Gas Is Really Costing Us About $15 a Gallon
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This might be an opportune time to make a disclosure: I am a BP shareholder. Admittedly, I’ve never attended the company’s annual meeting, and if I did, I would have very little weight to throw around.
I own two shares of BP stock. I received my stake in the company as a Christmas gift in 1989, when I was 14 years old. The previous June, I had taken a "summer enrichment" course in the Des Moines public schools, designed as an introduction to the world of business. The teacher gave each of us in the class a modest hypothetical budget to invest in the stock market.
Earnest young capitalists, we made our picks and then followed the quotes in the morning paper. I invested heavily in Amoco and finished the summer feeling that my portfolio had done quite well. As a result, my younger brother decided that I should receive a real piece of the enterprise that was once John D. Rockefeller's Standard Oil. He conspired with my mom to get me an Amoco share for the holidays.
I’ve watched the oil industry as an interested party ever since. In 1998, my Amoco stock split, turning my one share into two. Then, a few months later, the company was acquired by BP. This "oil mega-merger," as the BBC called it, gave me a stake in yet another energy titan. It also allowed the combined corporation to shed 6,000 jobs, prompting its new chief executive, Sir John Browne of BP, to confidently assure the press that "he hoped the merger will increase pre-tax profits of the two partners by 'at least' two billion dollars by the end of 2000."
The merger proved profitable indeed. Over time, the price of my stock nearly doubled. I received dividends every three months, usually of around 60 cents per share. And by the mid-2000s, BP was making some $20 billion per year in profits. The numbers looked good.
Of course, these are not the only numbers to consider. In fact, in the wake of BP's disaster in the Gulf of Mexico, they don’t seem like the right numbers at all. It’s time for a different accounting: What has that catastrophic spill cost our society? What price do we pay for our dependence on oil? How do we measure these things?
Costs of Business
When I first began receiving Amoco’s annual reports, they featured photos that celebrated robust industrial capabilities, like multicolored sunsets behind fields of horsehead oil pumps in Texas. These days, there's still some of that, but the reports tend to have more shots of solar panels, white windmills, and smiling school children (our future). Someone looking at the annual review the company sent me in 2001, for instance, might have been fooled by the photos of lush, palm-heavy landscapes in Indonesia, California, and Trinidad into thinking that it was a mailing from Conservation International.
Such changes in public relations were born of tragedy. Back in 1989, not three months before my summer business class, the Exxon Valdez collided with the Bligh reef in Alaska's Prince William Sound, breaching its hull. Even according to conservative estimates, it spilled more than 10 million gallons of oil and contaminated more than 1,200 miles of ecologically sensitive coastline. For years afterwards, we saw Exxon deal with the fallout of the catastrophe.
However many thousands of boats and booms the company deployed, it only managed to recover about 8% of the oil released. The rest evaporated, coated beaches, or sank to the bottom of the sea. The Exxon Valdez Oil Spill Trustee Council estimates that 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles, up to 22 killer whales, and billions of salmon and herring eggs were killed by the spill. Two decades later, some 16,000 gallons of leftover oil still poison wildlife in the Prince William Sound.