BP plc (NYSE: BP) is continuing to destroy the Gulf of Mexico even as the clean-up efforts are underway. The “Boycott BP” group is continuing to gather steam. It is understandable. … But before pulling out the executioner’s blade and going for the kill, members of these groups need to consider that a boycott today may only make a dreadful situation into something worse. This is of course not going to be pleasant, but there will be plenty of time to hammer this out after the spill is contained and the real environmental clean-up starts.
The “BOYCOTTbp” group on Facebook lists on its Info Page “Boycott BP stations. BP brands to boycott include Castrol, Arco, Aral, am/pm, Amoco, and Wild Bean Cafe, Safeway gas.” It also lists (as of mid-day) “437,243 People Like This” and shows 3,769 fan photos and 23,494 links.
The disaster has become very political as well, which is an admitted understatement of the year. There are abour 8 different Washington D.C. BP-related hearings this weekl. President Obama has been criticized by some and praised by others over his handling of the BP disaster as John Tamny of Forbes noted in “BP Isn’t Obama’s Crisis, Katrina Shouldn’t Have Been Bush’s.”
There are calls for BP to cut the dividend…. CNBC ran a survey, and it was surprising how many felt that BP should cut the dividend even though many of these pundits might support payouts of dividends at all costs. The decision on the dividend is still a matter of unfinished business even if politicians are demanding that dividends not be paid out.
BP started a brand-image campaign, although it has already been criticized for spending money on that rather than on the clean-up. Remember that any company even a fraction the size of BP would be doing a damage-control (no pun intended) campaign.
BP has said publicly that it will assume all responsibility for the damage, but it is a safe bet that suits will go on for years and that there are going to be many who claim that BP has ignored them. Will the fishermen be reimbursed for their lost business? And their workers for their lost wages? What about seafood restaurants and sushi bars? And what about the lost tourism to the beachfront areas when they were supposed to benefit from the recession easing?
An offshore new-project drilling moratorium has been proposed. While it is an obvious reaction, there are many safe drilling projects which are now being inadvertently thrown into the fire here. It is arguable about what this will do to the jobs and economic spending which would have been tied to those jobs and projects. Still, an outright ban on anything new? Is that Gulf of Mexico ban going to do anything to help get America off of its addiction to foreign oil or help ease the price of oil?
There is a small problem in cutting BP off today with global consumer boycotts. No one will care about BP’s profitability, particularly since BP is not even an American company. But imagine if BP suddenly finds itself in a position that it is losing money to the point where it could not fund the clean-up. While it had $8.3 billion in cash and equivalents at the end of 2009 and another $37.9 billion in long-term investments, the company also had $59.32 billion in short-term liabilities and all liabilities after long-term debt were $134.35 billion. Even with the insurance and even if BP can prove ultimately that its partners are partly responsible as well, calculating the ultimate costs of this disaster are becoming as as difficult as determining how much oil is coming out of the well today. The obvious answer is “billions, and billions…”
And should management at BP be fired? We do not have any solid figures over how many employees or managers are already out on an official basis, and before this over there will be many more which “are asked to leave” their jobs. It is probably a safe bet that CEO Tony Hayward is going to have an extremely difficult time keeping his job after this disaster is fixed, even if Hayward has said he won’t leave. There were deaths in this accident, and it is impossible to rule out jail time for at least some people if gross negligence is found. The time for firings will come, but those with the knowledge of a possible fix (inside and outside of BP) who are involved should stay on the job until the leak is under control.
It can always be argued that BP was perhaps green-washing, but BP has one of the largest solar companies in the world. It has 35 years of experience and installations in over 160 countries and claims over 2,200 employees in the BP Solar unit. We have a list of potential alternative energy winners from the disaster here, and it is going to take to see if these companies can adequately use this disaster to their advantage.
Even questioning a BP-boycott today is admittedly going to sound like the wife beater’s defense to many. It is not meant that way. This is a disaster which will affect all of us, possibly for years in some cases. And it affects all of us who enjoy things like clean water, clean beaches, a clean environment, and those of us who prefer not to eat contaminated fish.
In an integrated global economy which we all live in now, there are consequences for all actions. There is just no such thing as a static event, even in the heat of the moment.
JON C. OGG