It should not surprise anyone that BP, along with many other energy companies, is struggling with the unprecedented drop in oil prices. Oil prices, at this time in 2014, were steady at $100 per barrel. At press time, the prices are drifting slightly above $30. BP recently reported in its fourth-quarter earnings report that the firm’s earnings had dropped 91 percent, from $2.2 billion in the same quarter last year to $196 million this year. CEO Bob Dudley reported that “[i]t’s going to be a very turbulent year for our industry.”
The energy giant not only has to worry about oil prices, but also its obligations to Gulf Coast residents devastated by the oil spill. The company set aside $443 million in the quarter to cover obligations associated with the oil spill, with total costs now at $55.5 billion. Our readers may recall BP’s initial claim that costs associated with the event would be $40 billion.
Of particular interest to Gulf Coast residents is how BP will respond to this turbulent time. If the most recent news is any indication, the response is troubling. Mr. Dudley announced that BP would be taking steps to streamline the firm’s redundant systems put into place for legal reasons after the oil spill. Mr. Dudley’s excuse was: “We have our confidence back now.”
You may recall that this is the same company that consistently promised the government and all those that would listen that it would institute redundant systems and greatly emphasize safety after the Texas City refinery explosion that killed 15 people and injured almost 200 people. We all know the result – just a few years later, that “safety program” yielded the worst environmental disaster in United States history.
If anyone wants to feel sorry for BP considering the current oil price saga, Mr. Dudley has news for all. For example, he said that the markets are not taking into account the firm’s robust $5.8 billion in operating cash flow for the quarter, and the overall loss narrowed to $3.3 billion as opposed to $4.4 billion a year earlier. In other words, the oil giant is still circulating billions in cash and will do so for years to come. We should all remain steadfast in holding BP to a standard that does not cause the same situation that caused the worst environmental disaster in United States history.
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