Wednesday, 28 September 2011


The US Coast Guard has warned that more oil may have leaked from the Deepwater Horizon rig, causing a new round of finger-pointing between BP and Transocean.
The oil rig 'Deepwater Horizon' catches fire, Port of Venice, Gulf of Mexico

Photo: Rex Features

By Rowena Mason
5:18PM BST 28 Sep 2011

There have been several sightings of oil near the site of last year's Gulf of Mexico accident in recent months. On Wednesday, the Coast Guard issued a warning to Transocean, the owner of the rig, saying it "may be financially accountable for debris removal costs and damages" if the rig or riser pipeline are found to be the cause. There was no evidence oil came from the well itself.

However, Transocean denied responsibility, saying: "If a volume of oil has remained in the riser [a pipe], there is no question that it is oil from BP's Macondo well. As owner and operator, BP is the responsible party for all fluids that emanated from the Macondo well head, and BP has repeatedly acknowledged that responsibility. Transocean has accepted responsible party status for rig fluids, such as diesel fuel, consistent with the law. We take this very seriously, and we are committed to working with BP, the Coast Guard and other parties to investigate."

BP immediately distanced itself from the cause of the new oil leaks. "The Macondo well is not leaking oil and is not the source of the sheens. We will continue to co-operate with the Coast Guard to investigate other possible sources, including Transocean's riser," it said.

BP's share price fell 1pc to 399.8p, as a fresh arbitration hearing with its four Russian billionaire partners got under way on Wednesday. A tribunal will decide whether BP broke an agreement with the Russians by trying to do a deal with Rosneft.

Separately, Bob Dudley, BP's chief executive, said it was applying to develop more gas in India, after its $7bn deal with Reliance Industries.



Monday, 19 September 2011


Subsidiaries mapped: BP boasted the most convoluted corporate structure

By Rob Davies
10:11 PM on 19th September 2011

BP and Glencore have been named as the worst offenders in a report detailing the extraordinary lengths to which companies go to cover up their tax affairs.

Pressure group Publish What You Pay (PWYP), which campaigns for greater transparency on tax from mining and oil firms, mapped the subsidiaries of multi-national firms to determine which were the most secretive.

In the mining sector, Glencore (down 17.7p to 437.075p) won the dubious honour of keeping its tax payments the most closely guarded.

Of 46 subsidiary companies, nearly half were based in ‘secrecy jurisdictions’, where requirements to publish detailed accounts and tax data are minimal.

Miners BHP Billiton (down 67p to 1934.25p) and Rio Tinto (down 120p to 3505.25p) operated far more subsidiaries, 462 and 926 respectively, but just 20 per cent were in secrecy jurisdictions and just 15 per cent at Anglo American (down 116.5p to 2407.25p).

Glencore said it ‘provided all the disclosure required of a FTSE 100 company listed on London and Hong Kong’.

BP (6.15p to 407.3p) boasted the most convoluted corporate structure, with some 1,491 subsidiaries, of which 25pc were in secrecy jurisdictions.

Shell (35.5p to 2057.25p) has 1273, 41 per cent of them in tax havens.

Raymond Baker, director of research group Global Financial Integrity, said: ‘This is about getting rich secretly and not having to account for such riches locally,’ he said.

PWYP wants mining and oil companies to publish tax payments on a country-by-country basis to show their contribution to host countries.

The campaign group’s report come amid legislative moves in the US and Europe to clean up the natural resources business.

Read more:

Friday, 16 September 2011


'Moving on' from the Deepwater Horizon environmental catastrophe, Tony Hayward is now set to make millions from a Kurdistan oil deal

former BP CEO Tony Hayward
'Public disgrace – the fact of it, whether justified or not – no longer presents an obstacle to powerful careers' … Ian Jack on Tony Hayward. Photograph: LARRY DOWNING/REUTERS
Ian Jack, Friday 16 September 2011 20.30

Do the rich and powerful ever sink? After an explosion wrecked the Deepwater Horizon rig last year, killing 11 workers, nearly 5m barrels of oil gushed into the Gulf of Mexico over the following three months. It was the biggest marine oil spill in history – an environmental catastrophe with effects that will be felt for many years. BP, to whom the rig was under contract, set up a $20bn (£12.6bn) fund to compensate the victims, selling assets as it watched its share price tumble. City and Wall Street rumours suggested BP couldn't survive. The company's chief executive, Tony Hayward, came to be vilified across America for what looked like insouciance in the face of a seemingly unstoppable disaster, a man with a flair for bad PR. In the early days of the leak he offered the consolation that the spillage was tiny compared to the size of the ocean. Later, as the oil came ashore, he apologised for the disruption to the livelihoods of fishing and tourist communities, and said that he too wanted his "life back". "He wouldn't be working for me after any of those statements," President Obama said, and by the end of the year, he had left BP.

What was to be his life thereafter? Hayward was 53 when he parted from the company he'd served for nearly 30 years, eventually on a salary of $6m.

The pension and severance package must have been generous. He could have reflected bitterly on the unfairness of his role as the lightning conductor for blame – as he said, Deepwater Horizon was a complex accident involving several companies – and then "moved on". He might have run a charity for tarred seabirds or, as a geologist, spent days with a hammer on the Dorset coast. Directorships could have supplemented his income. It would have been a quieter life – more time on the yacht – but by no means a poor one.

But Hayward did none of these things. Instead, he created an investment vehicle called Vallares with initial capital of £100m provided by Nat Rothschild, two other businessmen and himself. Stock market flotation raised £1.35bn, and this month Hayward, as Vallares's chief executive, announced that new shares worth a similar amount would be sold to finance a merger (technically, a reverse takeover) with a Turkish company, Genel Energy International, which holds rights to oil reserves in the Iraqi province of Kurdistan. Hayward will replace the Turkish entrepreneur Mehmet Sepil as Genel's CEO, clearing the way to a stock exchange listing that may have been problematic had Sepil, who was fined £1m last year for insider trading, remained in day-to-day charge rather than assuming his new role as president.

The company aims to be included in the FTSE 100 next year. The potential is enormous. In Hayward's words, Kurdistan may be "the last big on-shore 'easy' oil province available for exploration by private companies anywhere in the world", with reserves equivalent to the North Sea's before those were exploited. Already, thanks to his initial stake, Hayward is several million pounds richer.

I read this in the business pages last week. Elsewhere, the same paper recorded that a Manchester man had been jailed for 18 months for handling stolen goods (a 37in TV) in the riots. No one has accused Hayward of criminal behaviour, whatever the record of his new company's president, but the contrast in the consequences of two successive summer outrages is a striking one. The Deepwater Horizon crisis made Hayward the focus of American loathing in 2010, just as this year's looters had Britain's public and politicians calling for punishment and revenge.

But capitalism has encouraged Hayward to "move on" in a way it won't be doing anytime soon to anyone found with a stolen TV in the boot of their car. Public disgrace – the fact of it, whether justified or not – no longer presents an obstacle to powerful careers.

A century ago, disgrace had a different effect. The chairman and managing director of White Star Line, J Bruce Ismay, felt the full force of American contempt when the Titanic went down in 1912, and he never recovered. Many of the charges against him echo those raised against Hayward: that he neglected safety in pursuit of competition and profit. Hadn't he persuaded his captain to work up maximum speed while the ship entered an ice field? Hadn't he refused to equip the ship with more lifeboats because they would over-crowd the promenade deck? Nothing was ever proven.

Incontestably, however, he had escaped on a lifeboat when more than 1,000 of his company's passengers, including women and children, waited to be saved. He made a plausible case for his behaviour – he jumped into the boat at the last moment, he insisted, because no more women and children answered his call – but the shame never died. For HG Wells, capitalism's "noble pretension" had jumped downwards with Ismay: "He was a rich man and a ruling man, but in the test he was not a proud man." The powerful had been seen to be no better than the rest of us.

Like Hayward, he ran a company that had become only superficially British. Inheriting White Star from his father, his first act as owner had been to sell it to the Wall Street behemoth J Pierpont Morgan, who included it in the portfolio of his interests known as International Mercantile Marine. Like Hayward, he faced hostile Washington committees of inquiry who grew angry with his blocking answers: "I do not know" and "I could not say" (Ismay); "I am not a cement engineer" (Hayward). Neither man could charm the media. To American reporters, Ismay came across as disdainful and arrogant ("J Brute Ismay"); and in any case, he had previously made an enemy of the press magnate William Randolph Hearst, whose papers now crucified him as a cowardly aristo from the old world.

The details of Ismay's subsequent life are contained in a fine new biography by Frances Wilson. The next year, aged 50, he quit White Star and spent increasing amounts of time at his house in Connemara. A kind of normality continued. As Wilson writes, he understood the difference between surviving and being alive. He remained a director of railway and insurance companies, but travelled to meetings with the carriage blinds drawn. His unhappy marriage went on being unhappy. He never returned to New York in the 24 years he had left to live, and a household rule banned the Titanic from mention.

Reports, probably invented, said that when Irish children passed his gate they chanted: "Coward, coward, coward."

Pauline Matarasso, Ismay's granddaughter, has written of how much family conversation liked to stick firmly to facts: "Without a moral dimension, without words like hubris, competition, guilt, greed, hedonism, the event [the Titanic] was drained of emotion like a stuck pig of blood. It was their way of surviving; they could cope with a corpse." Her grandfather, she added, was "a corpse himself".

One might argue that disgrace didn't sink him, any more that it sinks the powerful today. One might also wonder how much he regretted passing up the opportunity to sink, literally, like his 1,500 dead passengers and crew. But at best, Ismay persisted as an undersea creature, shy and seldom seen. He never got his life back. This is what shame and feelings of personal responsibility did, once upon a time.

Thursday, 15 September 2011


BP station in Alexandria, Virginia
BP’s share prices rose almost 5% but fell back after report was published Photograph: Molly Riley/REUTERS

Report says oil company is 'ultimately responsible' for oil spill but rig contractors also implicated in some areas

Damian Carrington and Alex Hawkes, Wednesday 14 September 2011 18.27

A key US federal report has focused the blame for the worst offshore oil spill in US history on BP, but criticised its contractors sufficiently for the markets to push BP's share price up. Amid a string of failures, BP's "cost or time-saving decisions… were contributing causes of the blowout," the report concluded.

Assigning ultimate responsibility for the disaster – and the billions of dollars of clean-up and compensation costs – will take years of legal action, but Wednesday's investigation report was seen as a significant indicator as it was conducted by the regulator responsible for offshore activities. The blowout at the Deepwater Horizon rig in the Gulf of Mexico in April 2010 killed 11 people and led to almost 5 million barrels of oil being spilt into the ocean.

BP's share price rose almost 5% in London on rumours the report would help avert the company being found grossly negligent in future, which would increase its financial liabilities hugely. But it fell back after the report was published, finishing the day up 3.5% at 395.1p.

The investigation, jointly conducted by the Bureau of Ocean Energy Management, Regulation and Enforcement (Boemre) and the US Coast Guard, stated that a "central cause" of the blowout was the failure of a cement barrier in the drilling apparatus. The cement job was done by a contractor, Halliburton, but the report states that BP was, as designated operator, "ultimately responsible" for safety on the rig. It also stated that, in the days before the blowout, BP had "made a series of decisions that complicated cementing operations, added incremental risk, and may have contributed to the ultimate failure of the cement job".

BP and Halliburton are already engaged in a bitter legal fight, with the most recent development being the filing of claims against BP in the Texas state court on 1 September, accusing BP of defamation and amending its existing action in Louisiana to include fraud.

The Boemre/Coast Guard investigation also found that staff from BP and Transocean, which owned the Deepwater Horizon rig and was responsible for safe operations aboard, had failed to react until it was too late to heed warning signs that arose during well tests. The report noted that Transocean staff had admitted to BP they had "screwed up by not catching" a similar warning sign six weeks before the blowout and that BP had failed to "take steps to ensure the rig crew was better equipped to detect kicks".

BP had experienced "personnel changes and conflicts" and BP's operations at the well were $58m (£37m) over budget at the time of the blowout, the report found.

The investigation found evidence for violation of seven federal regulations. BP are named alone in three, BP and Halliburton in one, BP and Transocean in another, and all three companies in the final two.

BP said the report concluded that the accident was the result of multiple causes involving multiple parties. "From the outset, BP acknowledged its role in the accident and has taken concrete steps to further enhance safety and risk management throughout its global operations," BP's statement said. "We continue to encourage other parties to acknowledge their roles in the accident." A presidential commission on the BP-Deepwater disaster concluded in January that there had been a "system-wide problem".

A spokesman for Transocean said: "The report confirms the primary cause of the incident was the catastrophic failure of the cement in the Macondo well, and finally puts to rest all previous allegations that improper maintenance of the blowout preventer contributed to the tragedy.

"We take strong exception to criticisms of the Horizon drill crew, nine of whom perished fighting to save their fellow crewmembers and the rig, for the actions they took in the face of such an unprecedented emergency," he added.

The report stated there was no evidence that the regulations themselves were a cause of the disaster, but did find that stronger regulations might have reduced its chances. The Obama administration created Boemre to replace the Minerals Management Service, the regulator at the time of the blowout. The service was disbanded following accusations that it had been "captured" by the oil industry. But Congress has yet to pass any legislation to address safety gaps highlighted by the disaster.

Only one person, BP engineer Mark Hafle, is mentioned by name in the report. Hafle's failure to investigate or resolve anomalies detected during a critical test possibly contributed to the failure of the crew to detect the initial influx of gas and oil. Hafle also chose not to run a cement log, a test that evaluates the quality of the cement job, in violation of BP procedures, the report found. Hafle refused to testify before the federal panel in August 2010, citing his constitutional right against self-incrimination.

Tuesday, 13 September 2011

Friday, 9 September 2011


Bob Dudley, chief executive of BP, will be a member of the British trade delegation going to Russia with David Cameron. Photograph: Ben Stansall/AFP/Getty Images

By Terry Macalister, Friday 9 September 2011

BP's anti-corruption drive in Russia picks up 365 offences

TNK-BP joint venture confirms 37 criminal cases under way as chief executive Bob Dudley prepares for Moscow trade visit

Bob Dudley, chief executive of BP, will be a member of the British trade delegation going to Russia with David Cameron. Photograph: Ben Stansall/AFP/Getty Images

BP's difficulties in Russia intensified on Friday as its TNK-BP Russian joint venture confirmed that 365 cases of corruption or other violations of company rules had been identified by security staff.

TNK-BP said 92 employees had been disciplined and 37 criminal cases were under way as a result of an internal drive to combat fraud which was enhanced nine months ago with the launch of a new "security hotline".

The Moscow company said the voluntary release of the figures and the work being done underlined its determination to root out dishonesty, but industry experts said it also highlighted the scale of BP's problems inside TNK.

The information was released just days before BP's chief executive, Bob Dudley, flies into Russia as part of a trade delegation alongside the prime minister, David Cameron, who is to hold meetings with his counterpart, Vladimir Putin.

Dudley is already struggling to deal with a raid on BP's Moscow headquarters by armed police as part of a $3bn (£1.88bn) legal compensation claim being launched by a group of TNK-BP's Russian shareholders.

Dudley's ambitious plans to undertake a share swap and Arctic drilling programme with state-owned oil group Rosneft collapsed in May, at a time when the British company needed some successes following the Gulf of Mexico spill last year.

BP is understood to have been actively pushing the TNK business to adopt tough internal procedures. Maksim Barskiy, deputy chairman of TNK-BP, said "integrity" was now one of the company's core values, and the steps taken showed it would not tolerate any form of corruption or fraud.

"We shall continue to improve our anti-corruption system, while at the same time seeking out advanced methodology and applying the best international practice in this area," said Barskiy.

"We will also act openly and make public any significant violations of business ethics. This will help not only to combat fraud and corruption more effectively, but will also attract to the company employees and partners for whom honesty is the cornerstone of their personal values."

The Russian business, which produces almost a quarter of BP's global hydrocarbon production, is also trying to ensure greater transparency from its contractors, it says.

Dmitry Medvedev, the Russian president, has made the elimination of official corruption an important part of his political programme, after a 100% year-on-year increase in cases reported.

Criminal proceedings were launched against 10,000 officials in 2010, one-third of them for taking bribes, the government said earlier this year.

The official visit by Cameron is important as relations between the UK and Russia have been difficult. Putin has not met a British prime minister for four years.

Dudley will be hoping to get a better understanding of the government's view of BP, since the Kremlin refused to support the company in the row with TNK shareholders which scuppered its attempt to forge the Rosneft deal.

BP's situation was not helped when Medvedev called on his deputy prime minister, Igor Sechin, to step down from the chairmanship of Rosneft in the middle of talks. Rosneft signed an alternative deal with BP's rival ExxonMobil in August.

Tate Modern to power ahead with art in oil tanks...(Oh the irony!)

By Alice Baghdjian
LONDON (Reuters) - Derelict oil tanks and forgotten industrial spaces hidden in the bowels of the Tate Modern art museum in London will open to the public in summer 2012, providing a new area to "revolutionise" the museum's work, directors said on Thursday.

The opening of the enormous and atmospheric oil tanks in the former power station on the banks of the Thames will provide flexible, subterranean "lunar" spaces and form the foundation for a further expansion of the world's most visited modern art museum. The expansion will also include a new 64-metre high building and is set to be completed in 2016.

"The oil tanks will give visitors a new way to explore and experience art at Tate Modern. Architecturally they are fantastic raw spaces, which are being carefully converted for public use without losing any of their unique industrial character," Tate Modern Director Chris Dercon said.

This completed space will not only showcase objects, but live performances, film, sound, learning spaces, piazzas and areas for socialising, including a terrace offering panoramic views of the British capital.

"The museum is not just about viewing and judging objects but mental and bodily exercises - we want to provide a new form of social space for interactions," Dercon said.

The costly Tate Modern Project development is estimated to reach 215 million pounds, 70 percent of which has already been raised through unnamed donors.

However, the expansion is necessary to maintain the museum's status as the one of the leading art organisations in the world and "set the benchmark" for the future of museums, according to the director.

"Museums are a constant work in progress and are constantly changing and transforming. That is the definition of contemporary arts today. The Tate Modern expansion is a response to the ever-changing field of contemporary art, and it will influence that field," Dercon said.

The project reflects a broader change in the contemporary art world over the last 10 years tending towards the use of media such as film and video, Dercon said.

"Contemporary art is performance, projection -- we need to provide spaces for events, live arts, time-based arts, as well as small events such as lectures, symposiums and films," Dercon said.

The finished project will not only expand gallery space by 70 percent, it will also increase visitor capacity of the museum.

The building is currently designed for two million visitors a year but often sees crowds in excess of five million and during 2010-11 this figure reached 7.4 million.

"The Tate Modern is the most popular modern art museum in the world and our aim is to make it better still. The Tate stands as a defence against all that is ugly and unimaginative in our world and is a storehouse of contemporary imagination and ideas that is open to all - no matter what age or where they come from" Chairman of Tate Trustees, John Browne said.

The opening of the oil tanks - the first phase of the Tate Modern Project - will coincide with London's hosting of the Olympics in 2012 and forms part of the larger Cultural Olympiad.

The museum is the hub of modern art in Britain and will host work from artists including Damien Hirst, Edvard Munch and Tino Seghal in 2012.

(Edited by Paul Casciato)
Business Traveler

Wednesday, 7 September 2011


The spy who quit MI6 for BP's oil cash... and set in train Labour's love-in with tyrant Gaddafi

By Steve Bird

He likes to proclaim in his Who’s Who entry that he enjoys the arts of Islamic calligraphy and falconry in his spare time.

But one boast the veteran Arabist Sir Mark Allen is unlikely be making to the pinstriped cronies he mixes with in London’s clubland is that he was the man who brought Colonel Gaddafi in from the cold.

Or that he forged close links with Gaddafi’s son, Saif, who has a PhD from the London School of Economics, which tarnished its name accepting vast sums from the Gaddafi clan.
Arabist: Sir Mark Allen is said to have forged close links with Gaddafi's son, Saif

As it happens, Sir Mark is on the advisory board of the LSE’s centre for the study of international affairs. He is also an adviser to the Monitor Group, the global consultancy firm and equity firm that Saif used to carry out the research for his doctorate.

As an MI6 spy, Sir Mark has for decades moved in a shadowy world that could have come from the pages of a John le Carré novel.


* Torture victim to sue Britain: Libyan rebel leader could be in line for £1million payout
* Britain handed rebel to Gaddafi torturers: Devastating secret files in Libya reveal UK 'crossed the line' to prop up tyrant
* Rebel troops poised to strike remaining Gaddafi strongholds after negotiations break down

The 61-year-old father of two is thought to be the author of a fawning 2004 letter to Gaddafi’s ruthless former intelligence chief, Musa Kusa, discovered in an abandoned Libyan government building.

The letter appears to show that MI6 provided intelligence which led to the rendition of a Libyan dissident who was tortured.
Ruthless: Gaddafi's former intelligence chief Musa Kusa is thought to have received a fawning letter from Sir Mark

Ruthless: Gaddafi's former intelligence chief Musa Kusa is thought to have received a fawning letter from Sir Mark

Quite what all those other Libyans who were also tortured at Mr Kusa’s behest – he is known in Libya as the ‘fingernail-puller-in-chief’ – will make of the letter’s solicitous enquiries after the Kusa family is open to question.

Few Britons can claim to have met Gaddafi as many times as Sir Mark.

It was he who paved the way for Tony Blair to visit the dictator in Tripoli in 2004 and strike a pact with the dictator who promised to renounce weapons of mass destruction.

The deal helped secure extensive drilling rights in Libya for the oil giants BP and Shell, and it came as little surprise that Sir Mark should soon move seamlessly at around this time from the diplomatic service to become a £200,000-a-year adviser to BP.

The key to Sir Mark’s extensive contacts in Libya lies in his obsession with the Middle East. From Catholic private school at Downside in Somerset he went up Oxford to study Classics but quickly changed to Arabic.

From university he went to Jordan, bought a camel and explored the country. It was there that he fell in love with falconry, a sport he had dabbled in since the age of 14 and one mastered to an art by the Bedouin tribes.

He went on to study at the Middle East Centre for Arabic Studies, a British ‘spy school’ in a village near Beirut.

At 23 he joined the Diplomatic Service and became known as one of the ‘camel-core Arabists’. To this day, Sir Mark can be seen occasionally wearing his black and white Palestinian keffiyeh, the traditional Arab headdress regularly worn by the late Yasser Arafat.
Acquaintance: Few Britons can claim to have met Gaddafi as many times as Sir Mark

Acquaintance: Few Britons can claim to have met Gaddafi as many times as Sir Mark

Working under diplomatic cover in Abu Dhabi and Cairo, he quickly developed contacts in the Arab world that were ‘second to none’. In 2003, he met Gaddafi and set in train Labour’s love-in with the tyrant. He was even said to have held a secret London meeting with Kusa, the Libyan spy chief, in the Travellers Club in Pall Mall. That summer, sanctions against the country were lifted.

But in 2004 Sir Mark quit the service early when he learned he would not be succeeding his boss Sir Richard Dearlove as head of MI6, and joined BP, although he never quite left his old diplomatic role behind.

In 2007, Sir Mark had made two telephone calls to Jack Straw, the then Justice Secretary, to discuss a prisoner transfer agreement with Libya, although BP insists it had not lobbied specifically for Megrahi’s inclusion in any deal.

It just so happened that negotiations over prisoners were blocking a £15billion oil drilling deal that Sir Mark was helping to broker between BP and the Libyan regime. Weeks after those telephone calls, Mr Straw allowed Megrahi to be part of the prison transfer agreement with Libya. It was a decision that put the White House on a collision course with the UK. And last year the American Senate Committee announced that it wanted to cross-examine the former spy over his role in the shameful affair.

In one of Sir Mark’s books, Arabs, he admits he has ‘avoided’ naming sources, adding: ‘Those who read it and see their influence in it will know how much I owe them.’ How much he owed Musa Kusa is clear from the tone of that 2004 letter.

Read more:

Tuesday, 6 September 2011

The BP Oil Disaster: Blaming Individual Consumers for Capitalist Destruction

The BP Oil Disaster: Blaming Individual Consumers for Capitalist Destruction
by Ian Angus
Global Research, September 13, 2010
Climate and Capitalism

Following the BP/Deepwater oil well explosion in the Gulf of Mexico, many commentators have tried to explain why it happened. Many blame greed and arrogance in BP’s executive offices. Others blame it on the Military-Oil-Government alliance that views free-flowing oil (and free-flowing oil profits) as something to promoted at all costs. But some writers identify a different cause. Bonus-seeking executives, corrupt politicians and oil-hungry generals all played a role, but they were only front men for the real villains – consumers.

“Who’s Really to Blame for the BP Oil Spill? We Are,” by U.S. green activist Dave Chameides, is typical:

“The bottom line is, no matter who did their work poorly, or who shirked their responsibilities, at the end of the day, we are the ones who are responsible for the disaster at hand.

“That’s right, we are the ones responsible.

“BP, like any other oil company, is in the petroleum game for one reason and one reason only: money. And where does that money come from? It comes from us.” [1]

Similarly, a Guardian article by British academic Mark Coeckelbergh was headlined, “We’re all to blame for the oil spill.”

“Moreover, and perhaps most important, we should not only consider responsibility for oil production but also for oil consumption. Business and finance are not isolated from our own choices. Companies such as BP can only do what they do because we want what they sell. We’re all too happy with cheap oil. …

“As consumers, we continue to depend on oil in various ways and therefore maintain the oil-hungry system that makes oil companies drill in deep water and undertake other risky activities. “[2]

These are just two of many such articles. [3] All promote a simple lesson: If only “we” would wean ourselves of our oil addiction, then “they” would stop destroying the environment. If “we” would just use less oil, then “they” wouldn’t have to drill in environmentally sensitive areas like the Gulf of Mexico.

As Al Gore wrote a few years ago: “All of us contribute to climate change through the daily choices we make … you can begin to take action and work toward living a carbon-neutral life.” [4]

Buy green products, drive less and save the world.

Such views rest on the implicit assumption that corporations – indeed the capitalist economy as a whole – are driven by consumers’ desires and choices, as displayed in the market. Economist Mark Perry of the right-wing American Enterprise Institute, explains:

“Consumers are the kings and queens of the market economy, and ultimately they reign supreme over corporations and their employees. … In a market economy, it is consumers, not businesses, who ultimately make all of the decisions. When they vote in the marketplace with their dollars, consumers decide which products, businesses, and industries survive — and which ones fail. ”[5]

Perry is echoing the opinions of the influential libertarian economist Ludwig von Mises:

“When we call a capitalist society a consumers’ democracy we mean that the power to dispose of the means of production, which belongs to the entrepreneurs and capitalists, can only be acquired by means of the consumers’ ballot, held daily in the marketplace.” [6]

This view, usually called consumer sovereignty, is widely held, not just by conservative economists but by commentators of many political stripes. It is conventional wisdom in the worst sense of the term, a dominant superstition that is assumed to be obviously true and so is never questioned.

But there are many reasons to believe that the conventional wisdom is wrong. The following are just four of them.

1. The market is manipulated

Fifty-three of the one hundred largest economies in the world are corporations. Exxon Mobil alone is larger than 180 countries. [7] In 2000, Fortune magazine reported that the 500 largest industrial corporations had revenues equal to two-thirds of all U.S. production. [8]

Those corporate behemoths constantly use their immense economic power to influence consumers’ choices. As a result, the balance of information and persuasion in the consumer goods marketplace is overwhelmingly weighted in favor of sellers and against buyers, for corporations and against consumers.

Michael Löwy writes:

“Contrary to the claim of free-market ideology, supply is not a response to demand. Capitalist firms usually create the demand for their products by various marketing techniques, advertising tricks, and planned obsolescence. Advertising plays an essential role in the production of consumerist demand by inventing false “needs” and by stimulating the formation of compulsive consumption habits.”[9]

Michael Dawson argues convincingly that advertising has to be understood as part of a much larger marketing process that aims “to make commoners’ off-the-job habits better serve corporate bottom lines.”

“Big businesses in the United States now spend well over a trillion dollars a year on marketing. This is double Americans’ combined annual spending on all public and private education, from kindergartens through graduate schools. It also works out to around four thousand dollars a year for each man, woman, and child in the country. …”

Dawson calls this process a form of “class struggle from above.”

“On our side of such struggles, within broad limits – for example, we must eat, drink, and sleep – we have the power to choose what we do with our free time, and we fight to make that time as fulfilling as possible. Meanwhile, big businesses have the power to implant objects, images, messages, and material infrastructures in our off-the-job behaviour settings, and, thereby, to influence the choices we make in our personal lives. …”[10]

As liberal economist John Kenneth Galbraith insisted, the immense sums spent on advertising “must be integrated with the theory of consumer demand. They are too big to be ignored.” This, he said, “means recognizing that wants are dependent on production…. [which] actively through advertising and related activities, creates the wants it seeks to satisfy.”[11]

This is not to suggest that consumers are helpless victims of all-powerful marketing monsters. Consumers frequently resist being manipulated, and specific advertising campaigns often fail. But by spending a trillion dollars a year on marketing, corporations don’t just promote individual products: they set the terms under which the market operates, define the range of permissible choices, and promote the constant expansion of needs and purchases that their profits depend on. They wouldn’t spend the money if it wasn’t working.

2. Consumers aren’t equal

Competition among consumers is also grossly unequal. “Consumer democracy” is rendered meaningless by the fact that a few consumers have most of the votes, because they have most of the money.

It’s sometimes argued that inequality of wealth doesn’t matter, because the rich are vastly outnumbered – our combined wealth lets the rest of us outvote the rich in the market. That sounds good, but it just isn’t true. The rich don’t just have more money than us as individuals, they have more than us collectively.

A recent study of the global distribution of household wealth, published by the prestigious World Institute for Development Economics Research, revealed just how much more the rich own than the rest of us.

“The richest 2 per cent of adult individuals own more than half of all global wealth, with the richest 1 per cent alone accounting for 40 per cent of global assets.

“The corresponding figures for the top 5 per cent and the top 10 per cent are 71 per cent and 85 per cent, respectively.

“In contrast, the bottom half of wealth holders together hold barely 1 per cent of global wealth.

“Members of the top decile are almost 400 times richer, on average, than the bottom 50 per cent, and members of the top percentile are almost 2,000 times richer.”[12]

Study after study leads to similar conclusions.

* In Australia, eleven very rich individuals own more than the country’s 800,000 poorest households combined. [13]
* The richest 5% of Americans own more than everyone else in the U.S. combined. [14]
* The 147 individuals who topped the 2002 Forbes “World’s Richest People” list had total wealth equal to the total annual income of three billion people, half the world’s population. [15]

Such gross inequality exposes the term “consumer democracy” for the fraud that it is. The capitalist market is a plutocracy: we all participate, but a tiny minority of very rich people has decisive influence.

3. Market choice is restricted

While consumers have some ability to choose among a variety of products, they can’t choose products that capitalists choose not to offer. Buyers face a “proffered world of micro-choices, where Ford versus Chevy is a live issue, but cars versus trains is most certainly not.” [16]

The market is also restricted by political, social and economic decisions – past and present – that few consumers have any ability to influence.

North America’s automobile-intensive culture, for example, is the product of a multi-pronged, multi-year campaign by the oil and automobile industries, beginning in the 1930s, to limit public transit, pour billions of public dollars into building roads, enforce zoning restrictions and building programs that encouraged urban sprawl – and at the same to promote the car as the quintessential symbol of success, freedom and modernity.

“Journalists never tire of pointing to the love of the automobile in the United States. But such ‘love’ is more often than not a kind of desperation in the face of extremely narrow options. The ways in which cars, roads, public transports systems (often notable by their absence), unban centers, suburbs, and malls have been constructed mean that people often have virtually no choice but to drive if they are to work and live.”[17]

There is even less choice when it comes to oil – it is so pervasive in every aspect of production and distribution that one analyst has justly called it “the stuff without which nothing else happens.” [18]

Indeed, it’s nearly impossible to buy a household product that isn’t partially or completely made from oil-derived chemicals. These are just a few examples:

Ammonia, Anesthetics, Antifreeze, Antihistamines, Antiseptics, Artificial limbs, Artificial Turf, Aspirin, Awnings, Balloons, Ballpoint Pens, Bandages, Basketballs, Bearing Grease, Boats, Cameras, Candles, Car Enamel, Cassettes, Caulking, CDs & DVDs, Clothes, Cold cream, Combs, Cortisone, Crayons, Curtains, Dashboards, Denture Adhesive, Dentures, Deodorant, Detergents, Dice, Diesel fuel, Dishes, Dresses, Drinking Cups, Dyes, Electric Blankets, Electrician’s Tape, Enamel, Epoxy, Eyeglasses, Fan Belts, Faucet Washers, Fertilizers, Fishing Boots, Fishing lures, Fishing Rods, Floor Wax, Folding Doors, Food Preservatives, Footballs, Glycerin, Golf Bags, Golf Balls, Guitar Strings, Hair Coloring, Hair Curlers, Hand Lotion, Heart Valves, House Paint, Ice Chests, Ice Cube Trays, Ink, Insect Repellent, Insecticides, Life Jackets, Linings, Linoleum, Lipstick, Luggage, Model Cars, Mops, Motor Oil, Nail Polish, Nylon Rope, Oil Filters, Paint, Paint Brushes, Paint Rollers, Panty Hose, Parachutes, Percolators, Perfumes, Petroleum Jelly, Pillows, Plastic Wood, Purses, Putty, Refrigerant, Roller Skates, Roofing, Rubber Cement, Rubbing Alcohol, Safety Glasses, Shag Rugs, Shampoo, Shaving Cream, Shoe Polish, Shoes, Shower Curtains, Skis, Soap, Solvents, Speakers, Sports Car Bodies, Sun Glasses, Surf Boards, Sweaters, Synthetic Rubber, Telephones, Tennis Rackets, Tents, Tires, Toilet Seats, Tool Boxes, Tool Racks, Toothbrushes, Toothpaste, Transparent Tape, Trash Bags, TV Cabinets, Umbrellas, Upholstery, Vaporizers, Vitamin Capsules, Water Pipes, Wheels, Yarn [19]

That’s not to say that people shouldn’t conserve, shouldn’t try to be as green as possible. Of course we should. But only radical social and economic change can possibly free us from dependence on oil. That choice isn’t available in the market.

4. Consumers don’t control production

In his article blaming consumers for the BP oil spill, Dave Chameides (who calls himself “Sustainable Dave”) recommends remedial action: “Stop driving your car one day a week … Ride your bike.”

That’s a good idea … but bear in mind that your bicycle’s tires, brake pads, handle grips, cable sheaths, lubricant, paint and other components are all made from oil. The metal was smelted, and the frame was formed and assembled, in factories that depend on oil. The finished bike was delivered to the shop in a diesel-powered truck driving on asphalt (oil again) roads.

The point, as environmental sociologist Alan Schnaiberg and his colleagues point out, is that even though consumers may decide what to buy from among the products that capitalists put on offer, they don’t get to choose how those products are made.

“While individual consumers may be the ultimate purchasers of some of the products of the new technologies, decisions about the allocation of technologies is the realm of production managers and owners. … [I]t is within the production process where the initial interaction of social systems with ecosystems occurs and where the key decisions about the nature of social system-ecosystem relationships are made…..

“The decision of which alternative forms of production will be offered consumers is not in their hands. It remains in the hands of a small minority of powerful individuals … who are empowered by their access to production capital. It is in those decisions where social systems (the producers’ access to capital and labor, and their assessment of potential liability, profitability, and marketability) and ecosystems (the producers’ access to natural resource inputs and ecosystem waste sinks) first interact.” [20]

Michael Dawson makes a similar point:

“Ordinary product users remain shut out of major economic decisions. Corporations plan, design, and sell goods and services according to their own profit requirements, without providing any means of subjecting basic productive priorities to popular debate and vote.” [21]

Even if we accept the farfetched idea that oil companies drill new wells only to please consumers, no one can reasonably suggest that consumers somehow forced BP to cut every possible corner, suborn regulators, violate safety guidelines, and worse. Those decisions were made in BP’s executive offices, and consumers had no say.

“In the end,” writes environmental policy professor Thomas Princen, “the idea of consumer sovereignty doesn’t add up. It is a myth convenient for those who would locate responsibility for social and environmental problems on the backs of consumers, absolving those who truly have market power and who write the rules of the game and who benefit the most.”[22]

Blaming Individuals for Capitalist Destruction

If the idea that consumers are in charge makes little sense for the capitalist economy as a whole, it is completely absurd for the oil industry. As New York Times columnist Bob Herbert points out, working people simply don’t count in this system:

“The fact that 11 human beings were killed in the Deepwater Horizon explosion (their bodies never found) has become, at best, an afterthought. BP counts its profits in the billions, and, therefore, it’s important. The 11 men working on the rig were no more important in the current American scheme of things than the oystermen losing their livelihoods along the gulf, or the wildlife doomed to die in an environment fouled by BP’s oil, or the waters that will be left unfit for ordinary families to swim and boat in.

“This is the bitter reality of the American present, a period in which big business has cemented an unholy alliance with big government against the interests of ordinary Americans, who, of course, are the great majority of Americans. The great majority of Americans no longer matter.”[23]

Nevertheless, as Michael Dawson writes, whenever mainstream thinkers comment on today’s social ills, they always “blame the little folk”

“Ordinary product users, who, because their purchases can be used to accuse them of choosing what they get, usually take all the transferred blame for capitalists’ costly, socially irrational actions.” [24]

It’s true that producers must sell their products, but the idea that consumers therefore control corporate behaviour is ideology, not fact. Immensely wealthy corporations decide what to produce and how to produce it. They spend billions to promote specific products and to protect their power. They allow us to choose – but only among the narrow range of options that they believe will be profitable.

In the Gulf, BP did what every capitalist corporation does – it kept costs down to keep profits up. Its irresponsible actions were bound to cause a disaster eventually – but if the company had lucked out this time, if the explosion hadn’t happened, BP’s executives and shareholders would have been rewarded for producing offshore oil more cheaply than more cautious competitors. That’s the way capitalism works.

The immediate cause of this particular disaster was BP’s greed for short-term profits. The long-term cause, of this and many other disasters, is an irrational grow-or-die economic system that is totally dependent on oil, on “the stuff without which nothing else happens.” A system in which private profit always takes precedence over the environment and human lives.

The journalists, pale greens and others who blame individual consumers are trivializing the problem and distracting attention from the social roots of environmental destruction. No matter how sincere they may be, they are making it harder to achieve real solutions.

This article was first published in Climate and Capitalism,1 an online journal focusing on capitalism, climate change, and the ecosocialist alternative which is edited by Ian Angus.
Related Climate & Capitalism articles

* Conspicuous consumption and destructive wealth: The case of Ira Rennert2
* Murray Bookchin on Growth and Consumerism3
* Growth and Consumerism: Nature or Nurture? 4
* Do Consumers Cause Climate Change?5
* Barry Commoner: The Illusion of Consumer Sovereignty6


[1] Dave Chameides. “Who’s Really to Blame for the BP Oil Spill? We Are.”7 Care2, May 12, 2010.

[2] Mark Coeckelbergh. “We’re all to blame for the oil spill.8” Guardian. June 9, 2010.

[3] Some other examples:

* Who’s To Blame For The BP Disaster?9
* The Bp Oil Spill: Who’s to Blame?10 (See comment by ‘Martin Smith’)
* The Oil spill…..who’s to blame? 11
* BP oil spill – who’s to blame?12
* Breaking Down the BP Gulf Spill Blame Game13

[4] Al Gore. An Inconvenient Truth. New York: Rodale, 2006. p. 305

[5] Mark Perry. “Consumer, Not Corporate, ‘Greed’ Is Ultimately Behind Layoffs.” 14Macinac Center for Public Policy, January 7, 2002.

[6] Ludwig von Mises. Socialism: An Economic and Sociological Analysis. New Haven: Yale University Press, 1951. p. 21

[7] James Gustave Speth. The Bridge at the Edge of the World. New Haven: Yale University Press, 2008. p. 62

[8] Douglas Dowd. Inequality and the Global Economic Crisis. London: Pluto Press, 2009. p. 59

[9] Michael Lowy. “Advertising Is a ‘Serious Health Threat’ – to the Environment.” Monthly Review, January 2010. p. 20-21

[10] Michael Dawson. The Consumer Trap: Big Business Marketing in American Life. Chicago: University of Illinois Press, 2005. p. 1, 134. See also Dawson’s excellent website with the same name.15

[11] John Kenneth Galbraith. The Essential Galbraith. New York: Houghton Mifflin Harcourt, 2001. p. 35,

[12] James B. Davies, Susanna Sandstrom, Anthony Shorrocks, and Edward N. Wolf. “The World Distribution of Household Wealth16.” United Nations University World Institute for Development Economics Research, February 2008. p. 7

[13] Calculation courtesy of Dick Nichols. The eleven are the ten men and one woman from Australia on the Forbes magazine list of the world’s billionaires. The 800,000 households are the poorest decile (10%) according to the Australian Bureau of Statistics.

[14] Jonathon Freedman. “Don’t Be Fooled by Europe’s Mood.”17 The Guardian, May 9, 2007.

[15] Eric Toussaint. Your Money Or Your Life: The Tyranny of Global Finance. Chicago: Haymarket Books, 2005. p. 34.

[16] Dawson. The Consumer Trap. p. 144.

[17] John Bellamy Foster. Ecology Against Capitalism. New York: Monthly Review Press, 2002. p. 101

[18] David Strahan. The Last Oil Shock. London: John Murray, 2007. p. 116.

[19] based on

[20] Kenneth A. Gould, David N. Pellow, and Allan Schnaiberg. The Treadmill of Production: Injustice and Unsustainability in the Global Economy. Paradigm Publishers, Boulder, 2008. p. 20, 22

[21] Dawson. The Consumer Trap. P. 144.

[22] Thomas Princen. “Consumer Sovereignty and Sacrifice: Two Insidious Concepts in the Expansionist Consumer Economy.” In Michael Maniates and John M. Meyer, editors, The Environmental Politics of Sacrifice. Cambridge: MIT Press, 2010. p. 152

[23] Bob Herbert. “More Than Just an Oil Spill.”19 New York Times, May 21, 2010.

[24] Dawson. The Consumer Trap. p. 144.

Ian Angus is a frequent contributor to Global Research. Global Research Articles by Ian Angus