British Petroleum, now known as BP, is a multinational oil and gas company headquartered in London, England. On March 23, 2005, a series of massive explosions devastated one of its largest refineries located in Texas City. The blast was so powerful that it rattled windows in downtown Galveston, which is 20 miles away and even felt in Houston that is 35 miles distant. Reports indicated that the explosion caused the death of 15 people and injured well over 150 others; many were seriously burned.
A spokesperson from BP addressed the media, explaining that the explosion occurred while an isomerization unit of the plant was being brought back to full production after undergoing annual inspection and repair (Hosmer, 49). As families mourned their losses, BP pledged to conduct a long and intensive investigation to determine the cause of the explosion (Hosmer, 49). However, these promises were cut short when accounts of prior problems at BP refineries began to surface.
Reports have revealed that a year prior to the most recent explosion at the Texas refinery’s processing unit, another blast occurred. Although there were no deaths or injuries, an investigation by the U.S Occupational Safety and Health Administration (OSHA) indicated violations of 14 standard operating procedures. Additionally, just a week before the Texas City explosion, BP settled a large lawsuit alleging that they had failed to properly maintain huge storage tanks and falsified maintenance records for those same tanks.
In September of 2005, a report was released that found hundreds of safety violations related to the venting system at the isomerization unit. The report indicated that the venting system was not functioning properly. This report was far more condemning than previous ones. As a result of this discovery, OSHA imposed a probationary period on BP. During this time, BP had to request permission from the agency before starting up old isomerization units, report all accidents and injuries, and hire outside professionals to review all refinery safety programs and procedures.
BP accepted wider responsibilities as a result of these findings and planned to spend over $1 billion on improving maintenance procedures.
However, the credibility of the company started to decline when another study revealed that the same isomerization tower responsible for leaking flammable gases and causing the deadly March 23 explosion had leaked those same gases eight times before (Hosmer, 59). Two whistleblowers came forward with separate accounts that helped OSHA conclude that BP’s lack of maintenance and worker training was a result of their continual demands to reduce fixed costs. Senior officials at BP denied these allegations.
Stakeholder Analysis
In a case involving environmental destruction, fines, lawsuits, and most importantly, the loss of human life; a wide variety of stakeholders are affected. The primary social stakeholder is British Petroleum (BP), consisting of all its officials and executive members. As the party being sued for the massive explosion at the Texas City refinery, BP has a tremendous amount at stake in this case.
BP has a significant interest in this situation because their reputation and profits are at stake due to the ongoing lawsuits and investigations. Additionally, they hold considerable power as they have complete authority and funding to maintain their production facilities and train their staff adequately. Based on the typology of stakeholder attributes, it is evident that BP possesses high power, high legitimacy, high urgency, and close proximity in this case.
As mentioned earlier, BP holds a significant amount of power because their decisions are the root cause of the problem. The fact that BP is the defendant in all its major lawsuits and has so much at stake gives it high legitimacy. Moreover, the situation for BP is urgent as most of their facility is damaged and unable to generate any profits for the company. BP also has close proximity to the case, with their facility and management located at the explosion site.
All of these characteristics prove BP to be a definitive stakeholder that can be harmed through bad publicity, countless lawsuits, fines and investigations, damage to its multi-billion dollar refinery, and loss of profits. The only possible benefit for BP in this pool of harms is the opportunity to rebuild the refinery with new, safer technology that abides by standard operating procedures. BP claims that the massive explosion resulted from highly complicated chemical processes and even places blame on its employees for operational mistakes.
The government agency OSHA imposes their legal right to a probationary period on BP and its operations, despite BP’s belief that they are not at fault. BP is denied the right to appeal for a shorter probationary period as the delay of proper maintenance is confirmed as the cause of the destruction (csb.gov”).
Additionally, the explosion at the Texas City BP refinery has had a significant impact on employees and managers of the facility. Many have lost their lives or suffered life-threatening injuries.
Due to the explosion, the health and well-being of these workers are in jeopardy. As a result, their interest in the situation is very high. Additionally, they are unable to earn wages to support their families. These employees have limited power since they cannot control BP’s decisions on maintaining their facilities properly. Consequently, both employees and managers at the BP refinery have low power but high legitimacy and urgency due to their close proximity to the case.
To further explain, the measure of low power for these individuals is a result of their position on the BP ladder. They simply carry out orders enforced by BP officials, such as cutting costs by 25 percent (Hosmer, 53), without paying much attention to consequences. Additionally, they possess high legitimacy with their lives and employment at stake. Their urgency is also high since they are unable to earn wages and must resort to external sources of income to provide for their loved ones. Furthermore, those injured in the incident must seek medical attention urgently.
Lastly, the employees work and reside in close proximity to the facility that has been damaged by the blast. This combination of attributes deems them dependent stakeholders, reliant on BP officials to carry out their will. These members of the case have virtually no benefit from the explosion. Due to dangerous working conditions and BP’s high expenditures on the explosion, they are at risk of injury or death and potential job loss.
Prior to the accident, these stakeholders were denied the legal right to an adequate training regime. This may have been a factor in the blast, as stated in an interim report issued by BP (Hosmer, 50). Additionally, the workers of BP were also denied their legal right to a union, further highlighting their lack of power and independence in this case. Finally, another stakeholder affected by the massive blast at the BP refinery is the U.S. Government – specifically, the federal agency OSHA (Occupational Safety and Health Administration).
Unlike other stakeholders, this secondary social stakeholder has a more indirect public or special interest stake in the case. The Occupational Safety and Health Administration (OSHA) has significant power and interest as it is responsible for ensuring that BP’s business practices align with standard operating procedures and provide safe work environments for citizens. This secondary stakeholder can also be classified as a definitive stakeholder due to its high power, legitimacy, urgency, and close proximity to the case.
What is the complete moral problem surrounding the practices of BP and their responsibility for the explosion that resulted in loss of human life and mass environmental damage, and how is it being addressed by the OSHA and U.S. government through lawsuits, fines, investigations, probationary periods, and other measures to prevent future incidents?
The OSHA has been granted tremendous power to enforce production requirements on BP until they meet proper safety standards. The U.S. government has close proximity to the accident and all key stakeholders involved in the case. While positive involvement from OSHA may benefit their public image, it could also decrease other countries’ investing interests. Through legal action and media attention, the amoral actions of BP have been brought to light with a conclusion that regular maintenance could have prevented such a disaster.
- Is it ethically permissible for the BP Company to ignore and delay maintenance requirements of their Texas City refinery, given that:
- The massive explosion caused 15 deaths and over 150 life-threatening injuries.
- The employees, managers, local communities, and environment are placed in a volatile situation.
- It is one of the largest refineries located in the United States.
- BP settled a large lawsuit claiming that it had failed to properly maintain huge storage tanks and improperly falsified maintenance records for those storage tanks a week prior to the explosion (Hosmer, 50).
- The same isomerization tower that leaked flammable gases to cause the March 23 explosion had leaked those same gases eight times before.
- A blast had occurred at the same gas processing unit of Texas City refinery a year prior to the March 23 explosion.
- They were charged millions of dollars by OSHA after finding hundreds of alleged safety violations in their facility.
They falsely pledged to conduct a long and intensive investigation” to determine the cause of the explosion (Hosmer,49).
They were attempting to reduce expenses by 25 percent after realizing an after-tax profit of $15.7 billion. What is the moral dilemma? According to Hosmer (55), a moral dilemma arises when a company’s financial performance conflicts with its social performance. In other words, a moral problem can occur when a business prioritizes profit and financial gain over the needs and rights of its stakeholders. These situations arise when certain individuals or groups, such as employees and customers, are negatively impacted while others benefit.
When considering the issue involving the explosion at the Texas City refinery, it is clear that BP disregards the rights of its employees, managers, and local communities by continually operating rusty, unsafe, and unmaintained systems” (Wolf). This decision is made to cut costs and reap a greater financial reward. There is a direct relationship between those who have been harmed and denied their rights compared to those who benefit and profit from this decision. This ultimately creates a conflict between financial and social performance. Therefore, this issue is a moral one. Specifically, the moral issue present in this case involves both a violation of justice and rights.
Regarding justice, the Occupational Safety and Health Administration (OSHA), a branch of the U.S. government, confirms that BP has violated fourteen standard operating procedures and hundreds of other safety regulations. Additionally, one week before the explosion, BP settled a significant lawsuit in California where it admitted to failing to properly maintain storage tanks and falsifying maintenance records for those tanks. By neglecting maintenance, BP is breaking federal law to increase profits while putting others at risk. Two whistleblowers have come forward revealing that senior officials ordered BP managers to cut costs by 25 percent (Hosmer 53).
This is simply unfair for parties with close proximity to the case, such as refinery staff, as they are unable to maintain a facility that they know is dangerous due to interrelated valves, controls, tanks, flares and alarms” that were found not to be working properly (Hosmer 50). BP has violated several positive legal rights and laws. For example, BP initially placed blame for the Texas City explosion on its workers’ “operational and supervisory mistakes” (Hosmer 50), thereby violating the positive legal right to adequate employee training. Furthermore, these very individuals working inside the BP refinery are denied the positive legal right to a safe working environment. The massive blast was determined to be a result of BP’s ignorance of necessary repairs.
BP is responsible for violating their employees’ positive legal right to work and provide for their families. This case involves rights and justice, making it a moral problem. To determine the economic outcomes, the concept of Pareto Optimality is key. Pareto Optimality refers to a condition in which society’s scarce resources are being used efficiently by producing firms, and goods and services are being distributed effectively by competitive markets. It would be impossible to make any single person better off without harming another person (Hosmer, 27).
In order to achieve Pareto Optimality, all markets must be competitive, and all customers and suppliers must be informed while including all costs. However, in the case of BP’s Texas City refinery, the condition that states all internal and external costs must be included is violated. BP fails to recognize the costs necessary to maintain their facility which resulted in a massive explosion on March 23. For instance, when it was discovered that the same isomerization tower had leaked flammable gases eight times before causing the explosion; all costs to repair the facility were ignored, and operations were continued as normal.
In addition, BP fails to include the costs associated with the loss of employee wages caused by the destruction of the refinery and the costs of tarnishing the health reputation of local communities. While BP does recognize the costs to mitigate their environmental impact and compensate for all victims, such expenditures only represent a small fraction of the total social and environmental damage caused by their operations. Furthermore, not all customers and suppliers are informed about BP’s practices, which means they are in violation of another Pareto Optimality condition. Hosmer explains that all parties must be knowledgeable about the features of products and standards of companies” (Hosmer, 8).
BP does not disclose all information regarding their products and standards. In fact, they generate corrupt documents in the process. This was evident when BP attempted to conceal a large California lawsuit in which they pleaded guilty to not properly maintaining and falsifying the maintenance reports of huge storage tanks (dol.gov). Without all necessary information, parties cannot make rational choices or express true preferences. In this situation, we cannot take action that will generate the greatest profit for the company because it will definitely not generate the greatest benefit for society since all costs are not included and all information is not available.
This moral problem cannot be solved economically or by applying Pareto Optimality because human well-being is still being jeopardized for marginal profit to BP, even when an after-tax profit of $15.7 billion is realized.
Consider the Legal Requirements. The law in a democratic society is the minimum collective standard that we hold people accountable to. In this case, the laws that must be obeyed by BP and its operations are the United States government regulations imposed on petroleum industries. In the time leading up to and following the devastating explosion, BP has failed to comply with a significant number of legal requirements. In 2004, BP was cited for 14 alleged violations of standard operating procedures at their Texas City refinery.
In September 2005, seven months after the explosion central to this case, OSHA found hundreds of safety violations that it called egregious and willful” (Hosmer, 50). BP not only violated their legal operational rights but also denied their staff the legal right to a safe work environment. Since the outbreak of BP’s actions, the U.S government has been active in ensuring that all legal requirements are met. Following the September 2005 report, OSHA levied a record-size fine of $21.4 million on BP and imposed a three-year probationary period during which BP had to request permission from the agency before starting up old refinery units and report all accidents and injuries, regardless of cause, to the agency regularly (Hosmer, 51).
Although the OSHA was able to bring about some positive change, there are still problems with the law relevant to this case. Initially, the aforementioned government agency lacked adequate information to impose necessary regulations upon BP that would force them to maintain their facilities properly. BP was falsifying their maintenance reports and managing to stay clear of the media. It was not until a series of in-depth investigations after the Texas City incident that OSHA was able to reveal the company’s maintenance fraud. The legal information observed in this case tends to lag behind necessary regulations and moral standards of society, proving that the law is flawed by lengthy delays.
Simply obeying the law will not solve the moral problem due to missing adequate information and lengthy delays. When human well-being is being jeopardized, the government’s action after investigating the cause is not up to par with society’s needs. In 2006, BP caused the largest oil spill on the North Slope of Alaska” because their major pipeline “was found to have been poorly maintained, badly rusted, and requiring total replacement” (Hosmer, 52), despite federal regulations in place. BP operates against the law even though they possess adequate information on their social and environmental consequences.
The government regulations, such as the $21 million fine observed in this case, are much more a minor matter for BP, [who] had reported an after-tax profit of $15.7 billion” (Hosmer, 50). Thus, the law cannot be used to solve this moral problem since BP is both lawful and immoral. To propose a solution to such a moral dilemma, it is crucial to evaluate the ethical duties of BP and the various ethical theories that apply.
Firstly, the principle of Personal Virtues comes into play. It implies that one should “never take any decision or action that is not open, honest and truthful and one that you would feel proud to see widely reported” (Hosmer, 99). It is clear that BP’s actions have directly violated this principle.
The decision by BP to knowingly delay maintenance of their problematic facility without informing key stakeholders is not transparent. Additionally, BP settled a lawsuit in which they falsified maintenance records for storage tanks, indicating dishonesty. The management of the refinery and other key stakeholders have not been open, honest or truthful in their actions and decisions. This is evident in two whistleblowing cases where a manager of the Texas City refinery claimed he was ordered to cut costs by 25 percent in early 2005, and another BP executive was directed to keep maintenance expenditures low.
It is clear that BP did not want the leaked information widely reported since both of these members of the BP Company were “laid off” following the press release. Therefore, BP violates the principle of Personal Virtues. Moving on, the theory of Utilitarian Benefits takes an instrumental approach by assigning costs and benefits to an outcome. It states that one should “never take any decision or action that does not generate greater benefits than harms for the society of which you are a part” (Hosmer, 99).
Based on the classical version of theory, actions are judged solely in terms of their consequences. BP is in serious violation due to their decision to ignore maintenance requirements and operate under dangerous circumstances. This decision led to a massive blast that had virtually no benefits for society, other than providing BP with an opportunity to rebuild a safer, more secure facility. However, this benefit is very minute and can only be assigned a score of 4 out of 10.
On the other hand, the aforementioned decision created numerous harms to society such as 15 deaths and over 170 injuries; major environmental damage; loss of jobs and much more. These outcomes are of significant importance and should be assigned higher values such as 10,8 and 7 out of 10 respectively.
Adding up the scores for benefits and harms clearly shows that the harms outweigh the benefits. Therefore, there is overwhelming evidence to infer that the Utilitarian Benefits principle has been violated.
Furthermore, the principle of Universal Duties implies that one should never take any decision or action that they would not be willing to see others, faced with the same or a closely similar situation, be free and even encouraged to take” (Hosmer, 99). In the case of BP, their actions directly defy the categorical imperative of the Universalizability Principle. This principle implies that one should act only according to the maxim they are willing to universalize. If BP were to universalize their behavior of ignoring maintenance requirements in oil refineries or disregarding employee safety and well-being, several catastrophic industrial incidents could occur causing deaths, injuries, environmental damage and an overall decrease in quality of life.
In fact, universalizing this behavior would be self-defeating as the lack of clean water and resources would hinder the growth of petroleum industries. When examining the Respect version of the categorical imperative, it becomes clear that BP is once again in violation. The principle explains how one should always use humans “as an end and never as a means only” (Hosmer, 96). The BP Company uses their employees merely as a means to an end by ordering them to carry out duties within the refinery. Given the numerous risks present in the workplace, workers are treated as objects with very little care and value, useful only in achieving company goals. BP does not abide by both aspects of the categorical imperative; therefore, it violates the Universal Duties principle.
Another ethical duty worth evaluating is the principle of Distributive Justice. This theory states that moral standards are based on the primacy of a single value: justice. It suggests that everyone should act to ensure a more equitable distribution of benefits and burdens” because this promotes individual self-respect, which is essential for cooperation (Hosmer, 100). Unlike other theories, this one is hypothetical and teleological.
If we were to conduct a thought experiment by imagining ourselves in the original position behind the veil of ignorance, it becomes clear that BP’s actions violate the Difference principle. Behind the veil of ignorance, we are unaware of our socioeconomic status.
However, we find ourselves in the original position, which means that we are interested in our own success as well as the success of those whom we care about. Therefore, we would like benefits and burdens to be distributed equitably since we do not know which party we belong to. The least advantaged members of society include workers at the BP refinery who earn low wages for their labor and take orders from BP managers and senior officials. With BP’s decision to ignore gas leaks, rusty pipelines, and delay future maintenance of their refinery, high proximity employees are placed in a very volatile situation where they may encounter life-threatening injuries or death.
BP’s actions fail to benefit the least advantaged members of society, which is unfair. Consequently, BP is not fulfilling their moral duty. Moreover, delaying maintenance not only destroys the BP refinery but also fails to provide workers with increased employment opportunities (or any employment at all). Therefore, the social and economic inequalities created by BP’s amoral actions cannot be justified.
A thought experiment reveals that an equitable distribution of benefits and burdens should benefit the least advantaged members of society. The final ethical duty is Contributive Liberty or Libertarianism.
According to the theory, moral standards are based on the primacy of a single value: liberty. It suggests that everyone should act to ensure greater freedom of choice” as it promotes market exchange, which is essential for social productivity (Hosmer, 100). However, applying this theory reveals that BP’s actions violate this principle. The explosion at the facility violates the negative rights of some stakeholders such as employees who are unable to work and earn wages due to the dangerous facility lacking maintenance repairs. Additionally, they are not ensured greater freedom of choice because they must follow management’s instructions despite seeing flaws in the refinery. Similarly, management is also denied freedom as they are ordered to “cut costs by 25 percent” or risk losing their positions.
BP is liable for the massive blast that shut down the supply of BP petroleum and gas products, ultimately obstructing efficient market exchange and violating the principle of Contributive Liberty by suppressing the freedom of these two stakeholders.
After determining the economic outcomes, considering legal requirements, and evaluating ethical duties, it is appropriate to propose a solution to BP’s moral problem. My recommendation is to make its most disadvantaged stakeholders better off and implement an ‘Employee Workplace Evaluation Program’ as part of BP’s regular operations. It is important to note that this case has already been legally resolved through BP being sued, fined, and placed on probationary period; however, it does not help the moral situation as law cannot solve anything morally.
BP is already mitigating its environmental impact through financial compensation, but my solution involves them starting by personally apologizing to each and every family they have harmed through the explosion of the refinery. Next, BP needs to work with local communities to provide long-term healthcare, food, and other services to those families that have either lost a loved one or suffered an injury that affects their ability to earn. In my opinion, this is the least a multi-billion dollar oil corporation can do to begin righting its amoral actions.
The second step in my solution entails BP implementing an Employee Workplace Evaluation Program (EWEP) with oversight from government authorities such as OSHA.
This will provide workers inside BP facilities with an opportunity to report on various aspects of their job, such as the safety of equipment, specific work instructions from their boss, and any hazardous occurrences (regardless of magnitude), all of which are relevant to the cause of the March 23 explosion. By using an EWEP, all information is openly available, honest and truthful from the employee’s perspective, thus conforming to the principle of Personal Virtues. The solution also holds true for Utilitarian Benefits as helping families recover from devastation and ensuring future employee safety greatly outweighs any potential harms. Finally, by providing employees with freedom of speech, BP can align with the principle of Contributive Liberty and create more secure and productive work environments.
