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Perspectives

Preliminary Economic Assessment of the Gulf Coast Oil Spill

Published: 04 May 2010
While it is too early to make any final judgment about the economic damage resulting from the continuing oil spill off the Gulf Coast, assuming that it is stanched soon, the impact on some local industries could be large, but the national impact is likely to be small.

  • Fishing in the affected regions of the Gulf of Mexico is already being hurt, with a 10-day ban in effect. The Gulf supports a fishing industry with annual dockside sales of $660 million, which employs (directly or indirectly) about 27,000 people in Louisiana alone and is second only in size to Alaska's fishing industry.
  • If the fishing grounds in this region of the Gulf are closed for any extended period of time, then the impact on those employed in the fish and shrimp industry could be devastating, and the impact on fish and shrimp prices nationwide could be large.
  • Tourism is another industry that could be affected, but only if the spill spreads and affects the entire Gulf Coast, including the Florida panhandle. At this point, this is a low probability event.
  • The biggest near-term risk from the oil spill is the potential for the disruption of shipping traffic in and out of the Port of New Orleans. This could impact the barge, container, and tanker traffic in the Mississippi Delta and along the Mississippi River. If traffic is affected for any extended period of time, then the prices of all types of commodities could rise, albeit probably temporarily.
  • The clean-up itself will create activity and local income that offsets some of the local losses (in current income, but not wealth).

Bottom line: while the impact of the oil spill on some local industries in the Gulf (most notably fishing) could be large, the national impacts still look to be fairly small. A lot will depend on how quickly the spill is contained.

by Nariman Behravesh

Additional Contacts

U.S. Macro: Nigel Gault: nigel.gault@ihsglobalinsight.com

U.S. Regional: Ana Orozco: ana.orozco@ihsglobalinsight.com

Tourism: Chris Pike: christopher.pike@ihsglobalinsight.com
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