It keeps getting worse for BP

Bob Moon Aug 9, 2006


KAI RYSSDAL: Monday about this time the story was oil, and how BP was shutting down a big field up in Alaska. Bad enough for consumers, rising oil prices and all that that means. But it’s getting worse for BP. Congress is promising hearings. The Environmental Protection Agency’s been looking at the company for a while now. The Justice Department is pursuing possible criminal charges. And Marketplace’s Bob Moon reports BP’s troubles might point to a much bigger problem for the entire industry.

BOB MOON: Even before this week’s pipeline shutdown, the Justice Department was investigating whether BP failed to carry out regular required inspections.

A company spokesman confirmed for us today that BP did skip internal pipeline integrity checks for 14 years on some sections of the pipeline. Because? It didn’t believe they were necessary. The spokesman insisted BP “closely complied” with all regulations.

Still a grand jury in Anchorage is hearing evidence about a huge oil spill on a different leg of the pipeline network in March. Richard Fineberg, who formerly served as oil analyst for the state of Alaska, says the investigation of BP is no surprise.

RICHARD FINEBERG:“They are chronically too slow to identify problems and the delays in fixing problems — and by delays, this can be years, and it frequently is years — places the West Coast oil supply, the workers and environment at undue risk.”

This may reveal a trend that began with lower oil prices that plagued the industry in the late 1980s and the 1990s.

Tom Wallin is president of Energy Intelligence.

TOM WALLIN:“What the worry here is, to me is, that the industry, in some cases, may have cut corners on maintenance and on the way that they operate, because of these cost pressures. And now we’re in a period when we’re stretching the entire global oil supply system to its limits, and we’re finding that things are breaking.”

The House Energy Committee’s ranking Democrat, John Dingell of Michigan, says Congress has an obligation to hold hearings to determine what broke down.

In Los Angeles, I’m Bob Moon for Marketplace.

RYSSDAL: Not a good day to be Alaska Governor Frank Murkowski. Alaska gets about 90 percent of its income from oil. Murkowski announced a statewide hiring freeze today until he can figure out how to replace the $6.5 million a day Alaska is now not raking in.

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