Tuesday, August 08, 2006

Beyond Problematic

Something is up at BP. I don't follow the company, don't own stock or bonds of theirs, but something just ain't right. Within the last year, BP has gone through all of the following, courtesy of the Wall Street Journal:

"Among the problems it has faced: an explosion last year at BP's Texas City, Texas, refinery that killed 15; a large oil spill at Prudhoe Bay earlier this year; and allegations of energy-market manipulation by BP traders this summer."

Plus now an corroded pipeline is causing the company to shut down their Prudhoe Bay oil field. As an outsider, it seems grossly irresponsible that the corrosion was allowed to go so far as to cause a complete shut down of an entire oil field. Couple this with the other problems, and it just sounds like a company that is cutting corners.

As an investor, nothing makes me more nervous than a company that seems all too willing to cut corners. That kind of attitude permeates an organization, and often results in cultivating less than honest people. See trading scandal. The company may also start sacrificing the long-term for the short-term, like ignoring basic maintenance to cut expenses now. See pipeline problem.

Again, I haven't done in depth research into BP, but where there is smoke...

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