yet another BP related post

You might have noticed I've been posting a post a week recently, in relation to the spill in the gulf of Mexico, and news items discussing British Petrolium. It isn't that I've been hired by BP to do media work for them. This is, after all, a nice little blog with a select few readers (an elite, naturally, but as elites go, not a numerous crowd), and no person in his sane mind, regardless of the amount of U.S Dollars he spends on compensations and oil-contamination cleaning efforts, would start giving away money to anonymous blogs.

The explanation is much simpler. As an investor, I've been interested in BP's stock for several months before the April spill. The decline of the stock presented, in my mind, a unique opportunity to buy an undervalued company (and i'm far from being a minority here), and as troubled companies shares tend to be volatile, the fact that I bought what in my mind is an amazingly cheap stock, with impressive profits in a not too distant future, did not prevent me from following closely the news items near BP.

Anyone who knows somthing about the stock market, knows that the largest gains are accumulated in a relatively few market days. It is probably impossible, despite what technical-style investors will tell you, to predict those days, and therefore, if you fear volatility, you need to keep a close track on the stock of your choice, and the news that surround it, which might send it sky-high (or rock-bottom...)

And thus I've been forced to read - on too many occasions - some of the most far-fatched opinions and analyses. People are allowing themselves to write the most illogical criticisms, as they perceive their act as a parallel to the act of kicking a dead corpse.

As I believe BP's stock would take the Well's complete shtudown, and maybe another quarterly report, before it will get back on track, I'm expected to keep bumping into such occasions, and therefore, I'm also expected to share my frustration of these opinions and analyses in future posts, and point at their flaws, illogical thinking or a plain lack of connection with reality...

And after this not-so-short introductory explanation, which was aimed at making a due disclosure of my interest in BP, and as an explanation for those who wondered about my new bizzare hobby, it is now time to start on the main dish on our plate today:

A yahoo finance piece dealing with the prospects of Anthony Hayward, BP's CEO being moved sideways or out of his role, as part of BP's reorganization efforts, preparing for the day after the seal of the spill. I don't have a problem with guessing about these prospects. In a way, it is surprising that it has taken the press so long to start speculating about this issue, considering Hayward's own complaint about his will to 'get his life back' and Obama's administration clear distrust towards Hayward.

My problem is with other bits in this article, and lets do them one by one:

Lets start with the statement regarding one of the hardships the person coming in Hayward's shoes will have to confront:

"Experts said Sunday that the new chief must also persuade thousands of employees to embrace a culture of safety that Hayward apparently failed to instill."

One can't argue that an accident has happened in that drilling rig. But no one really knows, at the moment, what caused that accident. There are rumors, tales, and partial facts running around on the loose. More than 20 years after the Exxon Valdez disaster, and the drunk captain myth is still holding ground, and this wiki-article is a fine example of the twisted logic at work of those who know who to blame before they hear the facts, and who know how to persevere with their twisted logic, despite the facts. It is possible that BP was neglectful. But considering the fact that this is a highly profitable company, operating many sites with the same magnitude of complexity and risks, as was that well, and (behold!) the great majority of these sites do not explode on the right and the left of the onlooker, another explanation comes to mind. At least to my mind: as is always the case with complex industrial accidents - too many factors came together, in a manner which is very hard for the human planner to foresee. It is very likely to assume that some form of human negligence or corporate negligence has been a factor and contributed in a way. But it does not mean that BP does not have a culture of safety. Far from it, as I've discussed in another post, BP appears to be a corporation with an impressive focus on safety. But errors take place in every form of human activity. The Japanese concept of finding the fault, not the blame, is something that the west, sadly, isn't gripping. Considering Toyota's recent behavior, it appears that instead of us westerners learning from Japan, the Japanese have embraced that horrible western habit of head-chopping, instead of fault-fixing. What the new CEO (if there will be such a CEO) or the old CEO should do, is simple: find the reasons for the accident. Currently, the regular suspects for the explision of the rig are a hydraulic leak and a failed battery in the rig's blowout preventer manufatured by cameron international corporation, but there are usually many other factors that combine with the technical ones, in complex industrial accidents. Once the reasons are analyzed, the CEO of a company is expected to improve BP's regulations and standards in such a manner that would recognize the elements of the thinking that preventing recognizing the risks that created that accident, and would make sure that in the future, such risks would be identified in advance. and this, my friends, is much harder to do, than to speak about. And it may very well be that in the end of the day, the conclusion would be sadly human and describe an unusual combination of events that are extremely hard to prepare to, and which might mean that it is either risk and drill undersea, or start getting used to life without oil...

Another annoying piece in that yahoo finance article, was -
"BP spilled as much as 184 million gallons of oil into the Gulf over 85 days. The oil has coated beaches and sensitive marshlands and fouled fisheries and wildlife habitats."
One of the most amusing habits of news items is the "spilled as much". One rarely sees the minimum estimates. Yup, I know, tragedies are not interesting if they are not great... and yet, there is a minimum estimate and a maximum estimate. and the minimum is much less than 184 million gallons. Don't get me wrong here - it takes a lot less than the amounts discussed here, to get a horrible nature disaster. And what we have in the gulf is a horrible contamination. But lets try to keep the numbers straight.

Another magnificent paragraph from that article mentioned that -
"Richard Charter, senior policy adviser for Defenders of Wildlife, says under a new CEO, BP must do more than scrub beaches. It should prepare to pay agencies to monitor turtles, whales, deep-sea coral and other threatened wildlife for at least another five years."
I don't know Mr. Charter. But it is clear from his professional description that he has a vested interest in BP's willingness to pay agencies for a prolonged period of time, in order to monitor threatened life forms. It is really strange, the way reportes and newspapers quote people, without mentioning their potential biases. It is clear that any person who makes a living out of protecting the environment, would be thrilled to get more budgets from BP. It is also clear that BP will have to finance long-term projects that aim at securing minimal damage to the environment, as a result of the leak. But that does not mean that BP will have to finance the U.S government. BP may very well choose to finance academic teams, or to establish an independent organization in that purpose.

Another amusing paragraph stated -
"BP must also deal with combative partners. Anadarko Petroleum Corp. and MOEX 2007 LLC, who could owe billions of dollars in damages, have refused to pay their share of damages so far. And the other major oil companies -- Exxon Mobil, Chevron Corp., Conoco Phillips and Shell Oil -- have accused BP of failing to follow the industry standards in operating the blown-out well."
I've searched for details regarding BP's deviation from the standards of the inudustry, and did not find specifics. Weird, isn't it ? Actually, no. All other players in the industry have a vested interest - that only BP would be found as the one to blame. The industry wishes to come unharmed from this event. The simplest way to achieve this, is to respond in a manner which presents them as operating in much better standards than those of BP... I'm not saying that they are necessarily wrong. But in order for such accusations to stand, one needs to establish the industry standards in operating deep-water wells, to know the standards of operation of BP in its deep water wells, to know the standards applied in that site, and based upon that data - to point at the reasons for the accident. The same reasons that are still not completely clear, remember ?

(and not a word regarding regulation, which theoretically guides all players in the industry to obey the same safetly rules...)

Another funny paragraph was -
"Experts also say smaller companies that invest in deep-sea projects and do contract work on the rigs will think twice before working with BP again."
And why is that exactly ? sometimes the most stupid claims are made, without the smallest attempt to tie them to reality. BP is on of the largest operators of deep sea drilling. Not working with BP is like shooting your own leg, if you are in that industry. Furthermore, now, more than ever, BP is well aware of the risks of deep-sea drilling. What company is more convenient to work with, and raise security considerations ? what company's middle management would be more attentive to security related claims than BP's ?

Is it possible that the person(s) who assembled that story, just tried to throw in everything they had, which just might sound interesting and create a nice stressful atmosphere ?


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