Saturday, May 1, 2010

Spill taints BP image, hurts stock

NEW YORK — BP brands itself a friend of the environment, an energy company that goes "beyond petroleum."
That image, worth billions of dollars, is being sullied by the company's inability to contain a massive oil spill in the Gulf of Mexico.

As the expanding oil slick threatens marshlands and wildlife along the coasts of Louisiana and Mississippi, BP faces perhaps the biggest public relations challenge an oil company has experienced in the U.S. since the Exxon Valdez tanker disaster in Alaska in 1989.

BP's environmentally friendly image has outlasted past accidents, including a Texas refinery blast and an Alaska pipeline spill. But last week's deadly explosion on an oil rig that BP hired and the looming environmental damage are shaping up to be a major problem, experts said.

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Since the accident, BP's stock market value has declined by roughly $25 billion.

An estimated 5,000 barrels of oil per day are spewing into the Gulf, and the company is spearheading the cleanup. But on Thursday, the government sent in equipment to support BP's efforts as the spill was reaching the coast. The Obama administration said BP is responsible to pay for the cleanup, which the company says is costing millions of dollars per day.

Marketing experts and environmentalists say BP's response so far has been superior to Exxon's treatment of the Valdez crash. BP devoted most of its home page on its Web site to the disaster, and it's held regular news conferences.

But it's had some slips. Most notably, BP appeared to initially downplay the extent of the oil spill. It estimated that 1,000 barrels of oil were seeping from the seabed each day. The government later corrected that figure to five times as much.

In addition, local officials in communities in the path of the spill have expressed frustration with the lack of communication from BP officials, as well as the government.

"They have to repair the problem. I'm not sure if anything else is going to matter until they do," said Kelly O'Keefe, managing director of the Virginia Commonwealth University Brandcenter. "And they should apologize."

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