Although it is impossible to determine the impact on the environment and/or the financial impact of the Gulf of Mexico oil spill in the long term, this article examines the facts so far.
Financial Implications for BP and Shareholders
On June 25 2010, BP reported that its own expenditures on the oil spill had reached $2.35 billion.
BP has announced that it will suspend dividend payments in order to pay for the 20 billion USD claims imposed on the company by the United States. BP shareholders have been significantly affected financially, with a 20 percent drop in stock value since the incident in addition to the dividend payments suspension.
So far, BP has paid out $25 million to Florida to promote its beaches and the company has planned $15 million each for Alabama, Louisiana and Mississippi.
$60 Million USD was allocated towards the construction of barriers off the coast of Louisiana and $1.4 billion USD has accrued in cleanup efforts.
Analysts at Barclay Capital, a leading global British investment bank, estimate that losses incurred by BP will come to 22.6 billion USD. This includes payments for clean up costs, legal fees, worker compensation and lost revenue in the future.
Economic Impact of Spill on Tourism
The state of Florida relies heavily on tourism revenue. Florida is struggling to persuade tourists to visit. Despite the fact that the beaches are clean and have not yet been blackened by oil, some hotels have already seen 50% cancellation because of oil-spill concerns this year. In the long term, loss of tourism could devastate Florida.
Although beaches were open in Mississippi with no oil apparent, tourism has slowed down.
Hoteliers are offering specials and discounts to potential visitors in a bid to draw them to the area.
Oil Spill Impact on Commercial Fishing
Gulf Coast states rely heavily on commercial fishing to sustain their local economies. The area affected by the spill is prime spawning ground for fish, shrimp, crabs and is full of oyster beds.
According to the National Oceanic and Atmospheric Administration, commercial fisheries brought in a total $659 million in shellfish and fin-fish in 2008. In addition, over 3 million people went on recreational fishing trips in that year.
The Gulf of Mexico region accounts for approximately one-fifth of total US commercial seafood production and nearly three quarters of the USA's shrimp industry. Louisiana produces fifty percent of the US shrimp crop and has a significant production of crabs and oysters.
As the oil slick spreads throughout the Gulf, fishing grounds are undergoing partial closures as wildlife and fisheries officials test for contamination. The NOAA provides information, which is updated daily, on areas that are closed for fishing in the gulf region.
Although Florida's waters have not been severely contaminated by the oil spill, public opinion and panic has impacted on the fishing industry and it has already experienced a significant loss of income. Federal assistance is helping to offset severe and immediate economic impact to Florida's fishing industries.
Related Articles:
Will the Gulf of Mexico Become one big Dead Zone
Gulf Oil Spill Disaster – What are the Long Term Effects Environmentally?
Source:
Time.com - information retrieved 2 July 2010
Fleur Hupston - Fleur Hupston is a professional freelance writer based in Botswana, Southern Africa. From this unique perspective, she writes travel ...
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