Oil spill economic fallout: "Out of control bad"

When you can see an oil slick from outer space, the total cost of ownership won't be cheap

By Andrew Leonard

Published May 19, 2010 11:08PM (EDT)

Oil drips from the rubber gloves of a Greenpeace Biologist at the mouth of the Mississippi River.
Oil drips from the rubber gloves of a Greenpeace Biologist at the mouth of the Mississippi River.

The eagle eyes at Footnoted.com have been scouring corporate filings for any mention of possible negative economic implications of the BP oil spill. Their findings are divided in two parts. There are reports from energy companies citing the dangers to their bottom line of potentially restrictive new regulations going forward, and the immediate pain of the ongoing moratorium on new drilling. It's not a particularly good time to be in the business of drilling exploratory wells, for example.

Then there are the disclosures from non-energy companies whose businesses involve the Gulf. Insurance companies, local banks, firms that sell boats or boating services, grocery store chains that depend on tourist purchases for part of their revenue stream. BP CEO Tony Hayward is famous for saying that "The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume," but the economic impact of that "tiny" amount of oil is spreading far and wide. (And when you can eyeball an oil slick from outer space the word "tiny" doesn't seem quite that appropriate.)

A full fifth of federal waters in the Gulf are now off-limits to fishing and seafood in the region will have to be carefully monitored and tested for years after the spill is finally contained. The longterm health impacts of exposure to oil for workers involved with cleanup will probably lead to massive compensation claims, if the Exxon Valdez is any guide. The New York Times notes that the official start of hurricane season is just a few weeks away;  no one in Florida even wants to think about what would happen to local beaches -- and tourist revenue -- if a killer storm sends a surge of oil towards the Sunshine state. As Florida senator Bill Nelson said on Tuesday, "this is looking like really out-of-control bad."

Too bad no one filed a 10-K with the government warning of the possible potential dangers of a massive oil spill before it happened. Oh wait, I guess that's what the environmental movement has been doing, more or less, for forty years. Too bad the shareholders in the U.S. -- er, I mean voters -- weren't paying close enough attention to the annual reports.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Economics Energy Environment Gulf Oil Spill How The World Works