The past few years have taught the world some harsh lessons. Financial conglomerates were the first in line, then it was manufacturing concerns followed by looming sovereign defaults. And now it seems its the oil and gas giants that are set to face the music.
This time around its complacency that caused the beaches of the Gulf of Mexico become oil-slicked. According to reports in the Washington Post, BP was exempted from a detailed environmental impact study by the US government. So, for President Obama to wag a finger at the oil driller isn totally justified.
That said, the fail safe procedures British Petroleum(BP) had in place, didn work as planned and oil has been gushing out at a rate of almost 20,000~30,000 barrels daily. That number has been estimated by a number of research organizations, and it has mostly been played down by officials at BP.
After three failed attempts to cap the spill and a $50 million advertising campaign to pacify the public, BPs CEO Tony Hayward and his team don seem to have any concrete solutions just yet. The share price of the company has nearly halved since the spill.
Under US regulations, companies may be fined up to $75 million for catastrophic disasters such as this one. President Obama has made clear that "BP will be made to pay for all economic costs of the disaster". UBS analysts estimate that final losses could climb up to $12 billion.
Energy experts have already started discussing the viability of offshore drilling activities, keeping in mind, the risks associated with another disaster. Regulatory oversight regarding oil production, at least in the US, is expected to grow in step with rules on banks in the aftermath of the financial crisis.
The ecological impact of the Deep Water Horizon oil spill is expected to last for years to come. More than 400 species of animals are at risk from the spill. Marine biology experts at various institutions fear the spill could spread as far as the Atlantic Ocean causing massive damage to the living environment of many thousands of animals.
By the time you read this US President Obama will have met BP Chairman to put forward American demands in front of the company, which could be very stringent.
The event has been characterised as an environmental 9/11 by Obama, who recently argued that American response should be just as swift and long lasting.
But knowing that BP paid £930 million in taxes to the UK government in 2009, and that the company and its employees have contributed nearly $3.5 million dollars in political contribution to US lawmakers, a 9/11 like response can be expected for real. Its rather Obamas Katrina.
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