=1&hp

http://www.nytimes.com/2011/02/23/business/global/23oil.html?ref=todayspaper

http://www.msnbc.msn.com/id/41785849/ns/world_news-mideastn_africa/

http://www.nytimes.com/2011/03/18/world/africa/18nations.html?hp

Mark Bly, BP’s head of safety and operations, released on September 7, 2010 an internal report blaming not only the company, but also its partners for the Deepwater Horizon rig explosion and oil spill. A spokesman at Transocean quickly lashed out, calling it a “self-serving report” that minimized what was critical: BP’s “fatally flawed” well design. For example, “Over a 40-minute period, the Transocean rig crew failed to recognize and act on the influx of hydrocarbons into the well,” the report states. A BP spokesman declined comment on whether BP staff were also supposed to be monitoring the pressure. Companies such as Royal Dutch Shell monitor all their wells in real time from central locations. Also, the “unstable” cement mixture used by contractor Halliburton allowed hydrocarbons to leak into the well, the report said. However, it was BP managers who decided to use a long production string rather than a casing tie back, decreasing the number of barriers to gas flow. Also, BP employees neglected to run a cement bond log (CBL) to test the integrity of the cement. They installed fewer than one third of the recommended number of centralizers, dramatically increasing the risk of cement channeling and gas flow Failing to conduct a complete “bottoms up” circulation of the well to insure the quality of the cement seal. Lastly, they did not run a lockdown sleeve to secure the production string to the well head, eliminating yet another barrier to a blowout. In his report, Bly defended the well’s design, which has been criticized by industry experts. “The investigation team reviewed the decision to install a 97/8 in. x 7 in. long string production casing rather than a 7 in. production liner, which would have been tied back to the wellhead later, and concluded that both options provided a sound basis of design.” To relegate or ignore the contributing factors of design while pointing to Halliburton’s “unstable” cement mixture suggests a subterranean motive. A likely candidate is minimizing damages from the many legal challenges facing BP.  That is, Mark Bly was essentially trying to spread the blame in order to spread the damages so his company could limit its losses from the well explosion. Such a purpose deviates from BP’s commercials wherein BP managers protest that they are doing everything they can to take responsibility for the disaster. Were it only true that saying it made it so. Even as BP’s media blitz was extolling the company’s responsibility, claims were being so scrutinized that the US Government pressured the company to allow an independent party deal with the claims. Sadly, some people are doubtlessly being taken in by the commercials. Just being on the air proffers a certain degree of legitimacy. It is more difficult to discern how a report is being used. A shark is a feeding machine. So too is a company. To expect a company to all of a sudden lose sight of its function is to believe in the tooth fairy.

Source: http://www.msnbc.msn.com/id/39046088/ns/us_news-environment/
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