What is the Price of an Accident? Understanding the Hidden Costs of Chemical Management
Chemicals are expensive. When you add in the purchase price, the price of storage, the cost of staff to maintain the inventory, the cost of compliance, the disposal expense, plus much more, the total starts to add up quickly. But, like an iceberg, there is also a hidden side to chemical expenses. Although we make every effort to prevent it, on occasion, accidents do happen. To understand the hidden cost of chemical management, we need to understand the price of an accident.
There are two costs with regard to a chemical spill. The first cost deals with the human aspect, and includes any person (employee or not) who was harmed or affected by the accident. The second cost covers the financial side and includes any disbursement the company has to incur due to cleanup efforts and negligence liability by those affected by the accident. When accidents happen and chemicals spill, both sides can be costly.
To illustrate, let’s look at the costs associated with the two major chemical accidents that occurred this year within the United States. The first occurred on April 17, 2013, when an ammonium nitrate facility in the town of West, Texas, caught fire and eventually caused an explosion. The accident tragically killed 15 people, injured another 160 and damaged or destroyed over 150 buildings. From a financial perspective, the site carried a $1 million dollar insurance policy, but is still facing numerous litigation lawsuits in court. The damage is estimated to be at least $100 million. This accident cost dearly both in terms of human and financial loss.
The second tragedy occurred on Friday, January 10, 2014, when 40,000 gallons of 4-methylcyclohexane methanol leaked out of a storage tank and into the drinking water at the Kanawha Valley water treatment plant near Charleston, West Virginia. Thankfully there were no fatalities, but over 300,000 people lost access to clean drinking water and more than 120 were hospitalized because of the spill. The financial repercussions are still to be determined, but the company responsible for the chemicals has already filed for bankruptcy.
When the costs regarding all aspects of an accident are factored into the total costs of a chemical spill, things become very expensive. One way to reduce the total cost is to invest in a chemical inventory management system. The benefits from such an investment include the ability to track up-to-date information regarding chemical inventories, minimize compliance costs and, hopefully, decrease the likelihood of an accident through better management.
Taking the proper steps can significantly reduce the total cost of ownership associated with chemical use. If you would like to know more, please visit our website today.