The Economic Impact of the BP Oil Spill

Topics: Petroleum, Oil platform, Exxon Valdez oil spill Pages: 6 (2342 words) Published: February 16, 2014

The Economic Impact of the BP Oil Spill
In April of 2010, a British Petroleum operated oil drilling rig off the Gulf of Mexico, the Deepwater Horizon, exploded suddenly after high pressure methane gas from the oil well rose to the drilling rig, causing it to ignite and then sink to the bottom of the ocean floor. The explosion caused a sea-floor level oil blowout, and crude oil was leaked into the surrounding water for three months before a solution was found. After eighty-seven long days, the wellhead was finally capped, and the oil from the well was contained. In the three month span it took BP to figure out a solution to this catastrophic problem, approximately 4.9 million barrels of gasoline were dumped into the water. This oil spill is considered to be one of the largest human caused disasters of our time, and is the largest accidental marine oil spill in history. The spill caused extensive damage to surrounding water and beaches, which is an area that many industries depend on to operate their businesses. States on the coast ranging from Florida to Texas immediately felt the impact of this spill on their economies through their fishing, real estate, offshore drilling, and tourism industries. While the Deepwater Horizon oil spill negatively impacted some industries, some industries were actually able to benefit from it. Environmental Service firms have thrived since the spill, causing their industry to grow. While it may seem that only those states on the coast would be affected, the spill actually impacted the United States as a whole, as Congress is having to reevaluate certain laws dealing with how offshore oil drillers are liable for their economic damages relating to an oil spill. The BP oil spill in 2010 economically affected many industries throughout the country, both regional and national, in both positive and negative ways. 1. Negative Economic Impacts of the Oil Spill

Almost immediately after news of the Deepwater Horizon oil spill broke, states along the Gulf Coast began to worry about how their businesses would be affected. Many of the main industries located in these areas rely on the ocean in one way or another for their businesses to be profitable. Fishing, real estate, offshore drilling, and tourism are four coastal industries that were directly affected by this event. The fishing industry was impacted in various ways. During and after the spill, a large section of the Gulf Coast’s waters were blocked off, leaving commercial fisherman unable to fish. For many local commercial fishermen, their only source of revenue comes from selling the fish they are able to harvest. Even if the waters were not blocked off, the chances that the fish that have survived in the surrounding water are not tainted as a direct result of the oil spill are very low. It can take up to multiple decades for complete ecological recovery to occur, and some species of fish may never fully recover (Terrance 501). With the supply of fish decreasing, the price of fish will inevitably rise. Restaurants will have to raise their prices to keep up with the rising prices of seafood, which then affects the customers. However, as a result of the spill, many Americans are shying away from seafood. Many are afraid to eat seafood that was caught in the Gulf because they are scared that it might cause them to get sick. So even if the fishermen were able to fish as normal, their revenues would still decrease due to the low demand for seafood.

The real estate industry has suffered losses in the recent years due to the communities on the coast looking less attractive to buyers than they previously did. The values of homes and condos have decreased because people do not perceive the areas affected by the spill to be as valuable as they once were. As the property values decreases, so does the amount of tax revenue that local governments receive. Local governments use property tax revenues to support local education, government projects, and...

Cited: Gandel, Stephen. “Cleaning Up On the Spill.” Time 176.3 (2010): 24-27. Academic Search
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Harder, Amy. “Congress Still Grappling with Oil Spill Liability.” National Journal (2011): 17.
Taibbi, Matt. “BP’s Shock Waves.” Rolling Stone 1114 (2010): 46-49. Academic Search
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Terrance Quinn, et. Al. “Impact of The Deepwater Horizon Well Blowout On the Economics of
US Gulf Fisheries.” Canadian Journal of Fisheries & Aquatic Sciences 69.3 (2012): 499-
510. Web. 29 Mar. 2013.
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