Last Updated May 3, 2010 2:30 PM EDT
A drilling accident to BP is, if you'll pardon the simile, like "pouring water on drownin' man," as Ray Charles once sang about a women named Hard-Hearted Hannah. BP's previous chief executive, John Browne, had his hands full with two major accidents, the first one in Texas in 2005 when an explosion at one of its refineries killed 15 people and let to an $87 million fine for violating safety regulations.
The second came in Alaska, when corroding pipes led to a leakage that federal officials concluded was caused by bad maintenance. A $20 million fine, that one. Even if you didn't hear much about that one, you heard about the chaos it created in jittery oil markets at the time.
Browne tried to re-brand BP as "Beyond Petroleum," but you can't help but think that "Bad Planning" might be more appropriate. Other people have suggested worse alternatives.
Tony Hayward, the new BP chief executive now has to find a way out of this mess, first by plugging the well, then cleaning up the spill. Only then can he focus on rescuing his company, whose stock is plunging a mite bit faster than one of BP's drill bits.
What will that take?
The Exxon Valdez spill in 1989 ended up costing ExxonMobil more than $4.3 billion, and has become firmly embedded in popular culture as a metaphor for environmental catastrophe. That will not go away.
If the Deepwater Horizon spill helps hammer the American economy into a double-dip recession, as some fear, then BP's name will be mud for a long time, with the public and in financial markets.
If the response proves fast and effective, then expect BP -- which leased the drilling rig from a separate company but took responsibility for the spill -- to bounce back reasonably quickly. (Also expect it to feed journalists dramatic details of how it cleaned up a mess they did not create.) Wall Street will embed the costs into earnings estimates, and the public image will get a stain that will slowly fade.
If this disaster steers between those two poles, then bet on a messy spaghetti of issues, like lawsuits and federal investigations, that armies of lawyers will work on for years. (BP lawyers are apparently already at work trying to get Gulf Coast businesses to waive their right to sue in exchange for a cash settlement, though it is now backtracking.)
And while the lawyers work away, BP will, as quickly as possible, get back to drilling, refining and retailing petroleum products, exactly what got it into trouble in the first place.
Photo from NASA Goddard Photo and Video via Flickr Related:
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- Peak Oil Era: Why the Cost and Risk of Oil Exploration Will Keep Rising