Oil Spill Won't Hurt National Economy: Report
Job Losses in Local Industries Could Be Offset by Spill Cleanup Jobs, Report Finds
By ALICE GOMSTYN and DANIEL ARNALL
ABC NEWS Business Unit
May 20, 2010 —
As big as the Gulf of Mexico oil slick is, it won't have a major impact on the national economy, according to a new report by Moody's Economy.com.
The oil spill caused by the explosion of the Deepwater Horizon oil rig last month is hurting businesses in areas of Louisiana, Mississippi, Alabama and Florida -- but those places represent only 1 percent of the gross domestic product and national employment "so broad macroeconomic effects are unlikely, at least in the near term," the report said.
The spill's impact, locally, however, will be uncertain. According to Moody's Economy.com:
Tourism: Prevailing winds, thus far, have moved the spill west, keeping damage minimal in tourist areas in Florida and the coasts of Alabama and Mississippi. Still, the tourism industry could suffer as travelers worried about the spill may hesitate to book beach vacations in the region.
Fishing: Louisiana's fishing industry is at risk, with National Oceanic and Atmospheric Administration banning commercial and recreational fishing in 4.5 percent of the Gulf Coast's federal waters.
"If the spill reaches coastal waterways where the marine life hatches and develops, the industry could face years of disruption," the report said.
Fish caught in the region -- mostly shrimp and oyster harvest -- is worth nearly $400 million per year dockside. The retail value of the catches, however, is much greater.
Shipping: Thus far, shipping lanes and port activity have been mostly unaffected. But if the slick does reach Gulf Coast ports, it could force them to shut down and block tankers and cargo ships.
The port of New Orleans is most at risk, but if the slick continues to move west, it also could hurt operations near the port of Morgan City, La. Cargo moving through the two ports accounts for just under 7 percent of total U.S. waterborne cargo shipments.
Energy: The slick's impact on energy production and energy prices in the U.S. is expected to be minimal, with just two oil and natural gas productions in the Gulf -- out of 4,000 -- stopping production because of the spill.
Jobs Created: Jobs created by the oil cleanup and containment effort at least partly could compensate for spill-related job losses in Gulf industries.
BP, the owner of the oil well where the rig was based, has said it has spent $350 million in cleanup costs so far. Exxon spent a total of roughly 11 times that much on its cleanup of the infamous Exxon Valdez oil spill of 1989.
The Gulf of Mexico spill and its expected economic impact often have been compared to Exxon Valdez, but a number of other spills in the years following Exxon Valdez also have taken heavy tolls on economies around the globe.
On the following pages, ABCNews.com takes a quick look at some of the biggest oil spills to damage bottom lines since 1989.
San Francisco, 2007
The Cosco Busan, a container ship, spilled more than 50,000 gallons of fuel into San Francisco Bay after crashing into a tower of the San Francisco Bay Bridge in November 2007. It was a relatively minor spill by historical standards, but it created big problems for the area's local crab fishermen.
The disaster prompted Gov. Arnold Schwarzenegger to temporarily halt fishing around the bay a week before commercial crab season was scheduled to begin.
"A lot of people were hurt by this spill," Larry Collins, president of the San Francisco Crab Boat Owners Association, told the San Francisco Chronicle at the time. "Everybody had spent their last dime getting ready to go crab fishing and the bills all piled up."
Some two years later, a government study found that herring fishermen also may have been hurt by the spill: Researchers found deformed herring eggs at oil spill sites.
The total cost of the bay cleanup, meanwhile, was $70 million, according to a report by the National Transportation Safety Board.
Lebanon, 2006
A power plant in Lebanon released more than 4 million gallons of oil into the Mediterranean Sea after it was hit by Israeli airstrikes during the country's war with Hezbollah in the summer of 2006.
Commercial harbors and public beaches were damaged by the spill, hurting the local fishing and tourism industries. The clean-up of the spill and efforts to benefit both industries in 2006 and 2007 cost more than $1.8 billion, according to a report by the United Nations Development Programme.
Spain, 2002
The oil tanker Prestige dumped some 17 million gallons after sustaining damage -- and ultimately sinking -- during a storm near Galicia, Spain, in November 2002.
The spill paralyzed local fishing for months, forcing the closure of fisheries. After they reopened, some local organizations reported an 80 percent drop in their normal fish catch, according to the World Wildlife Fund. Damage to fishing, tourism and other sectors totaled an estimated $5 billion, according to a report by the fund.
France, 1999
As with other oil spills, the one caused by the December 1999 sinking of the oil tanker Erika off the western coast of France, devastated the local area's fishing and tourism industries. But another sector was also affected: salt production.
When the Erika split in two and sank, it released some 3 million gallons of oil. The threat of oil damaging the reedy salt marshes of Guerande, France, forced salt producers there to give up their annual salt harvest at a cost of $8 million, the Christian Science Monitor reported.
The spill cost an estimated total of $475 million.
United Kingdom, 1996
The oil tanker Sea Empress ran aground at a harbor in Wales in February 1996, spilling as many as 20 million gallons of oil. The British government imposed a ban on fishing in the area that wasn't totally lifted until September 1997.
Though the months following the spill were "traumatic" for local fisherman, the BBC reported, the ban may have ultimately benefited stocks of crab and lobster, the populations of which increased while the ban was in place.
The cleanup following the spill cost more than $90 million, according to the BBC.
Spain, 1992
As with the 2002 spill near Galicia, the oil spill near the port of La Coruna 10 years earlier also devastated fishing in Spain. The losses from the region's mussel industry alone totaled $15 million, the New York Times reported.
The spill occurred when the oil tanker Aegean Sea ran aground in December 1992 and released 23 million gallons of oil. The disaster caused some $50 million in damages.
Gulf War, 1991
Oil spills during the Persian Gulf War -- considered the largest oil spill in history -- forced a halt to some fishing in the region. The deliberate release of some 240 million gallons of oil by Iraq into the gulf resulted in large slick that floated toward neighboring countries. In Saudi Arabia, the Saudi Fisheries Company stopped fishing in the gulf both because its fishermen couldn't navigate their boats through the gulf's giant oil slicks and concerns about the contamination of fish and shrimp.
Alaska, 1989
The Exxon Valdez oil tanker dumped some 11 million gallons of oil into Alaska's Prince William Sound after hitting a reef in March, 1989. Until now, it was regarded as the worst spill in U.S. history.
As with other spills, those in the fishing and tourism industries reported major losses relating to the disaster. In the tourism sector, resorts, tour companies, outdoor activities companies and sightseeing boat businesses were hit the hardest, according to a report by the consulting firm McDowell Group. That summer, tourist spending declined $19 million.
The spill forced the cancellation of fishing seasons, ravaging fishing villages along Prince William Sound. Exxon initially paid $300 million to fishermen to compensate them for their losses. After two decades of litigation, a court found last year that Exxon owes more than $900 million in punitive damages and interest to Alaska fishermen, business owners and others.
With reports from ABC News' Melissa Lenderman and the Associated Press.