But just how socially responsible is BP? The question has come into stark relief following a series of environmental and safety lapses and, as of this week, Federal charges of price-fixing which have muddied up the company's carefully cultivated image. In March, BP’s Exploration Alaska subsidiary spilled more than 200,000 gallons of crude oil near Prudhoe Bay, the largest North Slope spill ever. A Federal grand jury is investigating the spill, caused by a rupture in a corroded pipeline, and may bring criminal charges. BP has denied that it acted negligently regarding the spill.
BP’s safety record is also under fire. U.S. regulators are investigating BP's Texas operations, following a 2005 explosion at a refinery in Texas City that killed 15 people and injured more than 170. BP agreed to pay a $21.4 million fine in a partial settlement with Federal regulators. And in April, the U.S. Labor Department fined BP $2.4 million for safety violations at another refinery in Ohio; in a sharp rebuke, a U.S. Labor Department official stated that BP had “failed to learn from the lessons of Texas City.” BP is contesting that fine, but in the wake of the the Texas City refinery explosion, it is cooperating with U.S. authorities investigating the incident, has appointed an independent panel to review safety management systems and has taken steps to improve safety at refineries.
Which brings us to the latest black eye: charges that a BP unit manipulated propane prices in February 2004 to drive up prices and score a quick $20 million profit. According to a lawsuit filed in a Chicago federal court by the U.S. Commodity Futures Trading Commission, BP traders tried to corner the market for propane “with the knowledge, advice and consent of senior management.” This wasn’t the first time BP has been accused of price fixing. In 2003, the company paid a $2.5 million penalty to the New York Mercantile Exchange to settle charges of improper crude-oil trading (the firm didn’t admit or deny wrongdoing). BP has since fired some employees involved in the alleged propane scheme, though it maintains that “market manipulation did not occur,” and has vowed to fight the charges in court. Prevailing in the case could prove tough, however, since a former BP trader has pled guilty and is cooperating with prosecutors.
It's never a good time, of course, to be accused of price-fixing. But BP can especially not afford it now. Every month of record gas prices brings more pressure on Congress to impose a windfall tax on oil companies. BP’s chief executive, Lord John Browne, made a relatively modest $8.24 million last year, but his counterpart at Exxon-Mobil, Lee Raymond, retired with a package worth an astonishing $400 million adding more fuel to the fire over CEO pay and calls for oil industry profits to be reined in. While BP isn’t lobbying for drilling in the Arctic National Wildlife Refuge, the company has big plans to expand in North America; it aims to invest $37 billion over the next decade, including refinery expansions, increased exploration and production in the deep-water Gulf of Mexico and development of a liquefied natural gas terminal. “They have more to lose in North America than any other company,” says Fadel Gheit, an oil analyst with Oppenheimer & Co. “They cannot afford to do wrong.”
So is it time to point the finger at BP and call its environmentally conscious image campaign a greenwash? If nothing else, the company’s mishaps or missteps suggest that its activities merit more scrutiny from consumers and regulators alike. While hard to quantify, BP may well be reaping untold sales as a result of its green image, as consumers choose its gas over Exxon’s, whose image is still tainted by the Valdez disaster.
But it’s also worth putting BP’s transgressions, alleged or otherwise, in context. No other integrated oil company certainly none with $285 billion in sales has made a bigger commitment to alternative energy, cutting greenhouse gases and educating the public about conservation. Compared to Exxon, which still doesn’t support regulation of greenhouse gases, BP deserves high marks.
“They’re very public about their commitments and the big picture is real,” says Mindy Lubber, head of Ceres, a nonprofit that ranks corporate environmental programs. That may be small consolation when you’re shelling out for $3 gas. But in the oil business, as they say, it’s a start.