In Conversation with Antonia Juhasz
Five years later, the Gulf of Mexico is struggling to recover from the BP disaster, and the oil companies appear to have learned very little, author says.
Antonia Juhasz was already on the oil beat well before the 2010 Deepwater Horizon blowout. Her 2006 book, The Bu$h Agenda: Invading the World, One Economy at a Time, shined a spotlight on corporate globalization, with a particular focus on the oil industry. In 2009, she wrote The Tyranny of Oil: the World’s Most Powerful Industry – And What We Must Do to Stop It. So when BP’s Macondo well blew out in April 2010, Juhasz was uniquely situated to cover, and stick with the story. In 2011, she published Black Tide: the Devastating Impact of the Gulf Oil Spill. Last year, she was the only journalist to accompany researchers in a submarine to check on the deep-sea site of the spill. I spoke with Juhasz for the radio program Making Contact on May 31 – three weeks before the fifth anniversary of the Deepwater Horizon disaster.
Andrew Stelzer: So, we're speaking just about five years after the Gulf Coast BP spill. Paint a picture for us. How’s it look down there environmentally, and also in terms of the human and economic impact? Has the area recovered?
Antonia Juhasz: The area certainly hasn't recovered. It’s hard to paint one picture, though, of the Gulf of Mexico. I think most people don't appreciate how big of an area we're talking about: five states, the ninth largest body of water on the planet, an enormous economically diverse and rich area, a hugely populated area of people and wildlife. And so there’s sort of every impact that you can imagine.
photo by David Rencher, on Flickr
There are areas of extreme economic devastation, extreme environmental devastation, places where the amount of oysters that come in from the dock is 75 percent less than it was before the oil spill; communities of fisher-folk that haven't recovered at all or are just gone from the Gulf of Mexico; people in areas with extreme human health consequences. And then there are areas that are recovering, that are economically recovered, and people whose health has recovered.
You can go and see beautiful beaches. You can also go and see beaches with oil tarballs. Basically, you've got BP’s oil stuck in many places of the Gulf of Mexico. You've got a blanket of oil on the bottom of the ocean. You've got oil that’s floating around in the sort of shallow waters, and some of it is these huge tar mats that get broken up by the waves. Pieces of the tar mats come to shore, particularly during storm season, and during storm season you often see huge mats that come to shore. Just recently, 25,000 pounds of BP’s tar mats was being picked up off of beaches in Louisiana. That’s sand mixed with oil. So, that’s there, and the beautiful beaches are there.
We'll probably, just like with the Exxon Valdez, for decades still be trying to pick up the pieces and understand the consequences. And just like Exxon Valdez, they will be devastating for decades. But it doesn't mean that people shouldn't go to Alaska. It doesn't mean that people aren't still living in Alaska, and it doesn't mean that people shouldn't appreciate the Gulf of Mexico. So, I think that both the trauma and the ongoing trauma of the disaster are important to look at, and the reality that this is still a beautiful part of the United States are important to keep in mind.
In that partial recovery, how has BP done in terms of making things right, making people whole, cleaning up the natural habitat, both through their own goodwill and also being forced to through legal means and lawsuits?
How has BP done? So, one very good thing that happened was that in the wake of the Valdez, there was a new piece of legislation passed. That’s something that we haven't done, basically at all, except for one piece of legislation since the Deepwater Horizon disaster. Something called the Oil Pollution Act was passed in the wake of the Valdez, and the Oil Pollution Act required, for the first time, that the polluter had to pay. And BP had a lot of requirements put on it that made it so that the company had to be in charge of cleanup, of stopping the blowout at the source of the disaster, had to be ready to do lots of things. It wasn't ready to do most of those things, but it was required to do a lot of things it wouldn't have otherwise done. So, it did have to do cleanup, and it has had to pay economic benefits to some people.
That said, BP has also fought every step of the way. It’s fought the economic settlement that it agreed to all the way to the Supreme Court. There is a really historic change that happened, which was that BP was forced to agree to a human health benefit settlement which acknowledged that exposure to oil and exposure to the dispersants does have human health consequences. Two hundred thousand people were eligible for that settlement, but BP has fought very aggressively against that settlement after signing it. So, 200,000 people were eligible. Only 10,000 people have even put in an application. Of that, 148 have received payment, which is shocking. After the amount of time that I've spent in the Gulf witnessing the extreme human health consequences, and years after reporting on extreme human health consequences, to see that nobody is benefiting, essentially, from that really historic agreement to reach a settlement is shocking.
And, in addition, BP has certainly argued with the finding of scientists of ongoing environmental and human health and economic consequences of the spill. Fortunately there are legal proceedings that should hold BP to account, one of which is the Natural Resources Damage Assessment, which is something that we got out of the Oil Pollution Act, which is that there has to be an assessment taken of every impact on natural resources: what damage has happened, and what money is needed to make them whole. That assessment is still underway, and when that’s over, BP is definitely going to be forced to pay many billions of dollars.
photo by EPI2oh, on Flickr
Also, because of the release of the largest offshore oil spill in world history – what most people would argue is five million gallons of oil – BP has to pay a fine under the Clean Water Act for that amount of oil released. In the legal proceedings that are underway in New Orleans, which have been going on for five years, the judge, Judge Carl Barbier, first found that BP was grossly negligent in causing the blowout, and that both Halliburton and Transocean, which are two of the largest energy services companies in the world, were both negligent. It found that BP was putting profit above all else, was trying to look out for time, look out for money, and was not adhering to the many other things that it is required to do under federal regulations, which is to protect its employees, the environment, to make sure that things don't blow up, and it didn't do that. So, that was a good finding. But then, most recently, the judge found that BP wasn't grossly negligent in everything that came after. Basically, that it wasn't grossly negligent in its inability to stop the blowout, in the way that it handled the oil spill, and its lack of preparation or planning for either of those two events, which is just a terrible finding from my perspective.
What that did was, it first made it that there’s no opportunity for punitive damages, and it opens the way for the judge to have more leeway in his determination of actually how much BP’s fine could be. The government was arguing for an $18 billion fine, and that is how it should be. That’s a per-barrel of oil spilled fine that amounts to the highest rate that BP could be exposed to. Now that the judge has ruled that BP wasn't grossly negligent in all of the post-blowout activities, that fine could go down immeasurably. The only amount of money that judge is required to fine BP is $140,000 total, which is as low as it could go. I would be completely floored if that actually happened, but that’s the only regulatory requirement. So, somewhere between $18 billion and $140,000 is where the judge is going to land. These recent rulings make me very concerned that it’s going to be significantly lower than what it should be.
And what about BP’s public image? They were suffering for a while there. We remember the Spillcam, the live cam of oil spewing under the ocean. The company’s CEO stepped down. Since then, what have they done, PR-wise, to help build their image back up, and do you think it’s worked?
BP has had a lot of commercials, constant commercials on television saying that everything’s great in the Gulf and showing pictures of sunny beaches, and white beaches, and healthy sea life and people frolicking. Part of that was actually required of the company, which is that they were required to help with renewing tourism in the Gulf States, but the majority of it was PR. And those commercials, believe me, very much aggravate most people in the Gulf who are looking out and seeing tarballs, and no more oysters, and no more fish, and no more fishing communities, and contaminated seafood, and then they see commercials for everything back to normal on the Gulf of Mexico.
I don't think BP has succeeded in saving its image, but I do think that it has succeeded in convincing most of the public that everything’s back to normal on the Gulf of Mexico, and that they did the best that they could, and that it’s well past time to move on. And I think most people moved on fairly quickly in the United States from this disaster, at least mentally. Obviously, the country physically hasn't recovered.
But in terms of things like BP’s share price, it still isn't back to where it was before the oil spill. Dividends per share are still not back to where they were. It’s had a huge sell-off of its assets, about $38 billion already, and it has another $10 billion planned. [The] amount of oil that it’s been producing each year has declined dramatically because of the sell-off of assets. It’s historically already had a big problem with what’s called its “reserve for placement ration,” which is how much it has in reserves versus how much it’s producing. Its reserves have been fairly low [in comparison to what] it produces, and what that looks like when you're looking at the company is that they don't have a lot of oil in the future, and so you're not going to be as interested in them as a company. That was a problem even before the disaster, which was actually one of the reasons why then-CEO Tony Hayward was so aggressively going after oil anywhere, everywhere, under all circumstances no matter what it took, and that’s what drove him so deep into the Gulf of Mexico, making risky, terrible decisions, and it’s one of the reasons – only one – of why the disaster happened, and that hasn't changed.
So there’s a lot of rumors that have been swirling that BP could be a takeover target. Those rumors have been swirling for years, but now it looks way more likely because just this year, in the most recent reportings, BP’s profits completely collapsed as a result of reduced production and a collapse in the price of oil. And the rumors that have been swirling most recently are Exxon is a potential buyer of BP, which would just be tragic, the combination of that much power. BP is still – all of those numbers that I just gave you [notwithstanding] – as of last year, it was the fifth largest corporation on the planet. It’s an enormous corporation. It, before this year’s collapse, had made $23 billion in profits. Before this year’s collapse, almost $400 billion in revenue. This is a huge corporation. So if you combine that with Exxon, which is itself an enormous corporation, that is very worrisome. I certainly don't think a solution is to have BP bought by Exxon. The company, maybe like the Gulf itself, continues to suffer in many ways and is recovered in many ways.
So, talking about the size of BP, the company is not just in the Gulf Coast. I know there was a spill in Lake Michigan in 2014. Going back to before the Gulf Coast spill, a spill in Alaska in 2006, and an explosion in Texas in 2005. What’s the company’s global environmental reputation at the moment? I'm sure that plays into the company’s value and its reputation.
It’s that string of disasters that you named: the BP Texas City Refinery disaster, which killed 15 workers and injured another 180 people was the worst domestic refinery incident in US history, which was then followed just a few years later by the Deepwater Horizon, the worst oil spill in world history. Those incidents in Alaska and others have continued to demonstrate the failures of this company, and have continued to damage its name. And, again, those are among the reasons why it’s been talked about as a takeover target for so long.
But at the end of the day, unfortunately, when it comes to investors in a company, they seem to continue to just look at the bottom line, and the company does still make money. And its political power still remains just seemingly untarnished.
[BP is] like one of those companies that never dies, and it’s part and parcel to the oil industry as a whole. We have giant companies that have been giants for 100 years. One of the reasons why they become so big is that they're the spawns of Standard Oil. One of the reasons why BP is so large in the United States is because it entered the US by buying Amoco and ARCO, which are both themselves post-breakup companies of Standard Oil, just like Exxon and Mobil are the two largest post-breakup pieces of Standard Oil, which are now ExxonMobil. You know, we're sort of just watching this slow re-conjoining of the Standard Oil beast, and that size brings with it enormous political power which enables a company like BP to just keep getting contracts, keep finding new places to produce in spite of the problems that it causes.
BP is back in the Gulf of Mexico. They never stopped. One of the very first new leases signed after the Deepwater Horizon disaster was for BP. They have more rigs operating in the Gulf now than they did before the disaster. They're also partnering with every other company, and of course, BP has its own unique power behind it, which is the British government. It’s no longer a British company, but it still very much has that relationship to the British government and history with the British government, and that helps it just stay even after all these terrible incidents.
But it’s also, obviously, not unique in the oil sector for causing horrible accidents and horrible disasters. So, you know, it gets to just, in some ways, shrug off the problems by saying: this is just a cost of doing business in the oil sector, which is that we're going to cause horrible disasters, and they're right.
And their size obviously allows them to influence regulators as well. How has the federal government and the state of Louisiana done in terms of holding BP accountable? And has there been any sort of changed approach to regulating offshore drilling or other aspects of the oil industry, or is this just going to happen again?
BP’s political influence is certainly exercised within the United States as well through its political contributions and political weight. There’s been basically no change in regulations in the offshore drilling industry. I would say that the attitude of the Obama administration is different from the attitude of the Bush administration. There’s definitely a greater attempt to hold the companies in check. There’s been an increase in the number of investigators that are assigned to check the rigs than there was before. The administration did a good thing, which was separating out the agency that collected money from offshore drilling from that which regulates them, which is good. It has created a whole new set of regulatory agencies that oversee the industry, but that’s really it in terms of substance, in terms of all the things that we know went wrong, among them being that it wasn't just BP that didn't know what to do in the wake of the disaster.
None of the oil companies operating in the Gulf knew what to do. They were all sitting around the same table, and none of them knew what to do. None of them had planned. None of them had prepared. None of them had the right equipment. They all knew that a blowout was the worst thing that could happen, and they all planned, in their papers, for a blowout that was potentially three times larger than what actually happened, yet they also didn't have anything to do about it. They knew it could happen. They knew it would be big. They knew it would be bad, but there was nothing to prevent it, nothing to stop it, nothing to clean it up, and the regulators didn't make them either, and that’s still the case.
One of the things we learned is that the blowout preventer – which is a very aptly named piece of equipment that’s supposed to stop a blowout – basically doesn't work. They work like 50 percent of the time. That seems to me not an acceptable amount of risk, but that’s still the same piece of equipment that we're using, and not only that, but the regulators aren't overseeing it appropriately. So, what happened in the BP case is the blowout preventer, which only works 50 percent of the time, is supposed to be checked every five years. The Deepwater Horizon blowout preventer had been out for ten years and hadn't been checked once, and it ran out of batteries. That’s what happened. It ran out of batteries, and so it couldn't close. I mean, it’s just unbelievable.
The good news is we have more regulators. Now, hopefully, what they will do is actually write some regulations that they can enforce that will stop this from happening. But I don't have a lot of faith with that. So deep-water drilling has always been very dangerous and risky, but they're just going further and further out. You know, wherever there is oil is where they will go, and they're going hundreds of miles further out into the Gulf and thousands of feet deeper. And I am convinced that they're not any better prepared to deal with that offshore drilling as they are with the drilling that’s closer in to shore, and they're certainly not prepared for the enormous uncertainties related to that level of increased risk. And we haven't required regulations to hold them into check, and we're not giving regulators [the power] to deal with it, either.
None of this is worth the risk, particularly when we're at a stage in history where we're being told, very clearly, at a minimum, three-fourths of all fossil fuels need to stay in the ground if we're going to avoid the worst climate crisis. Given that knowledge, shouldn't we put the most ridiculously risky forms of extracting oil off the table? And while we're still dependent on it, stick to the stuff we actually know how to do?
So what, if anything, do you think BP and the oil industry at large has learned from Deepwater Horizon? Optimistically, we might think they're going to get serious about safety, transparency, risk assessment, environment. I hear you saying that they haven't changed their emergency plans. But what do you think they have learned?
I have no idea. I know that a lot of other companies use BP as a foil to say what you don't want to do in the case of a disaster from a PR perspective, and I see it referred to a lot there, that they learned not to talk to the press like Tony Hayward did, to say things like, you know, "I want my life back, too." Great, that’s nice for them, I suppose. I've seen that as a lesson. And I think in terms of PR, one of the worst lessons was actually the one that was learned by Exxon in the wake of the Valdez. I write about this in Tyranny of Oil. There were court documents that showed tapes of Exxon officials standing on the beaches and saying, “I don't care what you get out here, but you need to get something out here so that it looks like we're doing something. You need to get people cleaning rocks. You need to just get stuff out here. Whether it does anything good or not, we need to show a response.”
And a lot of what BP did that was actually wrong was attempts to meet that type of requirement. Just look like we're doing something. So, as opposed to having the equipment they needed to actually stop the blowout, people might remember these things that just seemed so ridiculous – “top hats” and “junk shots,” when they were throwing pieces of tire onto the blowing-out oil well. Everyone looked at it and said, “This seems completely ridiculous.” Well, it was completely ridiculous, and they knew it was, too. There was way too much oil for the things that they were trying to do.
The things they were trying to do had never been tried at that depth before. Basically, everyone knew it would fail, but they risked the lives of the workers who were involved, they spent lots of money, they threatened the environment or harmed the environment to just show they were doing something. So, I think the lesson we need to learn is: If we don't regulate them to actually prove that they have the capacity to actually do the things that they say they can do on paper, we're just asking for these – not only real nightmares, the real disaster itself, but then the PR mess, and that what our regulations currently amount to, really, is little more than a promise to do the right thing, rather than the actual proof that you can. Because I think we know that if we required the proof that they can do the right thing, they won't be able to come up with it, and we would have to say: you can't do it. And that’s something, currently, our regulators don't want to do, and certainly the companies don't want us to do.
photo by David Rencher, on Flickr
We have to get over, collectively as a nation, this myth that we've been under since the Reagan administration – which is that regulation is a bad thing. We desperately need good regulation, and regulation costs money. You have to pay for it. You have to pay for regulators. You have to pay for oversight, and we have to be willing to spend money on the government’s capacity to regulate these companies. That’s a lesson I hope we've learned.
When I look at the oil industry and its operations, frankly, I see very little change. I see very little lessons learned. Because if you think about all the talk of lessons learned that happened after the Texas City Refinery disaster, after the Alaska oil spill, BP’s Alaska Pipeline oil spill, it’s the same language that BP is saying now, in terms of new focus on safety, new focus on training. These are all things that were supposed to have happened after each other incident, and I don't see a change. I don't see a change in their practices.
And what about the press? How do you feel the media has done in following this over the last five years? It was all over [the BP story] until the well was capped, and then … How do you think the press has followed this?
One of the problems with press coverage is that one of the best outlets doing the greatest coverage was The Times-Picayune newspaper in New Orleans, which has been stripped almost out of existence like a similar trend across the media. And there’s a reason why we need local news. This is a really good example of it: an outlet on the ground every day that cares about this disaster, that cares about the people, that cares about the environment, writing amazing work, and they basically almost no longer exist. They're still doing some coverage but they've shrunk from what they were, and that’s a tragic loss. And I think our ability to see the constant coverage that needs to happen to really understand that this is a still unfolding disaster suffers enormously because of that lack of press coverage, local press coverage in particular.
The national media attention, which was actually very good – there was very good coverage from The New York Times, from major outlets that were doing very good investigative work – was short lived. And that has reinforced BP’s very strongly desired approach to this problem, which is that it’s long since over, and without that constant media scrutiny to say maybe it isn't, and in fact, it is not, the public is given a disservice.
There’s going to be a movie coming out starring Mark Wahlberg based on a New York Times series of stories, which I understand is going to look at what happened on the rig, the actual explosion of the rig. And I hope that’s good, because those 36 hours were horrific. Eleven men died, many were injured. It was a real embodiment of what this type of deep, deep offshore drilling really entails. Maybe we'll get a great Hollywood film that will remind people that this is a tragedy, and maybe we'll get a great Hollywood film that will make people think twice about President Obama’s recent proposal to open up offshore drilling off the coast of the Atlantic for the first time in history when they see what it really looks like when a rig explodes at sea. So maybe Mark Wahlberg is our hope for the future. I leave you with that thought.
This interview has been edited for clarity and length.