British Petroleum would have taken a major hit for its Deepwater Horizon mess in the Gulf of Mexico if it weren’t that bad.
But since company leaders butchered it from the first drop, the results are frankly eye-popping and devastating. While there’s no way to estimate how much perfect crisis management would have saved, it’s clear it might have reduced BP’s hit by billions.
On Friday, the Wall Street Journal reported BP already wrote off $42 billion, directly from its bottom line for fines, cleanup and other charges, with still more yet to come.
But that’s only the explosion at the surface. What lurks below is even harsher.
Company shareholders have lost $137.8 billion in equity at a time when its major competitors’ share values increased by approximately 25 percent.
BP also retrenched globally, selling $40 billion in assets, and is now forced to increase capital spending by 25 percent in less-hospitable and risky places like Angola, Azerbaijan and Indonesia — since the North American welcome mat was pulled in.
Finally, during the period since 2010, BP has declined from having the highest earnings-per-barrel in the industry to the lowest among the major energy producers such as Exxon, Shell and Chevron.
As my colleague Peter Kapcio likes to say, “crisis mismanagement is a behavioral problem.” Bad behavior gets punished.
The content of this blog is about crisis management and mismanagement in a digital age. It originates with Steve Bell, who spent 30 years as a journalist for the Associated Press and in four top editor positions at The Buffalo News. He is now Partner/Director of Public Affairs at Eric Mower + Associates, one of the nation’s largest independent advertising, integrated marketing and public relations agencies, with seven offices in the Northeast and Southeast. Learn more about EMA at http://www.mower.com. Steve’s blog is based on his own opinions and does not represent the views or positions of Eric Mower + Associates.