Discuss about the Deep Water Horizon Oil Spill.
In this article a complete adamantine study has been prepared over the deep water horizon oil spill and how BP along with government agencies prepared plans for eliminating the bad impact of deep water horizon oil spill. BP being a British petroleum unit and third largest energy company in world has been providing oil and gas services. It is evaluated and analyzed all the financial statement of BP that all the assistance and cost incurred by the BP for providing assistance to the injured people and their family are charged that tax deductible amount. This process has resulted into high amount of tax saving throughout the time for BP organization. Other factors such as evaluation of key issues of deep water horizon oil spill and associate factors that has resulted into legitimate claims of injured persons other assistance provide by BP along with other agencies. Apart from that in order to curb the loss aroused form the exposure BP has opened up an escrow account accompanied with more than US $ 20 billion amount. But it is stated that short amount is not sufficient enough to recap all liabilities arisen from the explosion (Kolian,et., al., . 2015).
This oil spill has been caused by massive spill on the horizon oil platform about 50 miles southwest of the Mississippi river delta. However, this explosion has helped BP to develop various safeguard against uncertain liabilities. Throughout the time it is identified that BP has history of misconduct stated with the facts (health and safety violation resulted into explosion in Texas and got 30 people killed in same incident and then this deep water horizon oil spill incident). this article has shown various strategies and tactical plans which are set up to establish effective ecosystem services around the Gulf of Mexico to curb the negative impact of BP oil business function. However, it is also observed that US government has observed that BP was the main company for this incident and should be accountable for all cleanup costs resulting from the oil spill. BP has made vigorous efforts and invested $ 360 million fund in its research and development department to identity the impact of Gulf Maxico oil spill and its related responses on marine and shoreline ecosystem. This ecosystem has been incorporated or established by government so that possible efforts could be made to reduce the major incident rate e.g. massive explosion on the Deep-water horizon offshore oil spill and drilling explosion. However, there were various eco- system cost amount between $ 12 to 47 $ billion per years which was engaged for providing eco- system services in Mississippi river delta. Courts and other department are considering and evaluating loss of Deep-water horizon offshore oil to determine the penalties that could be imposed against BP (Lazarus, 2016).
BP has reflected all the possible impact of Deep-water horizon offshore oil spill on its financial performance and charged all the losses from its taxable income. But it has been used by the BP to charge this losses amount form its profit in order to save tax in determined approach. However, this limited amount of disclosure by BP does not reflect the true picture of financial, environmental and social implication of Deep-water horizon offshore oil spill. In practical, governments and other department are also facing big problem in rigorously measure lost eco system resulted from the massive explosion. There are various imperative data shown in “analysis of replacement cost profit before interest and tax sheet” which reflects that BP in its second quarter is having $ 17150 million loss which is arose mainly due to replacement cost and payment of tax on the same. This has resulted into very bad impact on the business functioning of BP and no availability of return to its stock holders. In addition, negative amount of outcome reduce the value of money they have invested in BP. Yet company has not shown in amount of charges and penalties in its balance sheet expect from those which are strict in nature. Therefore, it could be reflected by grasping an eye on the balance sheet that company has not prepared any provision and other balances for covering its contingent liabilities. However, BP has argued on this point on the basis that penalties and other charges could not be quantified and there is no time limit within which it will be imposed.
BP and other government authorities have failed to identify the complete loss of massive destruction of this Deep-water horizon offshore oil spill. But it is considered notably that BP had agreed to provide fund up to $ 500 million for a 10 years research program for evaluating the influence of the Gulf of Mexico oil spill and its associated responses on the marine and shoreline ecosystem. In addition, government has also been preparing various process systems to quantify the losses of Deep-water horizon offshore oil spill so that it could impose penalties and fines on BP. It is the fact that replacement cost associated with implementing new plants and machinery could not be same as benefits. BP and Transocean Ltd are implementing plans and procedure to establish new plans and machinery but the cost associated with it can be less or more from the expected benefit of the same (Sammarco., et., al., 2013).
Penalties and other fines are uncertain amount which will be charged against BP and Transocean Ltd. Therefore BP has opened up an escrow account for arranging resources to pay off its future uncertain liabilities. Presently BP has maintained USD 20 billion escrow account by sale of US assets. This escrow account will be accountated to satisfy legitimate claims enalties imposed on BP. However, BP has been using money help in escrow account in development functions of ecosystem related with Gulf Cost claims facility(GCCF).
The explosion of Deep-water horizon offshore oil spill has resulted into loss of several people lives. The risk of uncertain incident and environmental exposure relating to possible future oil spill rendered more strengthen oil and gas activities in US. This explosion has resulted into negative impact on cash flow statement, comparative position , shareholder returns and implementation of strategic agenda. However, BP and Transocean have indulged in developing various research and development department for curbing such incidents. It is also required to avoid overexploitation and extremities issues The ultimate result of destruction of this Deep-water horizon offshore oil spill is that all the companies including BP and Transocean Ltd are making efforts in establishment of proper safeguard to avoid social wealth loss. There is various developed supported ecosystem which is used to clean up beaches in Louisiana and other countries (Kolian, et., al., 2015).
After analyzing the article it is observed that BP should indulge in following these theories for its business functioning.
This theory is an economic theory which is followed to interlink the wealth of stakeholders with the development of business. BP has used this interest theory and developed various ecosystem in Gulf Maxico to increase the sustainability of its business functioning and increase the social welfare. In addition, various regulators and government has motivated companies to implement eco system to reduce the bad loss to society.
This theory states for the greatest good for the greatest number of people. BP has suffered various losses and damage in its brand image due to the massive destruction of Deep-water horizon offshore oil spill. There are following stakeholders who have been affected by the value chain activities of BP (Mori, 2015).
BP results into harm of stakeholders through physical contact, respiration and absorption due to oil and other by products coming out of refinery system. Apart from the massive destruction of oil spill, dilution of oil in water by marine, animals has shown organ damage, ulceration, lowered immune system, skin irritation and change in their behavior (Kiruri, et., al., 2013).
BP and other companies who are engaged in same field have their own right to earn profit and to do business legally. However, as per the Kant’s theory affected people have right to live in a clean environment and curb such companies to emit less by products in social environment. BP has followed Kant’s theory approach to certain extent and indulges in investment for development of effective ecosystem to reduce the bad impact of oil spill.
In this article it is observed that BP cannot identify certain amount of penalties and fines imposed by government. BP could easily present its case before the judiciary system and pay all its possible liabilities to win the trust of general public with a view to avoid this uncertainty. BP should also increase the security system and indulge in improving new ecosystem. However, quantify the amount of this losses might be very hard task but BP could ask government to determine the full and final amount of penalty so that it could start its new business with fresh image (Sammarco., et., al., 2013).
The BP should react immediately by developing a mechanism to seek effective methods to collect spilled oil and reduce the bad impact of oil in column of water (BOND, 2013).
BP should improve the image of company by developing effective eco system plant under its corporate social responsibilities. Other plans and recommendation could be described as below
Conclusion
In this report the ecological and economic impacts of deep water horizon oil spill has been discussed to quantify its positive and negative outcomes. It is identified by reviewing article that BP has been suffering with damage in its brand image due to Deep-water horizon offshore oil spill. However, company should pay off estimated amount of penalties and fines in order to recreate its brand image. It is also observed that BP and other entities in similar filed have invested in development of eco system for the betterment and sustainability of society. Now in the end it would be said that BP should make efforts to reduce the bad impact of its oil spills and create compensation mechanisms for solving grievances of injured people.
References
Bodkin, C.D., Amato, L.H. & Amato, C.H. 2015, “The influence of green advertising during a corporate disaster”, Corporate Communications: An International Journal, vol. 20, no. 3, pp. 256-275.
BOND, D. 2013, “GOVERNING DISASTER: The Political Life of the Environment during the BP Oil Spill“, Cultural Anthropology, vol. 28, no. 4, pp. 694-715.
Fernández Ríos, L. & Buela Casal, G. 2009, “Standards for the preparation and writing of Psychology review articles”, International journal of clinical and health psychology, vol. 9, no. 2, pp. 329-344.
Kiruri, L.W., Dellinger, B. & Lomnicki, S. 2013, “Tar balls from Deep Water Horizon oil spill: environmentally persistent free radicals (EPFR) formation during crude weathering”, Environmental science & technology, vol. 47, no. 9, pp. 4220.
Kolian, S.R., Porter, S.A., Sammarco, P.W., Birkholz, D., Cake Jr, E.W. & Subra, W.A. 2015, “Oil in the Gulf of Mexico after the capping of the BP/Deepwater Horizon Mississippi Canyon (MC-252) well”, Environmental Science and Pollution Research, vol. 22, no. 16, pp. 12073-12082.
Lazarus, N.W. 2016, “A COUNTY-LEVEL RISK ASSESSMENT OF THE DEEP WATER HORIZON OIL SPILL IN THE GULF OF MEXICO”, Geographical Review, vol. 106, no. 3, pp. 360-380.
Mori, O. 2015, “Axiomatic theories of utilitarianism and weak utilitarianism”, Economics Letters, vol. 137, pp. 59-61.
Sammarco, P.W., Kolian, S.R., Warby, R.A.F., Bouldin, J.L., Subra, W.A. & Porter, S.A. 2013, “Distribution and concentrations of petroleum hydrocarbons associated with the BP/Deepwater Horizon Oil Spill, Gulf of Mexico”, Marine pollution bulletin, vol. 73, no. 1, pp. 129-143.
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