Obama warns the BP oil spill will cause substantial economic impact. What are the unseen repercussions of this disaster?
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M$4 Answers
The situation now with the Gulf oil disaster is similar to the Dust Bowl disaster in many respects:
1) Like the Dust bowl, the Gulf disaster comes on the heels of a major economic meltdown, throwing even more people out of work at a time when the country cannot afford to lose one more job.
2) Like the Dust Bowl, the effects of the Gulf disaster will be felt worldwide and will take years to mitigate.
3) Like the Dust Bowl, the Gulf disaster has the potential to displace large numbers of workers--fishermen and their families, hospitality and tourism workers, retail workers in tourist towns, real estate workers, and more--people who will no longer be able to support themselves on the Gulf coast.
4) Like the Dust Bowl, the Gulf disaster has the potential of pushing the country deeper into recession or even into Depression. Already there are signs of a 'double dip' recession spurred on by lack of expected job growth and economic problems in Europe and Greece. Mass migrations of unemployed southerners combined with the expense of mitigation of the oil already in the water could easily push the U.S. down economically for an entire generation.
5) Like the Dust Bowl, the Gulf mess is a man made disaster. The Dust Bowl was caused by poor farming practices that triggered severe soil erosion. Once the soil was taken up into the air by natural weather patterns, it was nearly impossible to stop larger and larger storms from forming. One problem built upon the last. It took the U.S. government nearly a decade to get the storms under control and to mandate safeguards against soil erosion to prevent a recurrence. In a similar way, the oil blowout could have been prevented but now that it has happened, years will be spent arguing over how to prevent the next spill and how to to mitigate deep water blowouts if they happen again. There will be lots of litigation before any real money is paid out by BP, and in fact there are already rumors on Wall Street that the company will file for bankruptcy to avoid as much liability as possible regardless of their PR commercials. Mitigating the oil is an even bigger task than stopping the dust storms--we really don't even know what other damage could be triggered by releasing this much toxic material over such a wide oceanic range--but we're about to find out.
In short, the Gulf blowout disaster is looking a lot like this recession's Dust Bowl. If you think it looks bad now, hold on to your hat.
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M$
* Rising unemployment. What will happen to businesses and jobs dependent on the Gulf of Mexico?
* Rising state deficits in the immediate region. The pool of taxpayers will shrink as the pool of dependents rise. What happens to, say, once-independent fishermen that can no longer fish?
* Rising federal deficit. The deficit can easily rise to $2 trillion from the economic fall-out from this horrific spill.
* Rising prices for corn, cotton, wheat, etc. General agriculture will be gravely impacted as water problems arise. The end result will be diminished supply coupled with ongoing demand.
* Higher taxes. The vicious cycle will keep growing as politicians use the occasion to agitate for more taxes on an already over-burdened economy.
* Indirectly, there is no positive impact on stocks and bonds but any that does materialize will certainly be negative.
* Many unintended consequences (inflation?) as yet unseen both here and internationally.
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M$You can leave an optional "tip" with Mahalo's virtual currency, Mahalo Dollars. If you are asking a difficult question that might require some research, or if you'd like a wide variety of feedback, a higher tip often leads to more answers to your question.
M$However, there is a lot of exaggeration going on. In particular, a lot is being said about the fishing way of life in the region. Yes there are many families who have fished for generations. But, that way of life was dying anyway. The fish have been overfished. There had to be more and more restrictions just to prevent them becoming extinct, and every restriction was met with cries that fishermen could not keep up their traditional livelihoods. The oystermen have been complaining that they could not afford to obey modern health requirements without going out of business. If the fishermen stop fishing for a few years and many of them leave for other industries that will be a good thing. This particular type of spill does not appear to be killing fish. It may make them unsuitable for food for a while. If so, it could lead to a recovery of the fish stock and eventually a larger, healthier industry.
Tourism is temporary. The effect will be one season at worst.
Overall, the effort to clean up the mess will pump more money into the local economy than is lost.
One major benefit to the disaster will be stricter safety rules, regulations, and inspections throughout the oil industry.
One possible benefit will be a reduction or even end to offshore drilling. The more oil is left in the ground the less the damage to the atmosphere.
Meanwhile, the bacteria are eating the oil more rapidly than was expected. Those bacteria will be eaten by plankton, which will be eaten by fish. This could help the fish stocks for a few years.
The cleanup will cost a lot of money; but, not more than BP can afford to pay.
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M$
Rather than assume I'm making the claim without evidence, please look it up for yourself because you're the only one making assumptions without a shred of evidence. Also you assume how much the cleanup will cost and you assume the effect it will have on tourism before it's even seen AND arrogantly assume that this will benefit the local economy more than hurt it, quite ignorant from your standpoint.
My opinions were based on wide reading and observation. You are welcome to disagree but my opinions are not of the same sort as your wild, paranoid conspiracy theory. It's one thing to make a guestimate about the future and another to make criminal charges without basis.
I said much was unknown; and I did not say what the cleanup cost will be, only that BP can afford it. BP's annual profits are far above any estimate of the potential damages. The highest I have seen is about equal to one year of BP profits. Much of the money spent on cleanup will go to the local economy. The fishermen are being hired to skim oil, the hotels are full of cleanup crews. I might add that I have lived here for decades and have personally observed the local economy and the regional tourism.
