Lessons Learned From the BP Disaster

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 |  Includes: BP, RIG
by: James Quinn

I’m a libertarian who believes the Austrian School of economics is the most realistic view of the financial world. The MSM scorns libertarians and tries to convince the masses that we believe in no laws, no regulations and unfettered corporate control of the economy. This is a bold faced lie used to cover-up the Keynesian failures and the fact that government and corporations are in bed together. The unholy alliance of politicians protecting corporations who bribe them and banks that create the debt to finance their promises to the masses, is how this country is run today. The lessons I’ve learned from this BP (NYSE:BP) disaster are:

  • Mega corporations with $300 billion in revenue formed by acquiring Amoco and ARCO are too unwieldy to manage by anyone. The bigger an organization gets, the more dysfunctional it becomes.
  • When you allow MBAs and their cost benefit analysis method of managing huge corporations to win out, then safety violations and fines are seen as only a cost of doing business. Proper risk management is discarded as old school.
  • When top management is driven by quarterly EPS, this attitude permeates the entire company. Middle level managers know they are being judged by the short term profitability of their projects. If they don’t hit their profit number, they will be fired or they will not get their bonus. This is why project managers on the Deepwater Horizon were in such a hurry to get this well online. Despite warnings from Transocean (NYSE:RIG) managers that they were not following proper safety procedures, the BP managers demanded speed.
  • If the executives of BP and other mega-corporations were personally liable for the damage done by their corporations, would they sacrifice safety for profits? NO. This is the same concept as the Wall Street investment banks. When they were partnerships, partners shared equally in profits and losses. When someone works for a corporation they are shielded from their excessive risk taking. The shareholders and the citizens of the U.S. get screwed.
  • The excessive pay packages of corporate executives, approved by the Board of Directors, allow executives to gamble on even greater profit making ventures. The CEOs are so disgustingly rich that they have no downside to taking excessive risks for more profits. Tony Hayward made $4.6 million last year. If he is now fired in disgrace, BP will pay him $2 million to just hit the road. No downside for an incompetent risk taking leader.
  • The response from Obama and Congress to this disaster will be more regulations, as if we didn’t already have regulations. We had the regulations. They were not enforced by the regulator. The regulator was bribed by the oil industry. Incompetent, easily manipulated bureaucrats, were bought off by BP. This is exactly what happened with Wall Street and the SEC. The regulated buy off the regulator and the American people are screwed.
  • The corrupt politicans in Washington DC pass laws and water down safety requirements for big industry because their re-election is dependent on the money from these corporations. They pass ridiculous liability limits for oil spills because the oil industry and their thousands of lobbyists have bought their votes. Right now there are thousands of bank lobbyists scurrying around Congress handing out gobs of money to gut the financial reform bill. It will work.
  • Obama’s entire Presidency was based upon Government being able to solve all of our problems. They would solve our health care problems, global warming, the economy, clean energy, and end our wars. This incident should prove beyond a shadow of a doubt that Government is completely incompetent and helpless to even plug a hole. Their $3 trillion of stimulus has accomplished nothing but pushing the country closer to bankruptcy. The healthcare fraud will destroy our national finances and provide worse care.
  • This disaster will destroy the livelihoods of millions of Americans. Do Obama and BP really care about this fact? NO. Obama is more concerned with the impact on his re-election in 2012 and whether he loses the House in November. It is only about the spin. BP has spent millions on TV commercials to make them seem caring. The only people who have benefitted are the PR maggots who created this crap.
  • Both BP and the government have continuously lied to or withheld information from the U.S. citizens. Big government and Big corporations can not be trusted to tell you the truth.
  • The fact that BP needed to drill one mile below the ocean in order to access oil should tell the American people that Peak cheap oil is a fact. All the easily accessible oil on the planet has been tapped. These sources are running out. Only difficult to access oil is left. That means prices of $5 to $10 per gallon just over the horizon.

Disclosure: No positions