The Wall Street Journal just published an article on June 29, 2010 on this thorny topic. This generally pro-business newspaper wrote a scathing expose on how cost cuttings at BP have affected its safety performance.
The paper cites an internal BP investigation that a small oil spill from a BP oil platform in 2008 was caused by a “defective pipeline pump that BP had put off repairing” in the “context of a tight cost budget.” The budget was “underestimated” resulting in “conflicting directions/demands.” Management decided that the problem with the pumps “was not in itself a cause for safety or environmental concern.” The repair was deferred until the following budget year.
The Journal reports that “after a six-month inspection of the Texas City refinery last year, OSHA hit BP with an $87 million fine, the biggest in the agency’s history. About $57 million of what OSHA describes as failure to abate hazards similar to those that caused the 2005 explosion which killed 15 people.”
It is also reported in the Journal that senior management at BP “focused on meeting performance targets, which determined bonuses for top managers and low-level workers alike.”
According to a former BP health and safety manager who was quoted in the Journal, workers had “high incentive to find shortcuts and take risks.”
The CEO of BP also spoke of “slaying two dragons at once; safety lapses that led to major accidents, including a deadly 205 Texas refinery explosions; and bloated costs that left BP lagging” Shell and Exxon Mobil.
After the small BP spill in 2008, BP’s internal report “warned of lax safety oversight and tight budgets.” As reported in the Journal, the BP report went on to conclude: “A key question to ask, especially with apparently minor and disconnected defects, is ‘what’s the worst thing that could happen?'”
I think we all know the answer to that.