BP plc--Rebuilding A Safety Structure In An Unsafe World

The oil industry apparently did not learn much from the Exxon Valdez spill, the Ixtoc 1 Oil Well catastrophe of 1979, the Amoco Cadiz disaster off Brittany in 1978. And perhaps there is nothing to be learned.

BP plc’s (NYSE: BP) new CEO Bob Dudley said what he had to say. BP has a new commitment to safety. It was the same commitment that Tony Hayward made when he took over from hapless Lord Browne in 2007.

The oil industry, like all major industrial and mechanically driven sectors, is subject to grave error leading to tragic mine collapses, bridge catastrophes, and airline crashes. Car recalls, which have effected millions of vehicles this year, fall into a similar category

BP’s problem is as simple as it is insoluble. A company passes rules and regulations to tens of thousands, and perhaps hundreds of thousands of workers. Their compliance is inspected, but not often because of the cost involved. The number of working parts on an oil rig or a jet plane numbers in the thousands. Many parts are prone to great stresses, some of which are hard to detect until they fail.

It is painful to admit components used in dangerous work are  flawed and that work done in dangerous situations is frequently careless. But human nature is not subject to any realistic regulation. Neither are the occasional desires to put risk over profit. In that way, it is not a terrible stretch to say, that flying, drilling, and mining are not entirely different from trading financial instruments or investing. Regulations have had limited effects on Wall St. Risk follows risk from generation to generation. The clever find ways around rules and laws.

None of this is to say that a system which is regulation-less and subject to ungoverned anarchy is an alternative. Rules and laws clearly mitigate the number and severity of accidents.  Otherwise, airlines might be able  to run planes flown by poorly trained pilots. The federal government is vigilant about the aviation industry’s practices, but the system is flawed because it is run by people and is subject to errors in oversight that can compound those of the regulated entities.

BP can promise that safety is among its foremost values, but there will be another oil spill disaster, another airplane crash, and another bridge collapse. Risk is often unseen and unpredictable until it is too late and that is why it is risk. Judgments and care are simply too imperfect.

Douglas A. McIntyre