The Effects of the Oil Spill in the Gulf of Mexico - Essay Example

and Section # of The oil spill in the Gulf of Mexico has caused a lot of effects to economy and the environment so how it will be particularly relevant to BP’s stakeholders and what is BP’s reaction to this problem.  INTRODUCTION One of the biggest ecological catastrophes of current times, the deepwater horizon oil spill- most commonly known as the BP Oil spill, has been the centre of news and people’s minds for a long time. It has impacted all walks of life, has prompted thought provoking questions in the mind of concerned as well as unconcerned parties. The BP Oil Spill can serve as a warning to all organizations who are careless on safety measures on the smallest issues; showing even the smallest carelessness can lead to such a big catastrophe that can haunt organizations and the concerned parties in the long run. To better understand the situation, a brief background of the how the catastrophe occurred is important. Deepwater Horizon was a 9 year old semi-submersible oil rig functioning in the waters of the Mississippi canyons, under lease of British Petroleum. At the time of the explosion, there were drilling going on for an exploratory well at depths of about 5000 feet. The well was almost funcationaly complete, whereas major cementing work was being carried out by one of the concerned parties/ contractor of BP, Halliburton (BBC, 2010). After completion of the well, it could be used as a subsea producer later. However, catastrophe struck on 20th April, 2010, methane gas shot up from the well 5000 feet under the ground and it shot up all the way up to the rig. The safety instruments did not react properly to this phenomena and the rig caught fire as methane exploded on the rig. All but eleven workers were saved through rescue efforts and lifeboats. This catastrophe didn’t end here; an oil leak was found where the oil rig stood 3 days ago. This sleek oil cover started endangering life. According to official estimates of August 2 and about 62000 barrels of oil per day has escaped the well into the water, endangering the environment and submarine life (Channel 4 News, 2010). Identification of key stakeholders: The oil spill happened at such a big magnitude that it affected a multitude of organizations, people far and wide, in multiple countries; it affected human as well as animal habitat. Therefore, the impact was far and wide, all the species directly as well as indirectly cannot be accounted for. The sub-groups can be classified as follows. With the oil spill came the disastrous damage that the Gulf of Mexico’s natural habitat had to face as the slick oil destroyed marine life. It suffocated the animal and plants and as the oil rose to the top, it created massive havoc in terms of dead fishery and plants and unimaginable loss to the scenic beauty of nature in that area. Naturally, this oil spill has been a disaster; however, indirectly it has cost millions of people their livelihood. Fishermen in the area have been worst hit by this calamity where their basic income is now dead or the area in which they fished is now contaminated. Marine life has been completely destroyed in some places. Therefore, apart from the natural habitat which was ruined, it was the fisherman who was the stakeholders which were affected in this scenario. Environmental agencies claim that there will be constant efforts needed for decades to come to bring the habitat close to its original well being. The complete restoration is not even possible (Szabo, 2010). As the oil slick reached the shores engulfing the Gulf of Mexico, tourism was hit. Tourists ran away from the spots which were considered as summer favourites before the disaster. Even today, when there is no presence of oil or its impact on the beaches of Denver, there are almost no tourists when compared to earlier years. Tourists now have widespread fear that the oil has ruined the shoreline and it may affect them in some way. The oil spill has also cost the company; they have to pay millions of dollars to the claims that are being set forward by people who are affected. The company, was lashed as responsible for its event, however their investigation spread their responsibility to other contracted companies and the parts that were being used. Coming to economical impacts to the government as well, about $1 billion of the US’s GDP is attributed to fishing in the Gulf region, $11 billion to oil and $13 billion in tourism from that area. The state of Florida is totally dependent on the tourism for its revenue generation and the outlook right now does not look very pretty for the state as well as the tourism industry for the surrounding areas. Apart from this area, the government is also affected due to the negative effect the oil spill has had on the fishing industry. Affect of the spill on the stakeholders: There has been tremendous effect on many lives due to this massive oil spill. Lots of lives have been completely altered forever, let alone the marine system has suffered a damage from which it may never recover completely. Studying the response of British Petroleum, one realizes that there was a certain level on uncertainty and mix ups in the start but the company then took full responsibility of the spill. There was negligence on many parts of the organization as well as the contractors which were working for British Petroleum that led to this disaster. According to a report released by BP, they have blamed a sequential occurrence of events that has led to the catastrophe, happening due to the fumble of many other parties apart from BP. This internal report revealed that BP took responsibility for this disaster but shared it with various work teams and multiple companies working in unison on the well, one of them being Halliburton. Even the fact that the people working on the well were unable to spot an abnormality of influx of hydrocarbons in the well to raise an alarm of what was approaching; the blow out preventer failed to launch causing the biggest oil spill in the history of this area. Apart from this, the report reveals that the pressure test should not have been accepted and it was and the rig’s fire and gas system should have prevented a fire as well. All in all, there was a complete lack of operations management, negligence on part of the contractors, certain employees as well as a management failure that led to this event (BBC, 2010). The market had also reacted in the negative manner following the news of this event. Although British Petroleum was able to follow a subsequent partially successful public relations campaign later on that helped them improve their share price over time. The company’s share price was lost by 47 percent since the oil rig explosion till June 10th, 2010. They lost a lot of share value and with the compensation payments they had to make repeatedly to all the concerned parties, they lost a lot of value in terms of their share price (Quinn, 2010). This subsequently leads to the losing crucial jobs in the market however; BP did not fire people from its organization and made sure that the crisis was dealt with in the best way possible. When it comes to compensation for the stakeholders, BP has been handling the situation by compensation provisions to all the affected people. This compensation should be moral, financial and steps should be taken to ensure environmental stability and rehabilitation. Since this oil spill has affected the marine life of Gulf of Mexico, the fishermen, the tourism and much more; it is the responsibility of the company to compensate for all and make sure that such an event does not occur again. They have been doing that and families like that of the Boggs, they are able to move from one year to another, in hope of a better tourism year (CNN Money, 2011). CONCLUSION: A lot of lessons can be learned from the disaster that unfolded almost a year ago and still is to an extent is a problem for many people. In such cases, it is the job of an organization to take into account all aspects of the organization’s internal environment as well as external environment. An organization cannot exist without the ecosystem it exists in and they should by all means take the interests of the stakeholders into account before taking strategic decisions. The oil spill has not affected the primary organization, which is BP, but also all the concerned stakeholders in direct or indirect ways. They have been traumatized financially, emotionally and the marine life has faced serious threat in the past year. However, British Petroleum should be commended on working through the problem that could have brought their organization down. BP has taken major responsibility of the oil spill and continues to work for the betterment of the community, its people, the affected stakeholders etc. They have strategies for the future that will help them better communicate and respond to crisis situations (Greasley, 2006). BIBLIOGRAPHY Greasley,A. (2006) Operations management. Pp 27-28. England: John Wiley & SONS, Ltd  Harrison, A. and Hoek, R. (2008) Logistics management and strategy. 3rd edition,pp 85-86. England: Pearson  BP. (10th December, 2010) “Gulf of Mexico response”. Available from http://www.bp.com/extendedsectiongenericarticle.do?categoryId=40&contentId=7061813 [27th April 2011] Reuters. (16 July 2010). “BP Chairman apologizes to Americans for Oil Spill” Available from http://www.reuters.com/article/idUSTRE65F5IW20100617 [27th April 2011] CNN Money.com (2011) “One year after the BP spill, this family business is still reeling”. Available from http://money.cnn.com/2011/04/11/smallbusiness/bp_oil_spill_one_year_later.moneymag/index.htm [27th April 2011] BBC (2010). “BP spreads blame over oil spill. BBC”. Available from: http://www.bbc.co.uk/news/world-us-canada-11225623 [27th April 2011]  BBC (2011).”US oil spill: ‘Bad management’ led to BP disaster. BBC. Available from:http://www.bbc.co.uk/news/world-us-canada-12124830 [27th April 2011]  Quinn, J.and Mason, R., 2010. BP oil spill: Billions wiped off value BP as share price plummets. Telegraph UK. Available from http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7816623/BP-oil-spill-Billions-wiped-off-value-BP-as-share-price-plummets.html [27th April 2011] Szabo, P. (2010), BP Gulf Oil Spill- Impact on Amerca’s Enviroment and Economic. Suite101. Available from:http://www.suite101.com/content/bp-gulf-oil-spill--impact-on-americas-environment-and-economy-a246061(accessed 23rd Feb 2011)  Black, R. (2010) Gulf oil leak: Biggest ever, hut how bad. BBC. Available from  http://www.bbc.co.uk/news/science-environment-10851837(accessed 23rd Feb 2011)  Read More