Case | HBS Case Collection | September 2010 (Revised January 2012)

BP's Macondo: Spill and Response

by Julio J. Rotemberg

Abstract

This case starts by reporting various factors that may have contributed to the massive Macondo oil spill, noting that BP, its partners and the government all made decisions that helped cause the accident. It then discusses the response to this spill by BP and the government. This helps provide some context for the decision by the Obama administration to request $20 billion for a fund from BP and for BP's willingness to go along with this request. The case also depicts BP's safety record before this spill, which may also have contributed to the creation of this fund. After this, the case describes the various ways in which the U.S. government is involved in offshore oil, starting from the leasing of tracts, the regulation of drilling and the assessment of fines and damages. To provide a contrast with BP's payments, the case depicts the payments made by Exxon after the Exxon Valdez spill. The U.S. regulatory regime is then briefly compared with regimes in other countries. After a brief description of the way the fund set up by BP sought to distribute funds and of the temporary moratorium that followed the spill, the case ends with discussion of possible regulatory responses.

Keywords: Safety; Metals and Minerals; Crisis Management; Infrastructure; Trade; Pollution and Pollutants; Risk and Uncertainty; Business and Government Relations; Finance; Multinational Firms and Management; Governing Rules, Regulations, and Reforms; Technology Adoption; Energy Industry; Mining Industry; United Kingdom; United States;

Citation:

Rotemberg, Julio J. "BP's Macondo: Spill and Response." Harvard Business School Case 711-021, September 2010. (Revised January 2012.)