A friend of mine, Alex Lightman, posted these insights on Facebook. They’re a great example of the reality that’s often driving business behavior – hidden from the public eye.
- The BP oil spill will cost $100 billion to clean up. But, oil will go to $200/barrel.
- If we take $150/barrel times 2.5 billion barrels – BP has oil worth $37 Billion as crude oil beneath DeepWater (or in the Gulf). Once refinced, that crude is worth 2-3 times that amount. That’s certainly worth fighting to keep.
- If BP plugs the oil well under DeepWater – BP loses the lease on that oil source. That means BP will lose $100 billion in revenue (minimum) if they plug the well.
Seems to me that putting $20B in a cleanup operation is nothing compared to that $100B in revenue (plus ongoing oil flows). It’s a drop in the bucket, no pun intended.
Which means that if BP focuses on profit – they won’t plug the hole. They’ll stick to the relief wells and let DeepWater keep seeping forever. Just like Nigeria and dozens of other places on the planet.
The Gulf loses – bigtime. The people, the environment, the critters. But BP shareholders and executives will be successful.
If profits remain our primary goal, our planet, our world suffers. Sooner or later, it won’t matter if we have lotsa profits or not, now will it?
