In the previous article, we talked about the circular economy and sustainable supply chain in the oil and gas industry. We saw the transition of the oil industry from a linear economy model to a circular economy model. Major companies like Shell, BP, and Chevron have adopted some circular economy strategies, such as waste minimization, resource recovery, and closed-loop systems. However, the oil industry’s narrative of sustainability through a circular economy is often undermined by persistent ethical failures. In this article, we will examine how oil industries promote a circular economy narrative while perpetuating practices that undermine business ethics standards.
Depleting Resources: A Finite Future?
We can not deny that there is a limit to the finite fossil fuels on Earth. There will be a time in the near decades when these fossil fuels will reach their minimum level and will run out eventually. Simultaneously, global energy demand continues to rise, leading to increased extraction from earth’s limited resources. According to the U.S. Energy Information Administration (EIA) report on global oil markets, global liquid fuel production (barrels/day) increased from 0.6 million barrels/day in 2024 to 1.7 million barrels/day in 2025. This growth is unquestionably endangering our future. The Millennium Alliance for Humanity and the Biosphere (MAHB) projects the following depletion timelines for fossil fuels:
- Oil endpoint is 2052 – 27 years
- Gas endpoint is 2060 – 35 years.
- Coal endpoint is 2090 – 65 years.
In light of these projections, the continued extraction of liquid fuels by the oil and gas industry is rapidly exhausting earth’s finite resources.
Labor Rights Violations: The Human Cost in Oil Industry
With the increase in oil extraction and depletion of earth resources, labor law violations in the oil industry have also become very common. Common violations include hazardous working conditions, wage theft, and unpaid overtime. U.S. Department of Labor’s states that investigations into Jet Specialties Inc., Frank’s International LLC, Stream-Flo USA LLC, and Viking Onshore Drilling LLC revealed violations of the Fair Labor Standards Act’s overtime provisions. Since 2012, over 1,100 investigations in the industry have led to the recovery of more than $40 million for over 29,000 workers nationwide. These investigations clearly show a recurring trend of oil industry employers neglecting to pay workers for legally required overtime.
Besides this, oil companies like BP and Shell have a notorious history of subjecting their workers to unsafe and hazardous working conditions. In 2005, fifteen workers lost their lives, and many were hurt in a massive explosion at BP Refinery in Texas. This was due to high pressure from BP management to cut costs and delay maintenance schedules, along with poor safety procedures.
On April 20, 2010, the Deepwater Horizon oil drilling rig owned by BP oil industry exploded and sank. Eleven (11) workers were killed and seventeen (17) were injured in this accident. Moreover, this also caused the largest oil spill in the history of marine drilling. According to the Frontline PBS documentary, internal documents reveal that BP engineers ignored standard engineering procedures to reduce costs on this project. In doing so, BP management and engineers prioritized profit over worker safety, putting their lives at risk.
Environmental Injustice & Human Rights Violations
The oil and gas industry significantly impacts the health and human rights of communities and wildlife near drilling sites and refineries.
Health Risks of Oil and Gas Pollution
The Wilderness Society states that more than 12 million people live within the 1/2-mile distance of 1.2 million oil and gas production facilities in the United States. The communities are exposed daily to hazardous pollutants. These pollutants cause cardiovascular, respiratory, and other diseases. Moreover, these pollutants are responsible for 13% of the deaths of people aged fourteen (14) and older in the United States. Also, when these pollutants are mixed with drinking water sources, they cause liver damage, cancer, and birth defects in newborn babies.
Environmental Racism by Oil Industry:
The Wilderness Society also highlights that small communities like black, brown, indigenous, and low-income communities often face higher pollution levels in their neighborhoods. In Greeley, Colorado, a largely Latino and immigrant community is fighting to shut down an oil and gas site placed near their school—after a similar site was moved away from a white school due to protests.
Shell’s Human Rights Abuses in Ogoni, Nigeria
Other than environmental justice, and labor law issues, these oil industries are also accused of human rights violations and corruption. One of the notorious examples is the execution of Nigerian activist Ken Saro-Wiwa who led the protests against Shell’s oil pollution in the Ogoni region of Nigeria. Britannica reports that the Nigerian military, allegedly backed by Shell, arrested and executed Ken Saro in 1995. His death sparked global outrage, leading to lawsuits and a $15.5 million Shell settlement to his family. The case remains a symbol of corporate environmental and human rights abuses.
Impact on Marine and Wildlife
Oil and gas extraction is a threat to marine and wildlife. The drilling process disrupts wildlife by creating noise, increasing traffic, and fragmenting habitats. The Wilderness Society reports that Wyoming’s pronghorn antelope, known for their long migrations, are especially vulnerable as they travel from Grand Teton to the Upper Green River Valley in winter. The intense extraction activities, including sprawling well pads and constant compressor noise, force them to search for forage in areas not yet bulldozed by oil industries.
In Africa, only a small fraction of gorillas, a mere 17%, currently reside within protected areas according to WWF. Vast swaths of their forest habitat have been destroyed as oil and gas companies and logging operations move into gorilla territory.
WWF also advocates for marine life. It reports that whales and other marine mammals use sound to navigate and find food. Loud seismic blasts from oil and gas exploration can deafen and harm these animals, causing injury, confusion, and death.
Climate Change: The Industry’s Narrative vs. Actions
According to the United Nations, fossil fuels like oil, coal, and gas are the largest contributors to global climate change. They account for 75% of the global greenhouse gas (GHG) emissions. Among these GHGs, nearly 90% are carbon dioxide emissions.
Instead of shifting towards green energy sources, AsiaFinancial reports that oil industries are stepping back from renewable energy, and inclining more towards the extraction of fossil fuels. According to the New York Times article, BP promised in 2020 to cut its oil production by 40% by the end of this decade. However, it backtracked in less than three years and said that it would spend more on fossil fuels. The company also abandoned $1.1 billion in offshore wind projects and intends to sell off other wind energy assets.
The New York Times also reports that Shell has softened or discarded its emissions reduction targets as Shell doesn’t see any business benefits in renewable energy investments.
The oil industry’s apparent disinterest in renewables is troubling given the urgent climate crisis. This raises questions about their business priorities and long-term plans.
Conclusion:
The oil industry’s shift towards a circular economy, as seen with companies like Shell and BP, is undermined by persistent ethical failures. Circular economy & business ethics issues in the oil industry reveal critical concerns, from depleting finite resources and labor law violations to environmental injustice and devastating impacts on wildlife. Furthermore, the industry’s contribution to climate change and reluctance to fully embrace renewable energy raises serious questions about its commitment to a sustainable future. In order to genuinely move towards a sustainable future, the oil industry must address these ethical lapses and prioritize long-term environmental and social responsibilities over short-term profits.
Have any questions or want to know more about circular economy, sustainable supply chain, and business ethics issues in oil & gas industry? Please reach out to the COBE Ethics Chair at COBEEthics@boisestate.edu. Explore the College of Business and Economics (COBE) website to learn more about undergraduate and graduate degree programs in economics, and supply chain management.