In 1973 the Ford motor company published an innocent-sounding memo titled “Fatalities Associated with Crash Induced Fuel Leakage and Fires”.
The document, which went on to be known infamously as the “Pinto Memo”, used cost-benefit analysis to compare the price of modifications to the Ford Pinto to the societal costs for injuries and deaths related to fires caused by a known design fault.
In the memo Ford estimated the cost of modifying the Pinto’s fuel system to be $137 million across the 12.5 million cars manufactured. If the system was left unmodified Ford estimated there would be an additional 180 burn deaths and 180 serious injuries per year which would cost around $49.5 million. A maths problem — more than $130 million to fix, almost $50 million to pay up.
The Pinto was not recalled.
The ‘Pinto Memo’ was quoted as a key factor in a jury’s 1978 decision to award $125 million in damages against Ford in a case involving the rupture and explosion of a fuel tank during a crash.
Anyone who has seen the movie Fight Club is familiar with this scenario, but many do not realise it was based on a true story.
If you think the above case is an example from the distant past then think again.
Just this year Freedom of Information requests revealed that BP had said in a 2016 report that oil spills would be “a welcome boost to [local] economies”.
It should no longer be a surprise that almost half a century after Ford wrote its infamous Pinto memo and rolled out “the barbecue that seats four” companies still think that way.
You can see it in Nestlé’s use of child labour more than a decade after the company promised to stop. You can see it in Monsanto’s pollution of Anniston, Alabama, for decades with toxic PCBs. Which the company knew all about, but covered up and was later ordered to pay $700 million in compensation for.
We should learn from these stories.
In offshore oil drilling there are different ways for assessing risk — ALARP and ALAP. Despite their similar sounding acronyms they are miles apart.
ALAP stands for “as low as possible” while ALARP is “as low as reasonably practical”.
It turns out “reasonably practical” is a very wide door that includes a whole host of financial considerations.
If you don’t want to drill a second relief well next to your risky deepwater drilling project or have a capping stack on hand, both measures the oil companies admit would be preferable for controlling a blowout but costly, and instead would prefer to wait the 85 days it took to stop the Deepwater Horizon then that’s fine.
In fact documents from BP reveal it would be “highly unlikely” they could find a relief well if they needed one to stop a blowout and that a capping stack would be unable to be used one third of the time.
The risks of not having these at hand are “reasonable”.
Professor Rick Steiner was recently in Australia to launch his report — Crude Intentions: Exposing the Risks of Drilling and Spilling in the Great Australian Bight.
Steiner said that more than 30 years responding to spills and disasters had taught him that it was customary for the oil industry to “understate risks and impacts of the project and overstates its mitigation and response capability”.
“Oil companies are famous for saying everything’s fine — until it’s not,” Professor Steiner said.
“This happened in Alaska, the oil industry thought that everything was fine with their tanker system until the Exxon Valdez slammed into a very well marked rock reef.
“In the Gulf of Mexico [Deepwater Horizon] BP and Transocean thought they had everything worked out, no problem, be happy — until it wasn’t.”
This comfort with taking risks makes more sense when you remember the Ford Pinto, remember the communities BP thinks would “welcome” oil spills, and remember that companies just do not think of risks in the same way as communities.
A single year after the Deepwater Horizon oil disaster BP posted a profit of $5.3 billion.
In the eight years after the Deepwater Horizon the ocean still hasn’t recovered and biodiversity is “flattened”.
That’s what we get when we swallow the “acceptable risks” that large companies give us. They may have to pay. But it’s just a maths problem for them.
For an industry that earns trillions and can bounce back into profit a single year after the worst oil disaster in human history, that maths problem is easy.
These consequences are all part of the plan for the companies that do not have to live with them.
All of this is without even talking about the impact of burning oil on climate change — it’s severe. The fact is we cannot afford to burn the oil and coal we have now, let alone go looking for more. Today’s Emissions Gap Report shows we need to get on track, quickly.
When the Ford Pinto rolled out of the production line after a memo saying there could be 180 people killed a year due to a design flaw — that was all part of the plan.
If oil began to spill into the Great Australian Bight, destroying the marine life, crippling economies, and stealing the beaches and seas from future generations, the oil company’s documents thought it would be a “welcome boost” to the economy.
A “welcome boost”, regrettable, but all part of the plan.
So when a company tells you they have looked at the risks and have a plan remember it means something different to them than it does to you.
You might be horrified at what their plans really are and exactly which risks they think are “acceptable”.