Thursday, May 27, 2010

Oily Conundrum

It's a conundrum. Plain and simple. The question is easy to ask. The answer, at first blush, seems quite obvious. There is either black or there is white. But if you ponder the issues only a little bit more deeply, you will see that what is at stake is really so much bigger. I have in mind the deceptive image of an iceberg. The part that you see above the water is only a small fraction of the total mass that lies lurking and hidden beneath the icy breakers.

The question centers on how the fourth largest company in the world should approach a major disaster for which they are responsible. Just over a month ago, a sudden, catastrophic explosion occurred on an oil rig called the Deepwater Horizon in the Gulf of Mexico, only 40 miles from the Louisiana coastline. In the end, 11 men had lost their lives. The pump lines, damaged in the sinking of the superstructure, started to hemmorhage several million gallons of crude oil per day into the clear waters of the Gulf. The oil has the potential for destroying hundreds upon hundreds of miles of coastline, with the loss of income for ten of thousands of families, and resulting in the ruination of several ancient ecosystems with an impact that will be felt for the next 50 years.

Blame seems to be the first issue to establish. That big evil corporation of course. From their side, it seems the problem is directly connected with money. The oil company that owns the equipment is trying to find a way to stem the emergent oil while perserving the remaining oil at the sight and minimizing costs. It's also about saving corporate face, market share, stock holder's value. The global ramifications associated with such a market giant shuddering or crumbling or enduring can be nontrivial. In fact, if the executives don't play this "game" carefully, the global market impact can easily dwarf the losses incurred by the fishermen and the industries relying on tourism in the local area.

Over the past month, several very public, but seemingly tepid attempts have been made to limit the damage. All have failed. Since the first moments of the accident and catastrophe, the legal wranglings sprung up and the extremist finger pointing and blame volleys between the company, the U.S. government, and the general public have been non-stop. There is a lot at stake here on many different levels. What may be in the best interests of the local communities that are affected are not necessarily what is in the best interest of the company in the long run. How should this situation play out to minimize the overall damage and impact and loss and ruin? Quite a conundrum.