Project Part 1
The General Subject: The Deepwater Horizon Oil Spill
The Narrowed Subject: The Economic Consequences
The Deepwater Horizon oil spill (also known as the BP oil spill), started in the Gulf of Mexico which flowed unabated for three months in 2010. It is the largest accidental marine oil spill in the history of the petroleum industry. On July 5, 2010, BP reported that its own expenditures on the oil spill had reached $3.12 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf States, claims paid, and federal costs. The United States Oil Pollution Act of 1990 limits BP's liability for non-cleanup costs to $75 million unless gross negligence is proven. BP has said it would pay for all cleanup and remediation regardless of the statutory liability cap. Nevertheless, some Democratic lawmakers sought to pass legislation that would increase the liability limit to $10 billion. Analysts for Swiss Re have estimated that the total insured losses from the accident could reach $3.5 billion. According to UBS, final losses could be $12 billion. According to Willis Group Holdings, total losses could amount to $30 billion, of which estimated total claims to the market from the disaster, including control of well, re-drilling, third-party liability and seepage and pollution costs, could exceed $1.2 billion.
Local officials in Louisiana expressed concern that the offshore drilling moratorium imposed in response to the spill would further harm the economies of coastal communities. In a 2010 news story, The Christian Science Monitor reported, "The oil industry employs about 58,000 Louisiana residents and has created another 260,000 oil-related jobs, accounting for about 17% of all Louisiana jobs." BP agreed to allocate $100 million for payments to offshore oil workers who were unemployed due to the six-month moratorium on drilling in the deep-water Gulf of Mexico. The real estate prices and a number...