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BP oil disaster’s impact on the US economy Jonah Guo
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BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Sep 08, 2014

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Economy & Finance

Jonah Guo

This presentation is prepared in the Macro-economy class to analyze the macro economic affect of the BP Deepwater Horizon oil spill. All the photos are found via Google search, copyright belong to the original authors. Logos came from the GreenPeace Logo contest
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Page 1: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

BP oil disaster’s

impact on the

US economy

Jonah Guo

Page 2: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Overview

Disaster Brief

Industry Impacts

GDP impacts

Summary

Page 3: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA
Page 4: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

"worst environmental disaster

the US has faced" -- Carol Browner,

White House energy adviser

Page 5: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Major impacts

Fishing

Tourism

Food

Health Care

Oil

Page 6: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

STATE-WISE IMPACT (Business Closed) ON TOP INDUSTRIES

145,000 businesses and close to 1 million employees

Courtesy: D&B, oil spill – Impact analysis

Page 7: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Tourism

Over $22 billion lost revenue

from coastal tourism in the long-term

Louisiana, had an

increase in business

visitor spending, due to

increase in media

presence and

government travel

Page 8: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Nationally is not likely seriously affected There are other places to go:

Page 9: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Fishing

Impact:

Alabama (40%), Mississippi (95%),

Florida (2%), Louisiana (55%)

Louisiana , the biggest seafood supplier in US,

could lose $2.5 billion

with 27,000 employees affected.

Only accounts for 1% state GDP

Page 10: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

On the other hand,

2/3 gulf remained open for fishing

US imports 80% of seafood

Courtesy: NOAA Fisheries Service

Page 11: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Food Local restaurants primarily affected

In 2011, FDA reported the seafood in the area

affected by the oil spill was safe.

Or maybe not?

Consumers still leery

Page 12: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Health Care

Eleven workers died

“Chemicals in crude oil and

dispersants can cause a wide range

of health effects in people and

wildlife, …damage every system in

the body,…even cancer.”

-- Wayne State University,

Gulf Oil Spill Health Hazards Report

The possible health care cost

are unpredictable and could

be HUGE

Page 13: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Short-term Oil price remained

low and stable • Well is exploratory, not for production

• 2/3 of US oil is imported

• 24,000

barrels per

day

(0.026%

of worldwide)

Page 14: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Long-term impact

Restricted policy on

offshore drilling could

harm new offshore

production.

Yet no regulations have officially been

implemented so far.

Page 15: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

True Economic Impact

BP has fully paid Obama Administration

9 bills ($632 million total) for

response and recovery operations .

Page 16: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Thousands of Clean-up workers

offset losses in industry

Page 17: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Disclaimer Vast majority of information published

during the spill, projections were worst case scenarios.

Media/research firms

sensationalized

data

Just

like this

Logo

contest

Page 18: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

GDP(=?) Total US GDP in 2010 was $14.66 trillion • Gulf coastal

area only

accounts for

3% of national

GDP and

employment

• Total loss

less than

0.1% GDP

Source: Bureau of Economic Analysis

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

Quarterly % Change in US GDP

Nominal GDP

Real GDP

Page 19: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

The cost of

ecology and environment

may be

huge

Page 21: BP Deepwater Horizon oil spill's impact on the us economy, Jonah Guo,Queen's MBA

Reference Logos Courtesy: Greenpeace

Greener Media , Dark Horizon: A Documentary about the Gulf Oil Disaster http://vimeo.com/12737283

D&B, “2010 Deepwater Horizon Oil Spill Report”

http://www.dnbgov.com/pdf/DNB_Gulf_Coast_Oil_Spill_Impact_Analysis.pdf (accessed June 12, 2011)

IEM, “A Study off the Economic Impact of the Deepwater Horizon Oil Spills”http://www.uflib.ufl.edu/docs/Economic

Impact Study, Part I - Full Report.pdf (accessed June 12, 2011)

TreeHugger.com, “BP Gulf Oil Spill's Impact on Tourism Estimated at 3 Years, Nearly $23

Billion”http://www.treehugger.com/files/2010/07/bp-gulf-oil-spill-impact-tourism-oxford-travel.php (accessed June 12, 2011)

CBC, “BP oil spill: 1 year later”http://www.cbc.ca/news/technology/story/2011/04/15/f-gulf-spill-one-year-later.html

(accessed June 12, 2011)

Reuters, “Factbox: Gulf oil spill impacts fisheries, wildlife, tourism”http://www.reuters.com/article/2010/05/30/us-oil-rig-

impact-factbox-idUSTRE64T23R20100530 (accessed June 12, 2011)

Business Monitor International, “United States Tourism Report Q2 2011”, Published in April, 2011

http://www.bizreportshop.com/product/bmi/United-States-Tourism-Report-Q2-2011_177900.html (accessed June 12, 2011)

Harold F. Upton, Congressional Research Service,“The Deepwater Horizon Oil Spill and the Gulf of Mexico Fishing

Industry”, published in February, 2011 http://www.fas.org/sgp/crs/misc/R41640.pdf (accessed June 12, 2011)

How Did BP Gulf Oil Spill Effect Gulf Fishing Industry Charthttp://hubpages.com/hub/Gulf-fishing (accessed June 12, 2011)

Daily Finance, “BP Oil Spill Creates a Wave of New Jobs, Takes Others

Under”http://www.dailyfinance.com/2010/06/01/oil-spill-jobs/ (accessed June 12, 2011)

Heatingoil.com, “BP Oil Spill Will Raise Oil Prices—in 2015”http://www.heatingoil.com/blog/bp-oil-spill-will-raise-oil-

prices%E2%80%94in-2015603/

Medill Reports, “Why hasn't BP's oil spill caused oil prices to

skyrocket?”http://news.medill.northwestern.edu/chicago/news.aspx?id=166157