BPs Tony Hayward

Commentary By Ron Beasley

In 2000 BP rolled out a new logo and if you believed the ads a new business plan - Beyond Petroleum.   BP was going to become an "energy company" not just an oil company.  It was going to invest in wind and solar power.  A high profile ad campaign started showing up on TV screens selling the new BP.  While the logo remained and the ads continued to run everything changed in 2007.

Soon after taking over in 2007, BP's newly appointed chief executive told an audience of business students at Stanford University that he thought too many people at the company were "trying to save the world". Tony Hayward's comments were intended to set the tone for his tenure at the helm of Britain's third largest company, but those words have returned to haunt him this week as BP struggles to contain one of the darkest chapters in its history.

His speech went down well. Hayward's focus on core values � on oil and gas as the only credible source of long-term profit � was a welcome relief to industry observers. His predecessor had made worrying statements about BP becoming an "energy company", able to exploit the anticipated growth in clean technology to deliver a business model suited to a carbon-constrained world. An attractive green logo had been unveiled, the words "Beyond petroleum" inserted elegantly beneath.

Fast forward to 2010, and BP's alternative energy division has been left to wither on the vine. The solar business is a distant memory and this year the company has allocated less than a billion dollars to its entire low carbon portfolio, now mainly comprised of biofuels. In contrast, the company is planning to spend 20 times this amount extracting oil and gas from increasingly unconventional sources including the tar sands of Canada.

Even the ads disappeared a few days after the explosion and collapse of the Deepwater Horizon and Tony Hayward's BP was in some serious deep water itself.

Lobbying and Astroturf

The success of this strategy relies on acquiescence by political leaders in the countries in which BP operates. Under George Bush the need for lobbying muscle was minimal, but since the arrival of a new president in the White House, BP has poured millions into Washington, mainly through third-party lobby groups. Organisations such as the American Petroleum Institute, funded in part by BP, have done the company's dirty work for them. Supposedly spontaneous citizen demonstrations against climate legislation have sprung up around the US, before journalists revealed they were actually populated by employees of the oil companies themselves. The climate bill that had, until recently, a sliver of Republican support paid a heavy price for this cross-party endorsement in terms of funding for a series of environmentally dubious projects. The most controversial concession now looks almost certain to be reconsidered � the opening up of America's coastal waters to offshore drilling.

Flawed Business Model

What BP will never admit, among their glossy corporate brochures and
extensive environmental assessments, is that its entire business model
is predicated on an ever increasing demand for oil, decades into the
future. These growth predictions rely on a world in which there is no
collective action to tackle global emissions, no concerted effort to
transfer clean technology to the developing world, and almost no chance
of maintaining anything like a stable climate.

As more oil drifts
towards the critical wetlands of the Mississippi delta, we must hope
that the more thoughtful members of BP's board will now feel obliged to
question the wisdom of a strategy that is, at its core, unchanged since
the opening decades of the 20th century.

The Wall Street Journal has an article on how the Deepwater Horizon is just the latest example of bad things resulting from years of BP of cost cutting.