The Exxon Valdez Disaster: An Analysis Of The Company's Response And The Repercussions Of Those Responses

1230 words - 5 pages

1. What was the basis for the crisis?The basis for the crisis was that Exxon really didn't have an emergency plan for a spill that near to shore. They were more concerned with losing tankers at sea."The company must do well solving the actual problem - in this case, cleaning up 10 million gallons of spilled oil. And the company must create a positive perception of how the problem is handled." (Elliott, 1989)2. Were there any policy decisions that led to the crisis?This depends on whether you see the cause as a policy decision by Exxon or an accident caused by their employee Captain Joseph Hazlewood, He admits to consuming at least three drinks before boarding the ship that day. He was acquitted though on charges of operating the tanker while drunk. He was however convicted with a misdemeanor offense of illegally discharging oil.3. How was the crisis managed?Compared to the negligence that led to the actual spill, the clean-up of the crisis was handled surprisingly quickly. The NOAA deployed a team of scientists that predicted the trajectory and distance of the oil spills. The data gathered from their calculations was used by Coast Guard and Exxon crew members to clean up the spills. Exxon paid for several methods of cleanup. A small oil-burning campaign was instituted and, after a few successful results, it was discontinued due to inclement weather. Also, mechanical skimmers tried to remove the oil, and succeeded partially before the equipment was clogged. Many gallons of oil were also transferred into temporary storage facilities while Exxon supported the use of a dispersal agent.Over the long term, Congress passed the Oil Pollution Act of 1990 and the EVOS (Exxon Valdez Oil Spill) Trustee Council was also established to help contain and control the current and future oil management problems. The EVOS in particular was responsible for many restoration projects in the affected areas.4. How was the crisis resolved?The crisis was resolved by clean up efforts, money being distributed to the region and people affected by the disaster. This disaster also made way for all oil tankers to have a double lining in the hull so if it does rupture the oil can not get out into water.5. What were the short term effects of the firm?The short term consequences to Exxon as a result of the spill in Prince William Sound were the cost of the cleanup, the reaction of the stock markets and the sociological impact of the accident.The estimates of the cleanup cost were expected to exceed $1.25 billion, and less than one-third was covered by insurance. Exxon's net income for the June 30, 1989, quarter, after the spill-related expense, amounted to $160 million, or 13 cents a share, a pittance compared with the previous year's second-quarter net of $1.2 billion or 90 cents a share. In fact, that's the lowest Exxon profit for any quarter in 20 years. Earnings had consistently topped $1 billion a quarter.Exxon's stock has indeed responded to the effects of the spill however...

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