The Marketplace Report: BP Oil Fined for Lax Safety

Noah Adams talks to Stephen Beard of Marketplace about the $21-million penalty BP oil has been ordered to pay for violating health and safety regulations. The U.S. Department of Labor's Occupational Safety and Health Administration announced the fine on Thursday for "egregious, willful violations" of safety standards that led to a fatal explosion at BP's Texas City refinery in March.

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NOAH ADAMS, host:

Back now with DAY TO DAY. I'm Noah Adams.

Major oil companies with operations in the Gulf of Mexico have been bracing themselves for Hurricane Rita, but one of those companies has something other than a natural disaster to worry about. The British oil giant BP has been blamed for a man-made calamity, a fatal explosion at its Texas City refinery back in March. The company has just received America's biggest ever fine for violating health and safety regulations. Criminal charges could follow. Joining us from the "Marketplace" London bureau is Stephen Beard.

Stephen, take us back to March. What happened there at that BP refinery?

STEPHEN BEARD ("Marketplace"): Well, it was March the 23rd. There was an explosion caused, it's believed, by highly volatile liquids and gases escaping from a vent. It was a major incident. Fifteen workers died and more than 170 were injured. And a US regulator, the Occupational Safety and Health Authority, has investigated the accident and has just found BP very much at fault.

ADAMS: And what were the causes? What did the company do wrong?

BEARD: Well, they've been accused of all sorts of things. I mean, the verdict was very damning. The regulator said BP had been guilty of literally hundreds of serious violations of health and safety regulations at the plant. There were things like failing to make a proper record of previous accidents and numerous cases of equipment malfunctioning.

ADAMS: It's very embarrassing for BP. What is the company saying in defense of what they did?

BEARD: Well, the company is not really trying to defend what happened. They've agreed to pay the fine, and it's already accepted full responsibility for the accident, but it doesn't admit all the violations. BP's got to be careful here because the regulator says it may refer some of these violations to the Department of Justice, so there could be criminal charges against the company and against individual employees. And then there are lots of lawsuits looming.

ADAMS: Yeah. And it looks--the fine's 21 million. It's going to cost BP a lot more in the future, I would imagine.

BEARD: Yes, financially the bill's going to be a lot bigger than that. BP has set aside 700 million to compensate the victims of the blast and their families, and that bill could go much higher. Hundreds of plaintiffs have already filed lawsuits. Mind you, BP is well able to pay. Last year it made a profit of $16 billion on the back of higher oil prices. But this story really does raise serious questions about safety in America's oil refineries as they go--as they drive flat out to satisfy America's ever-increasing thirst for gasoline.

And coming up later today on "Marketplace," we'll be back in natural territory--natural disaster territory--and assessing Hurricane Rita's threat to the Gulf energy industry.

ADAMS: Stephen Beard of public radio's daily business show "Marketplace." "Marketplace" joins us regularly at this time for discussions about money and business. It's produced by American Public Media.

Thank you, Stephen.

BEARD: Thank you, Noah.

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