Everyday we awaken to more disheartening news about the BP oil spill. BP executives attempt to appear sympathetic about this disaster, saying that they will "make it right". A common theme is emerging: initially, BP executives describe things in the most positive light, stating "minimal effect on the environment" and later: "Now that the cap is in place, a trickle of oil remains"".
BP Oil Spill Flickr etiennecoutu's photostream
Then external observers, including scientists and engineers, provide a very different assessment. The initial flow rate was far more than that initially described by BP, and the amount of oil "trickling" from the cap is hardly a trickle more akin to periodic geysers.
Blame is being assigned broadly, to BP itself to federal regulators to President Obama. The "$75 million liability limit" has been given much attention; now it is recognized that liability and damages will likely be in the billion dollar range.
BP's CEO has indicated that they will pay investors well over $10 billion this year in dividends for shares in the company, so a $1 billion penalty would be a relative "slap on the wrist" in response to this environmental disaster.
I keep thinking about the oil that has been recovered from the spill and how much can be recovered in the future. BP has reported that 14,800 barrels were recovered on June 7, and that proceeds from the sale of the captured oil will be donated to a new wildlife fund. This gesture may be well intentioned, but the impact will likely be minimal. At $72 per barrel, the recovered oil on June 7 represents a bit over $1.0 million.
Corporations must be profit-driven in order to survive and thrive, to be able to reward their investors and they must evolve to respond to changing markets and consumer needs. Instead of using a "stick" as a response to this disaster, why not use a "carrot"? In my opinion, this recovered oil is the most valuable oil in the world. If released into the environment, the cost is far beyond financial value; the dispersed oil taxes our future through lost jobs, public health risks and unborn wildlife. If BP viewed recovery of this oil as a means towards increasing profits, it is likely that they will invest more resources into efficient recovery and in accomplishing the recovery as quickly as possible.
As a consumer, how much would you pay for the recovered oil? Perhaps this precious commodity could be offered for bidding to the highest payer. Imagine a bidding war amongst the world's most wealthy individuals, with the prize being to not only claim that you are driving the recovery of the environment in the Gulf, but are a major player in driving profits of BP itself and the petroleum industry. Ultimately, BP could use these additional profits to support environmental preservation and research into alternative renewal energy sources. Yes, BP does invest in alternative fuels, but use of these profits would have special significance.
This approach may seem radical, but our economy is replete with examples of highly sought-after commodities garnering huge profits. We know that commodities can have a vast range of value, depending upon availability and emotion of the buyer. Consider unique pieces of art, that highly rated bottle of wine from a bygone era, that collectible automobile. The oil from a land-locked safely secured well may be considered as a "two buck Chuck" bottle of wine, but recovered oil from the BP spill is comparatively a $2,000 bottle of Mouton Rothschild.
Who would like to make the opening bid?