BP Fought Life-Saving Safety Equipment in TX - and Probably Lost Money Doing So

Yesterday's Financial Times ran a front page story of how BP lobbied against Texas regulators demanding additional environmental equipment and monitoring that would have saved at least some of the lives lost in the 2005 Texas City refinery explosion. (Sorry, no free link.)

According to the FT story, "The US Chemical Safety Board said the upgrade would have prevented - or at least mitigated - the blast that killed 15 and injured 500." Even BP's group vice-president for exploration and production said in his May 2005 report on the accident that adopting the additional environmental protections would have "reduced the severity of the incident."

Why did the company work hard - and even give someone a $1,000 bonus for the successful fight? Because the changes would have run an estimated $150 million. Instead, the company is bound to face law suits from the injured and the families of the dead - with negligence now in court room play. Combine that with the bad publicity and any effect on stock price, and I suspect that $150 million would have been the cheap way out.

Too often businesses scream that they want public policy based on risk analysis - and yet few companies are proficient at the practice themselves. Analysis only extends to costs that the company might avoid, not additional costs that will come up when something goes drastically wrong. It's a foolish practice and in the end actually costs shareholders unnecessarily. Will the company learn from this? I doubt it; few companies, as people, ever seem to learn anything.