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June 1, 2010

British Petroleum may go bankrupt

POLITICS - "In a hierarchy every employee tends to rise to his level of incompetence." - Peter's Principle.

In the case of British Petroleum, the level of incompetence is so ingrained the only competent people are probably the secretaries, the guys working in the mailroom, whomever is fetching coffee and the bicycle couriers. Everyone else working at BP is likely being paid way too much than they're actually worth.

The BP Oil Spill in the Gulf of Mexico is only the tip of the iceberg. The company has had a history of mismanagement scandals, which only recently have been brought to light because of the growing environmental problem and the criminal investigations that have barely begun.

Think Enron, but with a whole bunch of greedy oil tycoons.

Except those greedy oil tycoons are now all jumping ship. They're selling their stocks while they still can and leaving CEO Tony Hayward left out to hang for the company's crimes. To illustrate this just have a gander at BP's stocks which have dropped from $60.57 USD on April 15th to $36.52 as of June 1st.

The U.S. Justice Department is now investigating which laws have been broken. The American public is out for blood as the Gulf Coast fishing industry is being decimated as 800,000 litres of crude oil continues to pour into the Gulf every day.

"We will prosecute to the fullest extent of the law, anyone who has violated the law," says Attorney General Eric Holder. "This disaster is nothing less than a tragedy."

“My solemn pledge is that we will bring those responsible to justice,” says American President Barack Obama.

But frankly I don't see it happening. In this kind of fingerpointing farce the whole company, or at those with decision making power, should be held accountable. Otherwise it will just be pinned on 1 or 2 people in the board of directors... you know, the type of people who make decisions while taking a break on the golf course and then go back to their game. They punch a few buttons on their PDAs and then order another Scotch.

Remember the Walkerton E.coli disaster? Then Ontario Premier Mike Harris read reports that Ontario's aging water infrastructure was in poor repair and that there was likely to be an e.coli outbreak if it wasn't fixed. His solution? He downgraded water safety to the municipalities but didn't give the towns any money to help pay water safety as part of the downgrading (which is usually what is done). The municipalities in question were already strapped for cash so they ended up outsourcing water safety to privately run testing labs, which at their discretion could test or not the quality of the water any time they wanted. At the bottom of this mess was the two Koebel brothers who were told to take samples from the local water supply and send them for testing every so often. The level of incompetence was spread evenly between Mike Harris, the town council, the private testing lab and the two Koebel brothers. Guess which people took all the blame? The Koebel brothers. Mike Harris on the other hand, the man who made the initial decision not to fix the problem, got away scot free.

We can easily speculate that the level of incompetence at British Petroleum worked pretty much the same way. BP didn't bother to invest much in oil rig safety. The US government, which regulates these things, either wasn't paying attention or the safety investigator(s) were bribed / misinformed / failed to do their job. The workers on the oil rig (outsourced from Dick Cheney's old company Halliburton) ignored safety protocols. A fire broke out. An explosion. Kaboom! The oil rig is ripped from its moorings, the oil pipeline going down a mile under water is shredded into pieces and the oil starts gushing from the ragged chunk of pipe lying on the floor of the Gulf of Mexico.

Then to make matters worse BP's methods of plugging the hole are designed (get this) not to plug it, but an effort to salvage the oil well so that they can continue to make a profit off it. They could have sealed it completely a month ago, but instead the company has become obsessed with salvaging it in an effort to make a profit.

They've also had the option to direct supertankers to the region to help in the cleanup process. Supertankers are equipped with vacuum equipment which allows them to suck oil off the surface of the water, filter the oil and store it. But BP hasn't sent any supertankers to the region. Instead BP has all its supertankers busy transporting oil from other oil rigs so they can keep making a profit while the oil spill just gets worse.

Oh and lest we forget the disperants they've been spraying into the oil slick. Its a toxic chemical which causes the oil to temporarily sink to the bottom. Its a botox solution meant to make BP look good so the oil slick doesn't look so bad on camera.

BP isn't the only company in trouble either. Halliburton and Transocean Ltd. are also down the creek without a paddle. Their recent losses on the stock market are just a tidbit of whats to come when the bill for this trillion dollar disaster eventually has to be paid. Don't be surprised if BP and other involved companies find themselves so indebted they become forced out of business or just plain sold off in pieces to their competitors.

Criminal charges, bankruptcy, lawsuits from the families of the 11 workers killed in the explosion, lawsuits from the fishing industry, the cost of the cleanup, the cost of actually finding a way to stop the well from gushing...

I daresay BP stock is probably only good for wiping your backside with.

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