Environmental and Economic Implication of the British Petroleum Oil Spill

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Introduction

Even as the prestigious and economically valued oil and petroleum resources continue to flow into the popular Mexican Gulf, the long-term environmental and economic effects of oil least crosses into the minds of the majority. However, although considered the most valuable economic resources, oil disasters often have negative economic and environmental implications following oil spill-over. One of the world’s worst historical oil disasters that posed great economic and environmental danger was the Deepwater Horizon Oil Spill (BP Oil Spill). The 87 day disaster is the worst oil spill disasters in the history of the U.S. Over that period, over two hundred million of crude oil gallons were directly pumped into the Gulf of Mexico, causing major economic and environmental challenges to the affected regions. This oil disaster affected the leading coastlines of Louisiana, Texas, Florida, Alabama, and Mississippi. The summer 2010 BP Oil disaster led to loss of 11 lives and injuring 17 people following the unexpected oil ring explosion (Foley, 2011, p.525).

Literature Review

Environmental Impacts of the BP Oil Disaster

Depending on the location and timing of oil spill, even minor oil spills cause significant damage to the aquatic lives and organisms. These impacts can either be chronic or acute (short-term). Depending on the concentration and toxicity of the oil spill, aquatic animals and plants are likely to be harmed and killed. This was the case of the BP Oil Spill disaster that killed sea and ocean creatures, thereby, reducing their rate of reproduction, altering their development and growth, and impairing feeding mechanisms for these creatures (Kornfeld, 2011, p.333). The oil spill also weakened these animals and plants to the extents that the survivor became more vulnerable to disease attacks. In particular, the BP Oil disaster killed marine mammals, bird, intertidal species, bottom-dwelling species, and their development life stages. A report by environmentalists warned of the possibility of elimination of the waterfowl’s population along the Louisiana coastal regions (that account for over 75% of waterfowls in U.S.) (Campagna, et al, 2011, p. 395). Not only waterfowls that are at the risk of extinction, but, hundreds of species along the Gulf of Mexico’s coastline. The disaster led to water pollution, thus making the affected coastal waters health hazardous to both human and animal population (Kornfeld, 2011, p.329). Such polluted waters were rendered unfit even for industrial purposes. A report by the Department of Interior revealed that the BP Oil Disaster posed great danger and risk to four National Wildlife Refuges and eight National Parks within Texas to Florida. This further caused environmental damage to the Wildlife Services (Smith Jr., Smith, & Ashcroft, 2011, p.574).

Economic Implications of the BP Disaster

Although the exact economic costs and implication of the BP disaster cannot be determine given that oil gets biodegraded very quickly, it is estimated that the U.S government loss revenue amounting to $132 billion over the three months (Smith Jr., Smith, & Ashcroft, 2011, p.572). This was attributed to the fact that the Gulf of Mexico coast waters accounted for 73 percent of the domestic and industrial water supplies. Secondly, following the incident, the number of tourists activities along the Gulf of Mexico’s coasts significantly declined, hence loss of tourism income (Kornfeld, 2011, p.338). In addition, the company and the federal government had to incur extra financial and economic burden of cleaning up the affected coastlines (Jernelöv, 2010, p.364). This led to diversion of resources that could have been used for other development projects to create employment opportunities and stabilize the economy. On the other hand, the BP Oil Disaster led to inflation in the economy through the unexpected rise in oil prices (Nash, 2011, p.262). The oil disaster affected the real estate values. Following the disaster, the affected land suffered a significant drop in their economic values, hence real estate losses (Smith Jr., Smith, & Ashcroft, 2011, p.574). This further generated inflationary pressure in the American economy given the contribution of oil and petroleum products in the economic well-being of the U.S.

In accordance with the “Clean Water Act”, the BP will bear more financial burden to the Federal government in the form of fines and violations of the Act. It was estimated that a civil fine amounting to $4.7 billion will be settled by the company (Smith Jr., Smith, & Ashcroft, 2011, p.575). These will further burden the company finically and limit its expansion and growth capacity.

Conclusion

In conclusion, the BP Oil disaster affected all the leading sector of the American’s economy. Although the government responded to the disaster to avert further damage, its effects surpassed the expectations of the U.S. This British Petroleum Deepwater Horizon disasters will remain in history given that it caused both economic and ecological damage, with BP alone incurring losses of approximately $36.9 billion. This oil disaster is, therefore, likely to generate long-term and short-term ramifications for any future environmental policies and energy production.

References

Campagna, C., Short, F. T., Polidoro, B. A., Mcmanus, R., Collette, B. B., Pilcher, N. J., & … Carpenter, K. E. (2011). Gulf of Mexico Oil Blowout Increases Risks to Globally Threatened Species. Bioscience, 61(5), 393-397. doi:10.1525/bio.2011.61.5.8

Foley, V. J. (2011). Post-Deepwater Horizon: The Changing Landscape of Liability for Oil Pollution in the United States. Albany Law Review, 74(1), 515-530.

Jernelöv, A. (2010). The Threats from Oil Spills: Now, Then, and in the Future. AMBIO – A Journal Of The Human Environment, 39(5/6), 353-366. doi:10.1007/s13280-010-0085-5

Kornfeld, I. E. (2011). Of Dead Pelicans, Turtles, and Marshes: Natural Resources Damages in the Wake of the BP Deepwater Horizon Spill. Boston College Environmental Affairs Law Review, 38(2), 317-342.

Nash, S. (2011). Oil and Water, Economics and Ecology in the Gulf of Mexico. Bioscience, 61(4), 259-263. doi:10.1525/bio.2011.61.4.3

Smith Jr., L. C., Smith, L., & Ashcroft, P. A. (2011). Analysis of Environmental and Economic Damages from British Petroleum’s Deepwater Horizon Oil Spill. Albany Law Review, 74(1), 563-585.