The BP oil spill in the gulf is already the biggest oil disaster in the U.S. Scientists recently estimated that as many as 174 million gallons have been spilled, 18 times the amount spilled by the Exxon Valdez. Satellite images show the oil slick covers 25,000 square miles, impacting shoreline from Gulfport, Mississippi to Pensacola, Florida. The NOAA forecasts there is a 60% chance it will reach the Florida Keys. What is the possible economic impact? What role does oil play in the U.S. economy?(Article updated July 13, 2010)
1. Could Oilzilla Be Good for the Economy?
Oilzilla Could Create Jobs (Photo: John Moore/Getty Images)
JPMorgan Chase reported that the BP Gulf oil disaster could actually boost the economy this year. BP will spend $6 billion to hire 4,000 people to clean up the spill. This contributed more than the $700 million lost in fishing and tourism revenues and the 3,000 jobs lost to the six-month deep-water drilling moratorium. But that doesn't count long-term costs, or things that aren't counted in GDP - like the value of wildlife.
2. Oilzilla!
Hurricane Ike (Photo: Getty Images)
Add the worst oil disaster in U.S. history to a hurricane season nearly as bad as the one that spawned Hurricane Katrina and you get - Oilzilla! The NOAA is forecasting a near-repeat of the 2005 season, with as many as 14 hurricanes. Oilzilla could combine the ferocity of a hurricane with the long-lasting effects of an oil spill.
3. BP Disaster Worst American Oil Spill on Record
Worker cleaning oiled bird. (Photo: Justin Sullivan / Getty Images)
In its first month, BP spilled 30 million gallons of oil into the Gulf, three times the Exxon Valdez. Its economic impact will also be far worse. The Gulf fishing and tourism industries produce $3.5 - $4.5 billion a year. It will cost BP $4 billion to contain and clean up the mess, and another $4-$5 billion in penalties.
4. How BP Oil Disaster Is Worse than the Exxon Valdez
(Photo: Chris Graythen / Getty Images)
The BP oil spill threatens the shorelines of four Gulf states - Lousiana, Alabama, Mississippi and Florida. Worse yet, it could take three months to build the relief well to stop the flow. It immediately threatens more than 65,000 acres in four National Wildlife Refuges, home to endangered species. Approximately 40% of the coastal wetlands of the lower 48 states is located in Louisiana, and it's worth $96 billion.
5. Exxon Valdez Oil Spill
(Photo: Justin Sulllivan / Getty Images)
The impact of an oil spill lasts for decades. In 1989, the Exxon Valdez crashed onto the shore of Prince William Sound in Alaska, contaminating 1,300 miles of coastline with 250,000 barrels (11 million gallons) of oil.The tourism industry immediately lost over 26,000 jobs and more than $2.4 billion in sales. By 2003, it still hadn't recovered completely.
6. How Oil Affects the Economy
(Photo: David McNew / Getty Images)
Higher crude oil prices directly affect the cost of gasoline, home heating oil, manufacturing and electric power generation. For this reason, oil impacts the cost of everything you buy. Find out how.
7. How Oil Prices Are Determined
As the oil spill continues, it could reduce supply and increase oil prices. Find out how oil prices are determined.
