BP: in very Deepwater, but not drowning yet

If you were looking for a suitable image to convey what a crisis in reputation looks and smells like, you could scarcely do better than this. Hundreds of thousands of barrels of sticky crude oil leeching daily into the Gulf of Mexico, and washing up week after week on the shores of the country that is still the world’s biggest power, ruining people’s livelihoods along with the coastal environment and sending American politicians into apoplexy. The clever tagline that BP devised a few years ago to position itself as part of the new, sustainable future now looks like a bad joke. Far from being ‘beyond petroleum’, the company may now be about to drown in it.
Or so the conventional wisdom goes. What chance does BP have of emerging from the current crisis?
There’s a case for saying that, once the flow of oil has been staunched and the immediate crisis has passed – easier said than done, apparently - the company has a reasonable chance of returning to some semblance of business as usual. BP is a colossal company – the world’s fourth biggest – and its many other operations across the world continue to earn it healthy profits, particularly in an era of high oil prices. Unlike a company producing consumer goods, whose market appeal might be fatally damaged by an incident of this scale, consumers have limited scope to boycott BP’s products, even if they wanted to. Most of BP’s revenue is from its upstream rather than downstream business, in contrast to some of its competitors, and it’s hard to see how the drive to ensure BP covers the full cost of cleanup and compensation would be served by turning off its funding tap.
And there is some reason to believe the effect on its reputation may not be as seismic as has been suggested. BP has faced other problems – the Texas City oil refinery explosion killed 15 back in 2005, and corrosion problems in an Alaskan pipeline caused a spill of an estimated million barrels of oil there in 2006. But when GlobeScan tested awareness of these incidernts among UK and US consumers at the time, we found that most had not heard of them; those that had tended to feel BP were doing a reasonable job in trying to resolve them and – critically – the great majority did not feel that their respect for BP had been damaged as a result.
Of course, the scale of the current disaster dwarfs those two accidents, and together with the BP leadership’s hapless media performances this may mean that all bets are off. But it’s worth considering this: for many years, our data has shown that the oil companies across the board are not popular corporate citizens, and accidents like this are a major reason why. Deepwater Horizon may be a stark reminder of the price we pay for our collective addiction to oil, but for now, there’s no obvious alternative to hand. That, for now, may be enough to save BP’s skin.