Oil Spill Disaster in the Gulf of Mexico - Case Study Example

Name: Subject & Code: Tutor: Date: BP oil spill disaster in the Gulf of Mexico Introduction On 20 April 2010, fire exploded in the Gulf of Mexico engulfing the Deepwater Horizon petroleum-drilling rig. Eleven platform workers were killed and 7 others injured. The rig, that was valued at $560 million, sank almost 5,000 feet deep into the water on 22 April 2010 after burning for hours (Telegraph). As a result, extensive oil slick leaked for 9 months. Statistics indicate that more than 4.9 million oil barrels leaked before the well was contained, from 22 April to 6 Aug (UNEP). Analysts, political and environmental experts raised concerns over the amount of oil that had been spilled and the extent of damage due to the impacts of the oil to the environment. Strange’s (64b) theory of structutla poer can be used to examine how power operated in the situation, who should have been accountable, who accepted responsibility for the spill and who bore the cost of the disaster. This essay shows that shift in the balance of power from the US government to market forces contributed to confusions in the oil and gas industry that contributed to the BP oil spill disaster. Analysis of how power operated in this situation In relation to the case of BP oil spill disaster, different forms of power existed. Additionally, power was used in a range of ways. Before reaching an assumption, it is critical to examine the concept of power according to the fundamental perspectives of power. According to May (1-3) Strange’s theory of structural power can be understood in two ways. First is the instrumental sense or what the power does and second is the procedural sense, or how power does it. Hence, the concept of power at BP should be understood in terms of what it was used for and what it did. The individuals and groups that desired power in the case included the government, BP and BP’s partners (Transocean and Halliburton). The three key players sought power for different ends. While the government sought power for political ends, the BP, Transocean and Halliburton sought power for economic ends. As stated by Clegg (8), power is the production of desired or targeted effects. Clegg (8) further argued that where there are no social institutions to restrict the number of those whom power should be made possible, individuals who desire power most are those who are most likely to acquire it. Blau (117) showed that power is an attribute that exists of the taking. According to Blau (117-119), power refers to the ability of individuals or groups to enforce “their will” on others. Here, “their will” refers to the “desired or targeted effects.” Blau (119) stated that power in relationships can be described using four basic elements. These include, where will is enforced, there may be a likelihood of exacting a cost. Second, benefits are obtainable from elsewhere. Third, force can be used to obtain the desired benefits or to resist removing the benefits. Fourth, the relational benefits can be repudiated. To this end, since BP, Transocean and Halliburton wielded different kinds of power at the time; it is possible that they also contributed to the disaster to certain degrees. Susan Strange’s body of work can be used to analyse how power operated in this situation and to what extent each party contributed to the disaster (May 1-3). Susan Strange postulated that in international political economy (IPE), four dimensions exist within the structure power, namely production, security, knowledge and finance. According Strange, power means the capacity to offer protection and to create and control the authoritative means of interpreting the world. Strange’s analysis is targeted at the “market-authority nexus”, which refers to the balance of power between political authority and the market forces. Indeed, her body of work is relevant for the case of BP oil disaster as the underlying root causes depict a power swing between the market forces and political authority. Several investigations were launched to establish the root cause of the BP oil spill disaster (Dittrick 1). According to a report made by BP, blame was placed on the company itself in addition to two other companies, namely Transocean and Halliburton. The report stated that on 10 April 2010, the BP management had misread the pressure data before giving approval to the rig workers to replace drilling fluid inside the well with water (Dittrick 1). As a result, water was not heavy enough to prevent leakage of gas into the well. Consequently, the gas fired up the pipe to the rig, which resulted to the explosion. On the other hand, Transocean criticised BP for much of the decisions and the government for authorising the poor decisions. In sum, government had powers to control the market forces and to regulate industry standards. On the other hand, BP had the power to make decisions by controlling knowledge. However, it was subject to market forces. The rationale for drawing the US government into sharing the blame is based on Luke’s (16) one-dimensional view of power, which places focus on decisions made on issues that are of possible conflict of interest owing to failure to enforce policies due to some subjective preferences. This explains why BP had to incur the costs. U.S. District Judge Carl Barbier in New Orleans ruled that BP would have to pay $9.2 billion that it had agreed to pay in settlements (Feelay and Calkins 1). Authority/market bargains According to Strange, economics and politics can be unified through structural analysis of the implication of political authority on market and of market on authority (May 1-3). To this end, if economics is concerned with allocation of scarce resources and politics is concerned with providing public order, then the government can be blamed for the BP oil disaster as it had failed to bring public order through oversight of BP’s standards of operation and its readiness to authorise the decisions that BP made in reference to running the rig. Indeed, different studies have tended to argue that lack of political order results to failure of the market forces. This shows that power was a contested concept between the market forces, BP and the government. In a review of Steven Luke’s works, Swartz (3-5) explained that power is basically a “contested concept” and hence unavoidably political. Strange’s approach focused on the market-authority nexus and authority-market nexus to makes sure that the impact of structural power over the issues of such debates is acknowledged. To this end, BP and the US government should largely take the blame for the disaster. The security structure: ordering values According to Strange, the flow of security structure originates from security provision by one group to another. The individuals or groups may in process take advantage of the consumption and production of certain special rights or wealth within their society. Hence, the security structure has implications on who should get what of the economy, both nationally and internationally (Strange 8). Hence, security is a value that should be prioritised. In discussing values, Strange stated that “basic values” that individuals attempt to provide through social organisation include security, wealth, justice and freedom. In this case, the simple yet significant point varies within different societies based on the proportions through which they mix the basic values (May 6). Such arrangements result from the decisions taken within the context of self-set rules and customs. To this end, if power is for the most part described in terms of the capacity to create or upset order in a system, then security surpasses the other four values. Taking on this perspective, it can be argued that BP and Transocean can be blamed for their incapacity to create order in their management of the rig to enforce security and safety standards. Indeed, a report by the Oil Spill Commission claimed that poor management decisions by BP and Transocean could be blamed as there was an urgency to complete the well. Additionally, no safety culture was practiced at the rig (Dittrick 1). Allocation of Risk On Strange’s discussion of allocation of risk, she was particularly concerned with the risk of disaster that stemmed from allocation of bargains (May 8-9). In describing the risks of politically-defined arrangements that determine how threats to human life can be avoided, mitigated and compensated, she explained that political power within any system can be applied to avoid any risk, or to some extent shift the risk elsewhere as well as broaden the opportunities for individuals who are holding power. To this end, the issues on risk perception and risk mitigation as well as management and allocation of risks are a critical component of any risk analysis. Hence, risk is a concept that is generally unifying when it concerns examining the economic and political issues and implications. Basing on the BP oil spill disaster, analysis of risk can be probed using the question: What the risk’s origin? And most importantly: How have states and markets created the risks? The risk originated from Transocean, Halliburton and BP’s failure to enforce security standards. According to another report called “The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling,” the three companies -- Transocean, Halliburton and BP – were blamed for attempts to work more cheaply, hence used cheap materials and means to run the rig, resulting to the explosion and the subsequent 9-month leakage. According to the report, much of the decisions the three companies made heightened the risk of the Macondo blowout, which had saved the company significant amount of money and time (Dittrick 1). The US government can also be apportioned part of the blame for failing to mitigate risks. Strange explained that how the society views and manages risks is reflected by how they order values. Identification of the risks helps make out the balance between the market and authority. During the court trials, Transocean blamed government regulators for failing to make sure that the Gulf led to enhanced practices. Transocean argued that BP and the government should be blamed as the procedure that were conducted at the last few hours before the accident had been made and implemented by BP engineers after approval by the federal regulators. Production structure The production structure refers to an arrangement by the society to decide what should be produced and by which party and on what terms. Hence, production structure refers to “what creates wealth within any political economy” (May 10). To this end, when a certain social group loses power, then changes are likely to result in who should produce what and what should be organised and hence, who should benefit from the productive business. When the production methods change, a shift in the distribution and political power may follow. When the production structure changes, the nature of the state is changed. In addition, its capacities and responsibilities are changed. It is therefore argued that changes in the production structure because of market trends and state policies can change the relative significance of the factors that command greater control (May 10). Hence, it can be argued that when the US government lost its power to control the market forces, changes occurred on the US oil industry. In the case of the Deepwater Horizon in New Orleans, confusions emerged on who should produce what between BP, Transocean and Halliburton. A report released by Dittrick (2011) indicated that confusion had existed at the plan. The report suggested that BP could be partially blamed as well as Transocean, as the latter owned the rig. In reaction to the report, Halliburton and Transocean blamed BP entirely for the disaster. On the other hand, Transocean criticised BP for much of the decisions and the government for authorising the poor decisions (Dittrick 1). However, the US government report released in September 2011 claimed that BP was ultimately responsible for the spillage and that Transocean and Halliburton shared a portion of the blames. Financial structure According to Strange, the importance of financial structure has become increasingly prioritised over the last three decades and its today of critical importance in international economics relations. May argued that (10), what companies invest in the modern economy is credit rather than money and whoever can get the credit will control the economy. Hence, in any economy, the power to create credit means the capability to influence markets in production. Although the power to create credit is shared by the banks and the government depending on the regulatory and political relations, exchange rates are determined by the markets and the policies. In this case, the balance of power may shift from the government to the markets if the government has weak policies. This may result to volatility of the market (May 10-11). As a result, the sense of confusion and the weak confidence in the long-term feasibility of the global financial system may lead players in the market to use cost-cutting measures. This is what happened at in the case of BP oil disaster. The US had weak regulations that allowed the balance of power on who controls the credit to shift to the market, since the exchange rates are controlled by the markets. Unfavourable exchange rates implied that BP had to use cost-cutting measures to cut the production cost in order to sustain its ability to create credit. Indeed, a report by the White House oil spill commission blamed BP for using cost-cutting decisions, which resulted to the blowout. The report indicated that many poor decisions that had been taken at the Deepwater Horizon drilling rig were intended to save money and time (Goldenberg 1). However, according to Strange, since the power in the financial structure should lie in the authority of who creates and controls credit creation in country, then the US government should also be blamed for failure to control the provision of credit to prevent the balance of power from shifting to the market. This is since, in the first place, what caused the disorder (uncertainties and confusion in the market) lead BP and its partners to use cost-cutting measures. The Knowledge Structure In discussing knowledge structure, Strange discussed that knowledge is the most overlooked and underrate source of power since it concerns what is known, what is believed and the channels through which these believes are communicated (May 11-12). As a result, application of knowledge as power is constrained. According to Strange, power in the knowledge structure originates from the capacity to exclude knowledge and to exempt others from conveying knowledge. To this end, it should be argued that the power that originates from knowledge often stems from consent rather than coercion based on the status that emerges from power to control the knowledge. On analysis of Strange’s perceptions, it is clear that the distinction is between actions informed by information and those informed by belief (May 11). If this perspective has to be taken, then BP serves to be blamed for the disaster. For instance, investigations following the disaster revealed that BP had instituted actions that were informed by belief rather than information. An engineer at Halliburton, who specialised in designing cement for sealing the well against the leaks, had advised BP via email that 21 centralisers were needed to centre the drill pipe (Dittrick 1). He warned of the severe risks of the leak if only six devices were used, as it could lead to explosive blowout. BP overlooked the information and decided to use the six devices. To this end, it can also be argued that BP’s belief was based on luck (Fisk and Calkins 1). According to Dowding’s (207a) theory on power, some groups may be lucky as they get what they want from the society without having to act. Other groups are systematically lucky as they get their desires without trying (Dowding 305b). However, luck does not imply power, or getting what is targeted or desired. According Dowding (207a), luck is not power and it is the failure to distinguish between lack and power that results to errors in decisions. However, Transocean can also be blamed as it had failed to communicate to its employees of the risks of deepwater drilling despite having experienced a near-miss few months earlier. The US government could also be blamed for failing to use the information on BP’s practices to enforce high standards. For instance, Transocean claimed that the government regulators had failed to ensure that industry standards were enforced at the drilling rig. Transocean argued that BP and the government should be blamed as the procedures that were conducted at the last few hours before the accident had been made and implemented by BP engineers after approval by the federal regulators (UNEP 1). Halliburton’s blame on the government can be explained by Steven Luke’s perception on power. In his review of Luke’s theory on power, Lorenzi (87-89) stated that Luke’s key argument is that power should be perceived broadly and attention should be given to aspects that are least accessible through observation. According to Luke (14-19), power is viewed as the imposition of internal constraints and that those subjected to power acquire beliefs that result to their consent or adaptation through coercive or non-coercive forms. Conclusion Based on Susan Strange’s theory -- along with Luke and Dowding’s theories -- of structural power it is understood that a shift in the balance of power from the US government to the market forces contributed to confusions in the oil and gas industry that contributed to the BP oil spill disaster. As a result, the government failed to regulate the industry against possible breach of security standards and procedures. BP took advantage of the situation to use cost-cutting decisions that led to the accident. Hence, although the government could be blamed to some extent for the laxity, BP should be held accountable as the violator. It accepted responsibility and bore the cost of the disaster. Works Cited Blau, Michael. Exchange and Power in Social Life. John Wiley and Sons Inc: New York: 1964) p.117, Clegg, Stewart. Frameworks of Power. Sage: New York, 1989. Dittrick, Paula. "Report cites decisions, multiple causes for Macondo well blowout, oil spill." Oil and Gas Journal, 2011 Dowding, Keith. Encyclopedia of Power. Sage Publishers: New York, 2011a Dowding, Keith. “Resources, power and systematic luck: A response to Barry.” Politics, philosophy & economics 2.3 (2003b): 305-322 Dyrber, Torben. The Circular Structure of Power: Politics, Identity, Community. Verso: London, 1997. pp.20 Feelay, Jef and Calkins, Laurel. "Judge Rejects BP Complaint Over Proof of Economic Losses from Gulf Oil Spill." Insurance Journal, 2013 Fisk, Margaret and Calkins, Laurel. BP Gulf of Mexico Spill, From Disaster to Trial: Timeline. Bloomberg, 2013. 19 April 2014, Goldenberg, Susan. "BP cost-cutting blamed for 'avoidable' Deepwater Horizon oil spill." The Guardian, 2011. 19 April 2014, May, Christopher. “Strange Fruit: Susan Strange's Theory of Structural Power in the International Political Economy." Global Society 6.2 (1996): 1-13 Lorenzi, Maximillano. Power: A Radical View by Steven Lukes. Crossroads 2.2 (2006): 87-95 Luke, Steven. 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