THE explosion and oil spill at the Deepwater Horizon rig in the Gulf of Mexico has been a corporate disaster of the highest proportions for BP.

Careers are in ruins, a brand is deeply tarnished, investors have lost a huge fortune, wildlife has been destroyed, fishermen and tourism operators’ livelihoods are blighted, and, worst of all, 11 workers are dead.

BP has compounded its mistakes at sea with public relations gaffes of the first order, whether that be the chairman of BP describing the victims of the disaster as the “little people” or the chief executive Tony Hayward’s decision to attend a yachting event last weekend.

The sight of US senators laying into Mr Hayward last week was riveting television. He is the person behind the faceless company who finds himself on the receiving end of an outpouring of grief and anger. And it is right that somebody like Mr Hayward should take responsibility. After all, he is paid a fortune to lead the business.

Yet I came away from watching the senate committee with the uncomfortable feeling that the senators were also seeking to wriggle free of any blame themselves.

It’s hard to avoid the conclusion that BP has been the cause of its own troubles. It is principally responsible for tackling the blowout on the rig, which is currently leaking as much as 100,000 barrels of oil per day. There have been claims that BP knew safety equipment was defective and that the company took shortcuts to save money.

BP’s share price has fallen by almost 50% in two months, wiping approximately $70bn off its market value. Some of this loss in value arises from straightforward estimates of the financial cost to the company, but the majority of it is due to the hammering BP’s reputation has taken in the American press and on Capitol Hill.

Despite being ostensibly a British company, our politicians have stayed clear of the fray, though BP’s biggest investor Standard Life has remained supportive.

The biggest losers from the disaster will be US investors. BP only owns 67% of the rig, the rest being owned by Andarko and other US firms. BP, the product of a merger with Amoco ten years ago, is 40% US-owned, meaning US fund managers will lose more money than their British counterparts.

But it is the company’s British chief executive who finds himself in the hot seat. He is in Russia this morning to meet President Dmitry Medvedev to reassure him that BP’s joint ventures there are unaffected by events in the Gulf.

Analysts yesterday predicted BP would not resume dividend payments for two years and that it may have to sell off some North Sea assets to help meet the costs, all pointing to the fact that this is a huge failing of corporate governance.

The fact is the oil industry is a dirty business. BP is by no means the only firm to spill oil at sea or on land. It happens quite frequently all round the world, including US oil firms causing huge pollution overseas, a fact overlooked by America’s senators. Unlike all of these other spills, this one has occurred on the doorstep of a large western nation that doesn’t take environmental damage lightly.

America’s politicians, and those of the rest of the world, need to be more consistent about oil. After all, we all depend on it. If we want BP and other oil firms to drill responsibly in geologically challenging places, then the cost pressures need to be addressed and appropriate insurances put in place. Otherwise, oil companies might cease to invest in difficult terrains.