OPINION: The oil gusher's pressure from above

Born in London and now a long-time U.S. citizen living in New York, Gerald Lewis is a consultant to oil and convenience retailing companies. He has worked with senior managements of major oil companies worldwide.

Could an enormous organization like BP be just another British company that has stumbled because its top management failed to understand that the United States is different from anywhere else in the world?

Things such as management style, marketing methods, logistics and commercial arrangements, that made such companies successful elsewhere, often don't work in this single country of 50 states, each with their own laws, tax codes, governments and characteristics; with vast distances, an extraordinarily diverse population and a climate that goes from very hot to very cold and from very wet to very dry. It is the most competitive and judgmental market of all.

The Deepwater Horizon oil gusher (it is not a "spill") is only the latest (but certainly the worst) of a series of very serious problems that BP has had with its U.S. operations. In fact, in recent years the company has been convicted of several environmental and safety violations and has paid fines or settlements amounting to well in excess of $200 million to the U.S. government.

While recognizing that oil exploration, transportation and refining are inherently risky operations, it is notable that BP is said to have the worst safety and environmental record of all oil companies operating in the United States.

How is this related to the company's British parentage? The answer may well be that BP is the adoptive parent of three native-born American companies, and it didn't handle its new family very well.

In 1987, British Petroleum (now BP) took majority ownership of Standard Oil of Ohio (based in Cleveland), which sold gasoline primarily under the Sohio and Boron brands. In 1998, the company acquired Amoco (formerly Standard Oil of Indiana); and in 2000, it acquired Atlantic Richfield, which marketed under the Arco brand. Atlantic Richfield had been formed earlier through a merger of the Atlantic Oil Co. - a former component of the Standard Oil Trust - and the Richfield Oil Co. of California.

BP's actions, since putting these assets together, strongly suggest that its top management did not fully understand either the value of the brands it had acquired or the unforgiving nature of the market it had bought its way into.

The old Standard Oil brands - particularly Amoco - rated among the most trusted products you could use in your car, traditionally commanding 2 or 3 cents more per gallon at the pump than secondary brands. With several hundred years of combined experience in the U.S. market, the managements of these companies knew what it took to maintain their standards of operation and to compete fiercely against the other majors for market share.

But BP didn't seem to learn from the companies it acquired and decided to abandon the brands. The company ran a $200-million re-branding ad campaign, after changing the names to BP at more than 11,000 locations and issuing new credit cards to millions of customers. And for what? To get back to being considered a major brand, so that it could continue to command a premium price at the pump and avoid losing customers to the other majors, as well as to the growing low-priced gasoline competition.

And since oil companies generally are not the favorite businesses of an increasingly environmentally conscious public, BP also decided to project itself as a green energy company. "Beyond Petroleum" would have been a brilliant bit of word-smithing, if the company had been able to execute it in more than words.

Instead, while the company was projecting a new unified green image, it was also slashing costs at its decidedly un-green operations. Cutting corners at a refinery in Texas; cutting maintenance at a pipeline in Prudhoe Bay; disposing of waste down abandoned oil shafts in Alaska - these don't seem like the actions of a corporation truly committed to being green. They seem like the actions of a corporation that believes that repeatedly saying something makes it happen, not one that knows that, first, you have to get the fundamentals right.

So is it a surprise that word is now coming out that the Deepwater Horizon gusher might have been caused as much by BP's pressure from the top as by oil pressure from below?