BP oil leak – the power of the big corporation?

By Andrew Pakes

With the oil spill in the Gulf of Mexico now within touching distance of Florida, the BP disaster speaks to a larger story of private enterprise and our thirst for precious resources.

By opening up opportunities and reducing barriers to international trade, globalisation has created the conditions for big corporations like BP to gain an even longer reach into our economic life. In the face of the real threat of damaging and irreversible climate change we have not yet, however, come up with a compelling narrative about what the modern left really thinks about these global giant corporations.

We forget at our peril that for every progressive effort to change the legislative framework by green groups there is a better funded and more discrete lobbying force at work on behalf of the oil companies. In the last few months in America there have been moves to open up drilling in Alaska whilst even in the UK we are looking at the potential to explore energy sources around the Falklands.

But what is our response?

Aside from the immediate implications of the oil leak, the disaster also has lessons for how we organise our energy markets and the role of the state. Quite rightly, many in America – not least the communities in the southern states most affected by the crisis, are looking for effective action by the White House. Yet at the same time the Tea Party movement has been gaining momentum on an avowed ticket of reducing the role of the state. In the UK, meanwhile, the new coalition is united more in its libertarian approach to market issues and shrinking the state than it is in redefining a smarter role of economic intervention. Therein lies the rub: just at the moment that trust in politics and the state is on the wane we face a global challenge that requires more state action, not less.

The scale of the threat facing us on climate change, however, does have the potential to help define the power of good government and the need for a positive, smarter state. The size and power of companies like BP show that in many instances they have greater economic and political power than many governments. And that conclusion leads to some profound questions about our ability to tackle issues with a global reach, such as energy security and climate change, and what type of framework is required for global enterprise.

The oil leakage is estimated to have already cost BP over billion dollars. Every day, lost profits and clean up costs are rocketing upwards. By the end of this disaster the clean up and compensation package will dwarf the amount being invested in alternative energy sources.

With the clock ticking on our current fossil fuel supplies, energy companies and governments are taking ever riskier decisions about oil and gas exploration. Sometimes those risks will lead to ecological disasters in the quest to drive down costs and get a good return. At best it is a distraction from tackling climate change, at worst it is simply pillaging the earth for (short-term) profit.

Over the last twenty years, the big oil companies have become more powerful players, not less. In the former Soviet states previous national assets were sold off like a drunken game of Monopoly. Genuine and real progress was made by the Labour government and the energy companies made to play their part in delivering efficiency measures. But that was only the start of the journey.

Our future success requires a better debate and understanding of the role of the state in tackling both the national and international challenges in climate change. It is this reality that makes the coalition government and its drive to shrink the state at all costs so depressing.Our future success will also require a fundamental assessment about the relationship between the big global enterprises, like BP, and the political will to achieve progressive goals. How accountable are the big international corporations and what power do our elected representatives have in the modern economy? For the anxious fishing communities and tourist industry in southern America, that is a very real question indeed.