Oil spill is BP's wake-up call

As more oil drifts towards the Mississippi delta, we must hope that BP questions its future dependence on fossil fuels

John Sauven, The Guardian

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.

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.

As officials in Louisiana begin to face the reality of the spill that has now reached their fragile coastline, many will be asking if BP did everything in its power to prevent this kind of accident. Reports this week suggest that last year a senior BP executive lobbied against mandatory safety codes for offshore drilling, arguing that the regulation would be too onerous and would slow down the construction of new rigs. Industry pressure had the desired effect, but it will be up to accident investigators to decide if a code could have helped avoid the initial explosion last week.

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.