Why BP's handling of the spill has the entire oil industry panicked.

Early on Monday, BP’s boyish CEO, Tony Hayward, sat in an open-collared white dress shirt and, rocking back and forth in a studio chair, submitted to a series of four network interviews about his company’s catastrophic oil spill in the Gulf of Mexico. The questions from NBC, CBS, ABC, and the BBC differed slightly, but to all the anchors, Hayward delivered a similar line: “This is not our accident.” In other words, it's not BP's fault. Only after making that point did the 52-year-old Hayward proceed with a vow to clean up the mess and cover any damages.

Hayward is not known to be a gruff oilman. Yet his slow and defensive public response to the April 20 rig explosion has dismayed many oil and p.r. industry veterans who say that BP lost control of public perceptions virtually from the outset. Its first corporate statement after the explosion was a link to a press release from Transocean, the Swiss-based operator of the rig from which BP’s Macondo well was being drilled. And then, for almost two weeks, neither Hayward nor any other London-based executives got in front of the cameras on the scene to explain what they were doing and would do about the spill. When Hayward finally did, the British oil executive seemed intent on conveying only one crucial point—that, unlike a string of accidents in BP-run operations going back five years, this one was not inflicted directly by his company’s personnel. He bristled at comparisons with a deadly 2005 explosion at a BP refinery in Texas City, Texas. Yet, given the typically intense oversight exercised by Big Oil over important contractor-run projects such as Macondo, Hayward might as well have suggested that aliens seized control of the rig. The overall impression was that of an out-of-control catastrophe in which the company's CEO was attempting to fob off responsibility to a no-name contractor.

Now, the fallout from this clumsy response is making petroleum companies extremely nervous. Executives, not just at BP, but throughout the oil industry, are concerned that the disaster will have the effect of restricting or closing off their continued ability to drill in the Gulf, one of the few remaining places on the planet where oil producers are permitted a relatively free hand. That's why Exxon, Shell, and Chevron, which all have significant operations in the Gulf, are pitching in technical assistance—because the blowback from this disaster might harm their interests as well. "I’m really worried. I think this is Chernobyl" in terms of public opinion, says Merrie Spaeth, a Dallas-based corporate crisis consultant. “It plays to the, ‘Don’t drill, the sky is falling’ crowd."

Indeed, to understand the enormity of what's at stake in the Gulf of Mexico, you have to recall the dramatic effect such disasters have historically had on American politics. The most recent similar event was the 1989 grounding of the Exxon Valdez, a supertanker that spilled some eleven million gallons of oil into Prince William Sound, killed more than 100,000 seabirds and other animals, and dramatized the impact that a single accident can have on nature. But, in terms of overall political impact, one must go back another two decades to a more direct comparison—the 1969 blowout of a Unocal well six miles off the coast of Santa Barbara, California, which spilled around three million gallons of oil into the Pacific Ocean and was instrumental in the birth of the full-throated environmental movement that we know today.. Santa Barbara is why oil drilling in U.S. offshore waters is largely outlawed, and why President Barack Obama—even as he moved on March 31 to ease a moratorium on drilling off of America's east coast and off-limits sections of the Gulf—did not dare touch laws governing California.

The Gulf spill is already overturning attitudes in Washington. President Obama has frozen his plans to lift the drilling moratorium. Few believe that he will return to the same formulation regardless of the environmental outcome: experts predict stiffened regulation of drilling, and companies may not be permitted to produce in a wider area at all. But if the oil comes ashore and spills into the marshes of the Mississippi Delta, all drilling in the Gulf will be in jeopardy, not to mention other initiatives that affect the vital interests of energy companies.