2008 CHDS CIP Workshop Paper

This paper will examine the link between corporate profitability, economic sustainability and the environmental reliability of the petroleum industry in the United States. This is an empirical study based on ten years of data (1996-2006). The investigation builds upon the earlier work of Rose (1990) involving airline safety. Rose determined “richer was safer” when it came to airlines; but this important research stream has not been extended to other classes of industry or organizations. The nature of profitability in this sector will be examined. Its impact on environmental reliability will be made explicit, and the nexus of profitability and environmental reliability to organizational sustainability will be explored and further developed. The link between profitability and reliability is contingent on managerial choices involving resource allocation for the purpose of repair and maintenance, equipment upgrading and acquisition of new technologies. We will argue for a more comprehensive and robust approach to discretionary spending that has the potential to improve not only the environmental reliability of the petroleum industry, but also the industry’s sustainability in a very dynamic socioeconomic setting