Accounting Theory BP Oil Spill Disasters Essay


Discuss about the Accounting Theory BP Oil Spill Disasters.



The ‘BP Oil Spill’ is measured as the biggest oil spill in the world. It is also known as the ‘Gulf of Mexico Oil Spill’ or the ‘Deepwater Horizon Oil Spill.’ This oil spill not only influenced the environment and people; but also affected economic as well as financial position of nation in a negative manner. The financial position of the US has gone down after this oil spill within the nation. Along with this, this research report is useful to analyze the facts related to the case ‘BP Oil Spill.’ This paper is advantageous to portray the major theories of the public interest theory that should be considered by the politicians and governments of nations at the time of such disaster.

Facts related to ‘BP Oil Spill’

The BP oil spill is considered as the biggest fortuitous marine oil spill in the record of oil industry that took place in the Gulf of Mexico on 20th April 2010. There are numerous reasons behind the oil spill. For case, the key reason is that the management did not implemented appropriate prevention measures to avoid any kind of oil spillage within nation (Houdet & Germaneau, 2011). Along with this, the governance that was involved in the case was not working together with the BP organization. Both, the management and governance were performing their activities in a separate way. So, the lack of coordination is considered a major reason of the BP oil spill. Moreover, the board was not performing its corporate social responsibilities towards the society as well as environment.

On the other hand, the BP organization adopted and implemented poor risk management strategies to reduce the chances of oil spill within nation. The decision making process of the company was very poor. It took an important decision only in last minute; that cannot stop oil leakage in the Gulf of Mexico (Windsor & McNicholas, 2012). Moreover, the company did not provide adequate training to its employees. There was a lack of control within the organization. The management of the organization was unable to examine critical indicators that may enhance the chances of oil spill on the platform of organization. Consequently, the largest oil spill occurred in the history of oil industry. The reputation of the BP organization has spoiled due to this disaster. Moreover, the entire world faced the situation of financial crisis by facing this oil spill within the petroleum industry.

In addition to this, on the basis of the given case analysis, the public interest theory has relevancy with this case. According to the public interest theory, business firms operate their businesses in an inappropriate manner in the economic markets of nation. These firms totally disregard the importance of the society to improve the productivity and profitability of businesses. In this case, the management of the organization was unable to develop appropriate risk management strategies; and perform its responsibilities towards the society in which it was operating its business. These mistakes led to enormous damage to the environment and people of nation (Den Hertog, 2010).

Apart from this, in the case of the BP oil spill, the behaviors as well as attitudes of leaders have been seen disappointed and irresponsible as well. The key players of the organizations were unable to understand the skills of leaders that were linked to the case. The leaders of the BP are totally responsible for this biggest oil spill and environmental disaster. The CEO of the organization accepted that there were some weaknesses in the leadership practices of the organization (Glicksman, 2010). Due to these failures, the management lost control over the culture of organization. The organization did not implement effective risk management strategies, ignore advices of experts and disregard safety issues; that caused the biggest oil spill all around the world. The leaders of the organization were unable to respond this adequate speed as well as attention; and as a consequence, this disaster turned into the biggest oil disaster in the world.

On the other hand, the BP oil spill is considered as the biggest regulatory failure in the world. According to the public interest theory, the regulators were obliged to discover the deficiencies that exist in the regulatory system of the organization. The regulators must recognize that how and why the regulatory system of the company was failed to prevent the BP disaster; and protect both the public as well as environment of nation. The theory suggests some effective reforms that must be implemented by the organization to identify and improve regulatory deficiencies for the protection of people and environment (Houdet & Germaneau, 2011). Moreover, the OCSLA (Outer Continental Shelf Lands Act) that regulates the BP organization outlines some major reforms that are essential to protect the public interest in an effectual and a more comprehensive manner.

In the same manner, the regulators did not think about the stakeholders of the company. As per the stakeholder theory, shareholders, employees, customers, community, unions, suppliers, and government are the key stakeholders of the organization. The stakeholder theory / approach is an important theory of public interest that specifies that an organization must take care of its stakeholders for its growth and success in a long time period. Apart from this, the regulators of the organization also breach the theory of credible commitment (Ni & Van Wart, 2015). Under this theory, they make commitments for the protection of community and environment in which they operate their businesses. But, by considering this case, it is visible that, there were lots of deficiencies within the regulatory framework of the company.

On the other hand, I do agree that the BP oil spill is the biggest disaster in the world. The disaster happened due to the poor management system of the organization. The regulators did not have control on the entire system. They did not implemented effective strategies to reduce the chances of any misfortune within the organization (McNall, Hershauer & Basile, 2011). Along with this, the organization did not consider the public interest theory for the effectual operations of the business. If it had implemented the theory of public interest, stakeholder, and credible commitment then no such disaster may take place within the organization. Moreover, the regulators of the organization did not follow coded of ethics for the period of the oil spill in the Gulf of Mexico. One of the codes that must be implemented by the organization is the safety of the environment and society as well. In this case, it is visible that, this code was not followed by the organization; and as a consequence many people died and the environment was harshly injured during the oil spill (Houdet & Germaneau, 2011).

In addition to this, the BP oil spill spoiled the image of the organization and nations as well. Prior to this disaster, the Gulf of Mexico was recognized for its fishing industries, beautiful environment, and tourism all around the world. These all things changed because of the oil spill within nation. Moreover, the BP oil spill is a case of unethical activity. The major reason behind it is that the goal of each and every organization is the protection of the environment and community in which they exist (Balla, Lodge & Page, 2015). Business organizations are obliged to perform CSR (Corporate Social Responsibility) to show their concern towards the community; and to protect the environment as well. But, the regulators of BP did not perform any responsibility towards the society and environment.

In the same manner, in this case, I am totally against to the BP organization. There are numerous reasons behind this. The foremost reason is that the organization did not conduct codes of ethics within organization. The disaster occurred because of the regulators did not follow proper safety procedures as well as security measures within the organization. BP did not plan emergency response programs to protect people and environment in the case of a disaster within the organization (Windsor & McNicholas, 2012). So, the organization faced lots of criticism. The inadequate business practices of the organizations are liable for the harm of the people and environment.


On the premise of the above case analysis, it can be said that, the BP oil spill was very perilous act in the history of oil industry. This disaster happened due to absence of effective regulatory framework within the organization. Along with this, economic theories such as: public interest theory, stakeholder theory, and so on were not take into considerations by the regulators of the organization.


Balla, S.J., Lodge, M., & Page, E.C. (2015). The Oxford Handbook of Classics in Public Policy and Administration. UK: OUP Oxford.

Den Hertog, J. A. (2010). Review of economic theories of regulation. Discussion Paper Series/Tjalling C. Koopmans Research Institute, 10(18).

Glicksman, R.L. (2010). "Regulatory Blowout: How Regulatory Failures Made the BP Disaster Possible, and How the System Can Be Fixed to Avoid a Recurrence." Retrieved From:

Houdet, J., & Germaneau, C., (2011). The financial implications of BP’s response to the Deepwater Horizon Oil Spill. Comparing damage valuation approaches & highlighting the need for more reliable environmental accounting and reporting. Case study 2011-01, Synergiz, 1-5.

McNall, S.G., Hershauer, J.C., & Basile, G. (2011). The Business of Sustainability: Trends, Policies, Practices, and Stories of Success, Volume 1. USA: ABC-CLIO.

Ni, A., & Van Wart, M. (2015). Building Business-Government Relations: A Skills Approach. NY: Routledge.

Windsor, C., & McNicholas, P. (2012). The BP gulf oil spill: Public and corporate governance failures. Retrieved From:

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