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Wasted reputations

Imagine the outrage in Western capitals if it had happened in Russia. Imagine that before any due legal process had reached its course, the Kremlin had threatened the largest foreign investor in the most prospective oil province in the country with the removal of its licence to operate

Imagine that it had summoned the company's chief executive to Moscow for public humiliation; demanded that his company cough up $20bn to cover penal charges; and overseen the decimation of that company's market valuation and its reputation.

It's safe to assume that the reaction of governments and media in the West wouldn't be pretty.

Yet the tale of BP's experience in the US following the oil spill in the Gulf of Mexico bears uncomfortable similarities with the kind of behaviour seen in Russia in the past decade, and roundly condemned elsewhere. Remember Shell's experience in 2006? Alleged environmental violations forced the major to surrender control of the consortium developing an LNG project on Sakhalin Island. The charges – which at one stage amounted to $30bn in fines – mysteriously disappeared once Gazprom had replaced Shell as Sakhalin Energy's majority shareholder.

The US government has not appropriated BP's assets, but its potential liabilities now weigh so heavily on the UK firm that it has been forced into a firesale to shore up its finances. And the political reaction to the spill was ugly – as if the US government hadn't previously sought to lure deep-water drillers to the Gulf, relaxed the laws governing their activities, opened new waters to them, and proclaimed a goal of "energy independence" while doing nothing to control oil demand.

The spill in the Gulf of Mexico was both a tragedy and a disaster. Eleven men died. BP, whether it was to blame for the accident or not, initially handled the response badly. Along with local authorities, it repeatedly underestimated – either through ignorance, or deliberate manipulation – the volume of oil being spewed into the sea. That undermined the faith of those watching the response.

But despite the needs of the 24-hour news media that descended on the Gulf, establishing what was happening 1,500 metres below the sea – a depth too great for any human – was difficult. So was the task of stopping the flow. Indeed, drilling oil wells at such depth is a feat of engineering. Permanently sealing a gusher through the deployment of remotely operated vehicles at such depths is a significant achievement. BP pulled it off on 3 August. A day later, the White House concluded that 4.9m barrels of oil had leaked into the Gulf between the explosion on 19 April and the temporary capping of the well on 15 July.

Apocalypse ... not quite

Meanwhile, despite statements from the US government that the spill caused the worst ecological disaster in the country's history – a premise essential in its drive to keep a "boot on BP's neck" – its impact on the Gulf of Mexico may be far less than the apocalyptic expectations of many environmental groups. The White House's report now says about three quarters of the oil that spewed into the Gulf has already been captured, dispersed or dissolved. Stories of plumes of oil defying gravity to float beneath the sea now sound fanciful.

Ecologists from Louisiana State University, who are more accustomed to holding oil-industry polluters' feet to the fire, talk of the remarkable resilience of the local ecosystem, which has been abused repeatedly by the industry. To take one example, US Fish and Wildlife said last month that it had collected just over 4,000 dead birds following the spill; and about 1,800 had been "visibly oiled". By contrast, the Exxon Valdez disaster may have killed more than 250,000. The warm waters of the Gulf and the high grade of the region's oil, it turns out, mean the slick is being degraded naturally far quicker than the headlines predicted.

The drilling moratorium, the curtailment of fishing during the clean up and the disappearance of tourists have damaged the economies of the states that surround the Gulf. Even before the courts have established BP's culpability – or exonerated the contractors that many in the oil industry suspect may share some of the blame – the company is facing liabilities for the loss of this business.

Yet BP did not inflate the impact the spill would have on the coastline. While it was spending billions to mitigate the accident, it was wild speculation in the media, the fantastical predictions of anti-oil activists and the proclamations of Armageddon by some influential commentators, that helped drive tourists from the Gulf's beaches and persuade the government into its confusing decision to impose a moratorium on offshore drilling.

Not only had President Barack Obama's administration just weeks before announced the opening of new waters to explorers, but the blanket ban suggested it believed the spill was an industry-wide problem. If so, why did it so assiduously single out BP?

BP, accountable to its shareholders, has been humbled. Its share price has collapsed, its reputation has been tarnished, probably for years, and it has been forced to sell assets. US voters may hold the nation's politicians responsible for a mess created, in part, by lax regulations and the "corruption" – Obama's word – of the federal body overseeing drilling in the Gulf. The legions of green groups that, smelling blood, joined the lynching of BP will pack up and move onto the next media bonanza, where facts run as carelessly as a deep-water gusher.

In short, no-one involved in the spill or its aftermath has covered himself in glory, although some have been punished more than others. The credibility of oil firms that say they can drill safely in deep water has been compromised, despite incident-free operations elsewhere. The Obama administration and rent-a-quote congressmen put politics ahead of the facts, contributing to the wreckage of BP's share price and reputation. The White House, on the defensive, says it owes no apology to Tony Hayward, BP's former boss, who was criticised for saying that the ocean would probably cope with the spill. Yet he was correct. Green activists who used the spill to advance an agenda more connected with stopping oil consumption, full stop, than with preventing future tragedies have brought discredit to their other claims.

A disastrous legacy

If that is a legacy of the Gulf slick, it will be disastrous, because there are many more compelling reasons to push the world to break its oil addiction. Oil spills have been happening for years in countries such as Nigeria with little attention from mainstream media. And the hunt for fresh oil supplies in the Middle East has brought consequences for global politics that remain far more damaging to many more people than have been affected by the tragedy in the Gulf.

So with the end of the Deepwater Horizon spill, it is time for facts and analysis to trump the rhetoric. Lawmakers must react sensibly to prevent another accident in the Gulf, or anywhere else. Companies, including BP, Transocean and others involved in the Deepwater Horizon disaster, must restore their credibility by continuing the successful clean up (in BP's case) and deploying better practices wherever they drill.

But the US government, as well as the activists, must also recognise that while oil is consumed wastefully by some, to many others it is not a luxury and the companies that deliver it do so to meet demand. Steady supplies help economies to grow, spreading wealth and alleviating poverty. Until a new fuel can do the same, at the same cost and at the same scale, the world will need new supplies of oil. The sorry affair of the Deepwater Horizon accident cannot be used to deny that.

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