Fin 435 - Bp Oil Spill

Fin 435

BP Oil Spill Assignment

In April of 2010 an explosion on the Deepwater Horizon drilling platform in service for British Petroleum caused what is considered the second greatest environmental disaster in U.S. history. The spill poured crude oil into the Gulf of Mexico continuously for three months. The coastal areas of Louisiana, Mississippi, Alabama and Florida have all been contaminated by the spill as well as the waters of the Gulf of Mexico. The damage to sea life and wetland areas was massive. Fisheries took major hits especially in the areas of oyster, shrimp, blue crab and Bluefin tuna, all of which are heavily harvested in the gulf. Initial estimates were that the costs to the fishing industry in the Gulf could be $2.5 billion. However, since the environmental fallout of the spill has not been fully realized that figure could change substantially. Further, an estimated $23 billion in damage was done to the tourism in the region. People canceled planned vacations to the area. While there was a slight bump in occupancy at coastal hotels during and after the spill, it came mainly from people in the coastal region to deal with the spill. Hotels and resorts had to report to special deals and cancelation guarantees to satisfy patrons that refunds would be provided if oil were to arrive at the destination.

In addition to having numerous agencies including the Coast Guard and the U.S. Navy involved with the containment and clean-up efforts, various government agencies began to look closely at changing policies regarding offshore drilling. Initially the Department of the Interior tried to completely shut down drilling in the gulf for six months so that every operation could be heavily scrutinized and greater safety measures could be put in place. A federal judge ruled against the shut down saying that it was too broad in it's scope. Even the President met with BP executives concerning the spill. Many investigations were launched by Federal agencies including the United States Coast Guard, the Bureau of Ocean Energy Management, Regulation and Enforcement. The White House formally convened an oil spill commission to review the reports being generated. In all accounts it was determined that there were numerous faults on the part of the company in the areas of safety and stability and that they were done in order to save BP time and money. All accounts stated that more government oversight and regulation was necessary to avoid another such disaster in the future. The federal government additionally sent a $69 billiion bill to BP for the governments assistance in the cleanup effort.

BP agreed to pay over $100 million to the coastal states to help regain the tourism that they lost. Additionally BP has set up an oil spill response fund of $20 Billion to be paid to state and local governments and private claims regarding losses as a consequence