During the last few years, oil spills have become a widely publicized feature of life in the United States and other nations in which deep water drilling is occurring. The most devastating oil spill in recent history was that of the BP oil spill off the Gulf Of Mexico in 2010. Pictures of decimated coastlines, oil soaked wildlife, and tar sands washing up along the beaches made it impossible to ignore the environmental, social, and economic catastrophe that occurred following such disasters. This paper will support the thesis that the economic consequences of oil spills are felt most heavily by the local communities which surround them, and are far more devastating than the financial losses experienced by the companies who own the wells. As a result, communities that consider allowing offshore drilling to occur must seriously consider the potential hazards of such activity.
While valuable coastal areas are usually contaminated by oil spills, there are also significant costs incurred by activities designed to clean up the mess; in addition, significant economic losses are typically experienced by businesses and individuals who depend on the resources from coastal activities. Frequently, tourism and fishery sectors are where the greatest impacts are felt (Economic Effects.) However, many other industry activities including local sectors are likely to experience significant disruption and loss of earnings following these disasters.
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For example, the tourism industry, which is largely profitable to local business owners and individuals, is frequently disrupted by oil spills. Activities including swimming, boating, and diving are interrupted because of contaminated shores; although such contamination is typically short-term, further long-term and damaging economic effects can happen because the public perceives that far-reaching pollution remains well after the toxic oil has been removed. As a result, hotels, tour operators, and other businesses that depend on tourism may suffer significant financial losses over the long-term because of negative publicity about the aftermath of the oil spill. Many local businesses have no alternate income, so that they are at risk of completely shutting down in the absence of any revenue.
The BP oil spill is a case in point. The national impact of that disaster was ultimately minimal: this bill reduced national economic growth only by about one half of one percentage point during the first quarter after the spill, and even less during the second half of the year (Oil Spills’ Economic Impact Mostly Local.) Commercial fishing in the Gulf only comprises a small percentage of the total US economy, but the local communities have suffered injury to their economies and environments that have lasted many years after the spill. It was estimated that nearly 250,000 jobs in fishing, tourism, and energy were eliminated or lost for one reason or another after the spill during the second half of 2010.
Many of the jobs that had been only created to clean up the oil spill were ultimately given to out-of-state owners of boats, much to the anger of the Gulf residents (Oil Spills’ Economic Impact Mostly Local.) Further harming the local economy after the BP oil spill was the fact that the absence of so many jobs resulted in residents being able to spend less money for purchasing goods, so that local merchants and service providers suffered tremendous financial losses as well.
When an oil spill occurs, local residents are frequently promised that they will be the beneficiaries of jobs involved in the cleanup, and that hospitality for out-of-state oil industry workers that are involved in cleaning up the contaminated areas will also add to the local economy. They are also told that they will be at a financial advantage because of all the goods and services that will be purchased by out-of-towners who have come to the area to assist in the cleanup activities. In fact, however, many of those promises made following the BP oil spill were moot because people were hired from states far away from the Gulf in addition to international workers hired for the most lucrative jobs that paid, for example, up to $1800 per week as opposed to the $13 per hour made by the fishermen who were trying to continue to make a living (Oil Spills’ Economic Impact Mostly Local.) Many people made a great deal of money following the BP oil spill, but unfortunately almost none of it went to the people living in the local community around the Deepwater Horizon Well.
Many communities become enthusiastic about the prospect of offshore drilling in their areas because of the promises of lucrative jobs for local residents, which may result in an ongoing source of jobs and revenue for the area. However, as illustrated by the BP oil spill, these promises fell far short of what was projected to the areas of the Gulf Coast region; instead, many local businesses and individuals lost most or all of their sources of income, while the people involved in the cleanup as well as BP itself did extremely well financially.
- “Economic Effects.” n.d. International Tanker Owners Pollution Federation (ITOPF). Web. 20 September 2014.
- “Oil Spills Economic Impact Mostly Local.” 28 June 2010. CBS News.com. Web. 20 September 2014.
