The purpose of the report is to analyze the ethical practices undertaken by the major oil and gas industry in order to carry out their business activity. From the case study, it has been evident that in order to get access to the available oil in the surface of earth, the giant oil and gas companies like British Petroleum (BP), Exxon and several such oil and gas giants are actually creating ethical dilemma in their business activity. At the time of drilling oil, the environment is getting degraded which is creating major concerns for the environment (Hase and Phin 2015). This particular study shall highlight the major reason behind the degrading environment situation and how these oil and gas industries are actually creating hindrance in the sustainability of the environment. A detailed analysis on the leadership approach to be undertaken by the leaders of the oil and gas industry shall also be undertaken in this study.
Managing Ethical Risk in the Oil and Gas Industry To Reduce Accidents:
As commented by Bergh et al. (2014), in order to avoid negative consequence of major accidents, primarily it is important to identify the major hazards of the business operation. In case of oil and gas sector, the ethics of business activities are related to the environmental, legal, economic and even the assets of the people especially in those countries where oil and gas is the major source of income. As argued by Ferrero et al. (2016), oil drilling activities are very challenging and it often results in certain accidents. However, as evident from the major case studies like BP and Exxon, it has been found that if not the accident but the intensity of the loss that these oil industrial giants has created could easily have been minimized. Therefore, it is very important to consider certain strategies in order to minimize the impact of risks and health hazards and consider ethical approach towards the complete oil extracting activity. .
In order to manage risks related to the extraction of oil and gas that would eventually reduce the number of accidents, certain pivotal steps can be easily followed. As stated by Badiru and Osisanya (2016), for the governmental and non-governmental industrial agencies, it is important to conduct the work following self-policing standard. It should be the prime responsibility of the leaders to consider the environmental safety and sustainability in terms of extracting oil and gas. It is expected that the leaders would maintain certain standard that would eventually help them to manage the entire working situation that would result in less harm to the environment (Mansor et al. 2013). In addition to this there should be flawless communication and better reporting system that would help to take immediate action in lesser time because it has been evident at many times that the intensity of the risk increases because the risk is not reported on time and the right approach to combat the situation is also reduced.
With the analysis of the case study, it has been found that the major dispute that has occurs in case of BP and Exxon could have been minimized if proper steps were taken at the right time. Investigations have showed that there was involvement of corruption and unethical practices in the overall process of oil drilling (Ferrell and Fraedrich 2015). Again, the oil spill also took away lives of innumerable water animals. In fact, the oil spill has been found to affect the costal lines as well. This has degraded the lives of not only the animals and plants but has also degraded the situation of the people living along the coastal areas as it has degraded the water resource of the region. The intensity of the risk could have been minimized if proper ethical approach was undertaken (Bertocco and McCreery 2014).
Comparison of the Risks that BP and Exxon Continue to Face in Providing an Adequate Supply of Energy
The primary risk faced by these oil supply giant is related to the legal aspect. The approach made to supply oil at the right time in order to meet the demand of the oil and gas ultimately lead to an irreparable disaster. The aftermath situation was more threatening as it took away lives of huge plants and animals and has created a threat for them (Nwagbara and Brown 2014). These oil and gas companies are still engaged in the risky behavior just to ensure their profit margin remains high. It has been evident that the BP oil spill and blowout is the worst case scenario that the world has ever faced. The accident resulted in the killing of 11 workers and destroyed the semi-submersible and the mobile drilling rig released by BP from the Transocean resulted in huge explosion at several points (Revie 2015). Although the organization managed to release, 40,000 barrels of oil before setting a permanent cap on the surface, the risks and accident already created major issues that degraded the ethical perspective of the business activity.
These oil and gas industries are facing challenges related to environmental sustainability. The oil spill resulted in the contamination of water and has significantly contributed to the contamination of the air as well. As the oil reserves are present beneath the ocean surface, any potential leakage would eventually harm the water life. Similar evidences were found from the oil spill of BP (Ferrell and Fraedrich 2015). The risk that was caused due to the Exxon Valdez spills created environmental disaster and eventually increased the liability of the company to cleanup and restoration.
Leadership challenges are also another aspect that is continuously harming the operational activities of the oil and gas industry. One of the major reasons behind the human made disaster of the Exxon Valdez was that wrong approach undertaken by the captain of the ship that lead to hit the rock and cause oil spill. With the detailed investigation, it had been found that the disaster caused by BP was more vulnerable compared to other oil spills and disasters that occurred at the time of extracting oil. Investigation revealed that BP was using low cost and cheap tools for the purpose of extracting oil and this was the reason that the oil spilt out of the pipe (Revie 2015). Hundreds of people in the Gulf of Mexico had to suffer aftermath the situation and thus, it can be easily considered that the disaster caused by the BP was the most.
Importance of Ethical Leadership in the Oil and Gas Industry to Manage Risk:
The degrading situation of the oil and gas industry has resulted in major leadership and managerial issues. This has automatically created the urgency of considering ethical leadership approach in the oil and gas industry in order to manage the risk. The oil spill caused by BP, Exxon has created good examples for the future leaders to consider ethical approach in order to carry out the business activity in the right way. In the view point of B Rasmussen et al. (2014), ethics is about morality and the several other factors that influence support and coach the other members. Ethical leadership can thus affect the organizational performance to a large extent. It has also been evident that major oil and gas sector works are carried on a contractual basis and this is the reason that a particular leader fail to show any kind of ethical approach towards their work (Grant 2013). It has also been evident that in spite of the several warnings, the captain of the ship did not consider the situation and did sense activities that resulted in the death of more than 200 species of birds and hindered the fishing industry as well (Ferrell and Fraedrich 2015). These clarify the situation that the major reason behind the degrading condition of the business activity is the incompetency of the leaders to manage the situation.
As commented by Crane and Matten (2016), ethical leadership creates a trust among the people in the industry. This way the industry would find itself in a safer situation and would help to create a community level relationship even in the delicate situation. It has to be understood that oil and gas industries set expectation among the stakeholders and they can operate with negligible or non-existent consultation and environmental assessment process. As highlighted by Shaw (2016), in the recent situation, considering the sustainability approach is the major concern for majority of the industries. Therefore, it is equally important for the oil and gas sector to consider ethical approach towards environmental sustainability for the betterment of the environment. Therefore, the business activities should always be focused towards environmental condition rather than considering the profit margin of the company (Hartman et al. 2014).
Another importance of ethical leadership is the reasonable care for the employees and the staffs working for the particular industry. Health and safety of the employees also falls under the consideration of the leaders in an organization (Chell et al. 2016). As it has been found that in the respective cases that many workers have to sacrifice their lives for the sake of oil drilling, it should fall under the prime responsibility of the leaders to undertake ethical approach towards the oil drilling activity. It is expected that if ethical approach is undertaken by the leaders, it would result in a better business situation.
The study highlighted that if ethical approach towards the business activity is considered, it is likely to reduce the ill effect of the degradation of the environment caused by these oil and gas industrial giants. It has been found that the disasters that took place in the major oil shores were a result of the unethical approach undertaken by these industries. There is no doubt that these organizations have the capability of carrying out the drilling and oil extraction in the ethical way that would not harm the environment. However, lack of proper managerial and ethical approach towards the same has lead to the situation where the environment and the living beings have to suffer. It has been found that in the recent time, ethical leadership is the most important thing under consideration and that the leaders of the oil and gas industries should consider it in order to improve the current scenario of the oil and gas sector.
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