Corporate Values, Ethics, and Consequences

by: Dan Sullivan

Tue Jul 06, 2010 at 11:43:31 AM EDT

The failure to capture the costs of this particular unassigned risk are dramatic and, in this case, quantifiable. Further, the casual dismissal of potential responsibility and the attempt to fix it on others is transparent. Both Marine Spill Response Corporation and National Response Corporation were set up to be the fall guys in the event of a less tragic event where BP would be positioned to claim it had been misled about the capabilities, dust itself off, and carry on.

It is much more difficult to fix costs when, for instance, mountaintop removal is used to mine coal that will produce poisonous pollutants as an end product. With this oil spill, the damage is impossible to disguise and easier to assess. Other industries that create waste that will either one day have to be cleaned up or will create permanent wastelands while reaping exorbitant margins by shifting real cost are harder to indict. Consumers who enjoy the benefit of such arrangements through lower prices at the counter are just as irresponsible as the corporations. But theirs are often acts of omission while the corporations' are acts of commission.

The BP obfuscation continues in the stories of skimming efforts. While it reports that more than 671,428 barrels of oil-water mixture have been captured, they are remiss in failing to mention that 90% of the mixture is water. In the end, $20 billion may not cover making the Gulf region whole. And equally as dangerous is the prospect that BP may be the victim of a corporate raid by our close ally, Libya. Imagine if the long term cost of this spill had been included in the price of a gallon of gasoline in anticipation of risk.

Bottom line: if the true cost of oil production or coal production, or battery production, or whatever, were captured by the producers and passed to the consumers, the free market could function more closely to the ideal manner described by the Chicago acolytes. The actual cost of energy would make the green alternative dynamic and profitable in a world where truth has value.