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The Gulf of Mexico Oil Spill

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The Gulf of Mexico oil spill, which is also referred to as the Deepwater Horizon oil spill or BP oil disaster is the catastrophic oil spill that occurred in the Gulf of Mexico. The Gulf of Mexico is situated down the Mississippi River. The oil flowed continuously for three months in the year 2010. The world witnessed a major occurrence. It resulted into many negative effects on the environment and the people who lived around the Gulf of Mexico. Consequently, the relationships between the countries around the Gulf of Mexico was also affected. It also greatly the nation’s economy, as well as the oil companies involved in the Macondo project.

What Happened

On that morning of 20th April 2010, methane gas oozing from the well under high pressure blew up the drill column of the BP-Macondo project. The highly flammable gas had ignited and a powerful explosion followed. The workers who were drilling on the well only managed to escape by life boats and choppers that came for their rescue. Only 17 managed to escape alive. 11 people went missing and considered dead. This leak was only stopped on July 15th 2010 by capping the bubbling wellhead (Beech, 2007).

The amount of oil that leaked during this disaster was staggering. The total leak volume amounted to about 4.9 million barrels. This exceeded the Exxon Valdez oil spill as the largest one in American history. This was also the most significant marine oil spill in the history of the petroleum industry.

The spill caused serious damage to the wildlife habitat of the Gulf of Mexico. Economically, the gulf was negatively affected by its fishing and tourism industry being stymied during that period. In an attempt to save hundreds of miles of beaches, estuaries and wetlands, skimmers ships, anchored barriers, and dispersers were deployed by the government and volunteers.

The oil spill was blamed on BP and its partners for employing extensive cost cutting methods and not ensuring adequate safety of the well. It was concluded that it was not just an isolated neglect by the government officials or industry, but a systematic failure to implement  necessary reform in both the industry practices and the government policies.

Consequences

BP did an internal probe and admitted that they had made a mistake. They, therefore, lay aside $20 billion to compensate the victims of the oil spill. The company has been able to pay quite a large number of claims. The total number of claimants has added up to around 1 million, and is counting in thousands every passing week. The final report by the US government in September 2011 stated that the accident had been due to a defective cement job. Halliburton, BP, and Transocean were responsible for the accident in different ways. Halliburton blamed BP and Transocean for affecting every decision it made in doing the work it had been contracted to carry out.

The oil spill brought about grave consequences on the international stakeholders of the Deepwater Horizon project (Sherrow, 1998). One of the companies involved in the project was Transocean, based in several countries including Switzerland, United States, Norway, Scotland, Brazil, Indonesia, and Malaysia. The company suffered great losses following the explosion of the Deepwater Horizon.

The oil spill accident tarnished the reputation of the company, which formerly boasted of being the safest of all the oil-drilling companies. Before the incident, the company had been rated as one of the best drilling companies. It suffered a real blow since this meant that the confidence that had been vested in it declined massively. Loss on the ground was also an issue that the company had to deal with. The amount of oil that was wasted was large and that obviously meant a great loss to the company.

Another company that suffered a losses when this incident took place is the famous Shell BP. The oil that was drilled belonged to BP. Its own expenditure on the oil spill had reached $3.4 billion, including the cost of the spill response, relief well drilling, grants to the Gulf state, claims paid and federal costs. BP stations, the majority of which the company does not own, reported a drop in sales of up to 40% due to a backlash against the company. The image of the company got tarnished; this led to a downfall on its market curvature. Some BP station owners suggested that the name be changed from BP to another. Others claimed that after all the effort they had put in to promote BP, it turned out to be a gamble.

The loss that BP experienced was so great that it amounted to more than $17 billion. This was the first loss after 18 years of BP’s successful existence. BP confirmed that it was going to set up a unit to deal with the spilled oil (Leacock,2005).

The gas stations faced supply shortage of oil due to the big loss during the spill and due to delays in shipment of the oil imported into the United States. This consequently meant that the available gas prices hiked affecting the citizens’ budget. The international station owners who were supplied by BP were also on the losing end. The effect on the company trickled down to these BP station owners. They either faced delivery delays or the losses that the company incurred that were passed down to their accounts.

Local officials reported that the spill harmed the economy of the states a great deal. Business was affected both locally and internationally. Locally, real estate prices decreased

significantly during that period. As a result, area officials wanted that taxes be paid according to the current market value. This would mean massive loss in revenue for each region affected.

Tourism sector suffered a huge blow during this period. The US Travel Association estimated that the impact of the spill on tourism could exceed over $3 billion. Beaches were covered with oil preventing tourist activities. In some affected areas, hotels cut cost; some had to refund their customers who happened to have booked for that unfortunate time. Deals such as free golf were offered. Revenue remained below the 2009.

Main tourism attractions of the area that were affected are marine life, beaches, service industries like hotels and banks, and gas stations, which could not operate normally. Beaches were closed since it was neither possible nor safe to do sunbathing or beach touring on a polluted shore. Interference with marine ecology meant that there was to be no marine tours. Marine animals perished partly due to suffocation caused by oil and partly because the spilt oil polluted their food. More than 400 animal species that inhabit the Marshlands and Gulf Island are threatened. Eight U.S national parks are also in danger of losing some of the animal species due to toxic chemicals released during the disaster. This puts U.S in an economic and environmental uncertainty. Tourism sector will be very much affected by a decline in the number of animals. The beauty of the natural environment that exists at the present will be gone.

Beach activities like boat riding could not be safe in such an environment. Transportation industry suffered too due to this disaster. The numerous travels to the coast were now limited since the tragedy interfered with businesses at the coast (Inc Scholastic, 2010). The tourists bound for the coast could not continue with their travel due to the negative effects the oil spill had on the tourism facilities. The decline in tourism activities consequently led to a massive decline in jobs. People either lacked job or could not find one in the tourism sector during this time.

By June 21st 2010, a very large area stretching to 86,985 square miles which is thirty six per cent of Gulf waters was closed to fishing. An attempt to catch enough fish before oil spread further in Louisiana was cut short after it was noticed that oil had fast spread as far as their coast. Both commercial and recreational fishing grounds were closed immediately. Fisheries were declared a disaster for the states of Louisiana, Alabama and Mississippi. The ban on fishing was necessary so that people do not consume contaminated sea food. For that short period, economy that was being sustained by the fishing sector obviously suffered loss. International stakeholders on this sector incurred huge losses as well. Food supply was affected due to the ban at the sea.

Organization for international investment warned that the political rhetoric surrounding the disaster was going to destroy the reputation of British companies in US. This was to be understood that British companies were not going to be in a position to win government contracts. This would tamper with international relations. International stakeholders or investors in the business sector located at the coast experienced great loss that shook their confidence in investing in the US.

Politically, some New Orleans judges have excused themselves from hearing the oil spill cases because of their stock ownership or due to other conflicts of interest. The hesitation in the hearings by the government officials in charge puts the government in bad light with the affected individuals and neighboring countries. The delay by the federal government to give Louisiana the green light to deal with the emergency brought about tension between the two centers of authority (Farrell,2011).

Environmental activists tried to enquire about the chemicals contained in this oil through the freedom of information act, but they were denied an access to that information by the EPA. After suing on their behalf by Earth justice, EPA released a list that inferred that 57 chemicals were present in the spilt oil. These chemicals were said to expose people to dangers of getting cancer and other respiratory diseases. Cases of skin dehydration were common among those who were working in the disaster site to disperse the oil.

There was a disagreement between the oil companies and the Canadian government as pertains to safety rules which require same season relief wells. Five days later, the Canadian minister for environment issued a statement that the government would not approve a decision to relax environment regulations for large energy projects.

The spill affected the neighboring countries that were not in any way involved in the project. Their economies suffered. Their natural environment was polluted. Tourism, especially in the coastal regions of US, Mexico, Brazil was affected in one way or another. Fisheries could not be accessed any more. These led to an economic downfall and serious popular disappointment.

People in the affected states of Alabama, Mississippi, and Louisiana were left living with uncertainties in their minds. Their nice beaches covered with oil, their fishing grounds not accessible, their businesses halted, they had worries and anxieties. They were worried about their health that there was deposition of toxic chemicals that that made them prone to diseases. Recovering the coast from the oil spill will not be an easy task. Regaining the purity of the coastal waters will take some time. The loss incurred during that time will not be easy to recover (McCoy, 2010).

Right management and decision-making by BP and the associate companies, good communication within BP and between BP and the contracted companies and efficient information would have prevented the Deepwater explosion.

Conclusion

In conclusion, without an effective and efficient response by the government to ensure that the policies that govern oil exploitation are strictly followed, the petroleum industry will not reduce the risks and unsafe methods it employs and many more losses and destructions will be experienced. The government might not be in a position to reduce all these dangers alone. It needs support of oil and gas industry. The gas and oil industry need to embrace the oil policies and ensure safety of the highest level possible. The companies will only thrive once all measures put to deal with such occurrences are adhered to; otherwise, a similar disaster is inevitable.

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