A gumbo of catastrophic effects--the effects of the BP oil spill measured during the oil spill and six months after the oil spill on three towns in South Louisiana.
Alijani, Ghasem S. ; Mancuso, Louis C. ; Omar, Adnan 等
INTRODUCTION
On April 20, 2010, an explosion and fire occurred on the BP
licensed Transocean drilling rig Deepwater Horizon which ultimately sank
claiming eleven lives and spewing over 200 million gallons of oil into
the Gulf of Mexico (Clifford, 2011). This historic environmental
disaster was the worst oil spill in U.S. history having wide-ranging
economic consequences in the areas of Florida to Texas. Businesses such
as fishing, oyster harvesting and charter fishing boats, were impacted
directly by oil in the water. Of course, restaurants, hotels and rental
properties that depend on tourism money saw a drop-off in sales, even in
cases where there was no oil visible on the beaches (Clifford, 2011).
Currently, BP has paid $5 billion in claims out of the $20 billion
set-aside by BP for recovery. The Gulf Coast Claims Facility, headed by
Kenneth Feinberg (former administrator of the 9/11 Victims Compensation
Fund), which took over the claims process from BP in August 2010, has
approved 38% of the 947,892 claims submitted (Clifford, 2011). The fund
has received claims from all fifty states and thirty-six countries. The
vast majority of the claims paid have gone to five states: Florida
residents and businesses have been paid $2 billion; Louisiana recipients
have been paid $1.5 Billion; and Recipients from Alabama, Mississippi
and Texas round out the top five, respectively (Clifford, 2011).
Mr. Feinberg has taken heat from both BP for being too generous in
his payments and from the government for being too stingy in his
payments (Clifford, 2011). The U.S. Coast Guard has reviewed over 1,000
claims that have been challenged. The Coast Guard has sided with Mr.
Feinberg's decisions.
Of course, no one really knows the long-term effects of having 200
million gallons of oil spilled in the Gulf of Mexico coupled with
approximately 1.4 million gallons of dispersant used, 23.5 million
gallons of oily water recovered, 80,806 miles of federal waters closed
to fishing, 6,100 vessels responding to the spill, and 1,360 animals
found dead in the spill area (Thomas, 2010).
Along with the environmental disaster is the economic calamity
unfolding in South Louisiana where as many as 25,000 jobs could be
affected by the six-month ban imposed by President Obama while the
investigation into the BP accident is underway. Currently, the ban has
been lifted but permits issued are few and far between. It has been
projected that the ban could cost the local economies between $3 billion
and $5 billion a year (Hargreaves, 2010).
Three south Louisiana towns have been hit very hard due to the BP
oil spill: Venice, Grand Isle, and Galliano. This study will look at the
effects of the oil spill two months into the spill during June 2010 and
six months after the Deepwater Horizon cap was closed in March 2011.
METHODOLOGY
This study was conducted twice in Venice, Galliano, and Grand Isle,
Louisiana in June 2010 and March 2011 where Southern University at New
Orleans Business Entrepreneurship and Management Information Systems
majors was asked to interview approximately 200 South Louisiana Business
People. The students were supervised by the writers of this article. The
vast majority of the respondents were located on the Venice Fishing Pier
in Venice, in Grand Isle, and a big box store in Galliano.
Demographics and Location Diversity
Both Venice and Grand Isle sit on the Gulf of Mexico and Galliano
is approximately 36 miles from the Gulf, however, Galliano is on a bayou
that leads to the Gulf of Mexico. The most common industry in Venice is
fishing representing 13% of the industries located in the area
(city-data). The population of Venice is 2,220 with a median household
income of $40,523 (Muninetguide). Grand Isle has a population of 1,541
with a median income of $40,205 (Muninetguide). The leading industry in
Grand Isle is fishing representing 15% (Sumplyhired). Galliano has a
population of 7,356 (US City Home) and a median household income of
$31,419 (City Data Galliano). The most common occupations for males is
rail and water transportation
(16%) and fishing (6%) (City Data Galliano).
Research Issues
The objective of this research is to investigate the effects of the
BP Oil Spill during the spill (June 2010) and six months after the oil
spill (March 2011). The above objective as expressed in terms of a set
of questions which are appropriately reflective of the situation.
Q1. What is the approximate sales revenue per year of the South
Louisiana Business people before the BP Oil Spill?
Q2. What percentage of the South Louisiana Businesspeople revenue
has decreased today (both June 2010 and March 2011)?
Q3. Are South Louisiana Businesspeople willing to do the same
business in Louisiana in the next five years?
Data Collection
The method of data gathering was based on face-to-face interviews
from different locations. Approximately 200 questionnaires were obtained
in June 2010 and 144 questionnaires were gathered in March 2010 from
randomly selected people in the towns of Galliano, Louisiana; Grand
Isle, Louisiana; and Venice Louisiana.
OUTCOMES
Question 1:
The following table indicates the results of the first question
concerning annual income of the residents before the BP Oil Spill.
The Weighted Average located in each table is an average in which
each quantity to be averaged is assigned a weight. These weightings
determine the relative importance of each quantity on the average.
Weightings are the equivalent of having that many like items with the
same value involved in the average. (Investopedia)
Table 1 reveals that the approximate revenue of the businesspeople
(June 2010) before the BP Oil Spill was overall less than $100,000. The
respondents in Venice indicated they had the lowest income of less than
$100,000, whereas, the people in Galliano and Grand Isle reported
incomes of $100,000 to $249,000. This would be as expected since the
businesspeople in Venice are engaged in the fishing industry whereas the
businesspeople in Galliano and Grand Isle are engaged with businesses
dealing with restaurants, rental homes, and own fishing processing
plants.
In Table 2, the respondents were asked in March 2011, which was six
months after the BP Oil Spill was stopped, the reported revenue were
stated lower where all the respondents in all three communities and
overall stated their revenue before the oil spill was less than
$100,000. However, there was no significant difference with the results
reported in June 2010. Certainly, the lower revenue estimates in March
2011 as compared to June 2010 could be due to the loss of income caused
by the BP Oil Spill that was calculated since the businesspeople had to
have documentation (proof) to obtain compensation from the BP Claims
Facility, whereas, the June 2010 calculations were just
'guesstimates.'
Question 2:
The respondents were asked to assume their business revenue was
100% before the BP Oil Spill. What percentage of the respondents'
business income has decreased today.
Table 3 indicates that the overall decreased income amounted to 21%
to 40% with the businesspeople in Galliano and Grand Isle reporting a
decreased income of 41% to 60%, whereas, the businesspeople in Venice
reported a decrease in income of 21% to 40%. When the authors visited
the three communities in June 2010, the communities appeared to be ghost
towns with closed restaurants, closed rental properties, and closed
fishing processing plants. It is believed the business people of Venice
had a lower decrease in income since they are primarily fisherman and BP
hired them immediately to pick-up the oil spread over the bayous of
south Louisiana.
Table 4 shows a lower decreased income when compared to June 2010
where the business people in Galliano and Grand Isle loss in March 2011
was 1% to 20%, whereas, the business people in Venice indicated a
decreased income of 21% to 40%. When looking at the total respondents
the decreased income amounted to 1% to 20%. It is suggested the lower
decreased estimates was due to BP hiring south Louisiana people to
clean-up the oil spill and by March 2011 the pipeline of BP compensation
was flowing to the business people. Also, the state of Louisiana
received funding from BP to advertise its 'clean' beaches and
'excellent oil free' seafood causing tourism to flow again
into south Louisiana and in particular Galliano and Grand Isle. Of
course, the fisherman of Venice had to contend with the oyster fields
still being closed, continuing a reduction in their income.
Question 3:
Table 5 reveals how many businesspeople in South Louisiana will be
doing the same business in Louisiana in the next five years.
When the respondents were asked about business continuity for the
next five years in June 2010, the majority of the businesspeople
indicated they would 'likely' be doing the same business for
the next five years. However, twenty-nine percent of the overall
population indicated they would not continue in their current business.
In Galliano, thirty-two percent of the population indicated they would
not continue in their current business; in Grand Isle, forty-one
percents of the population would not continue in their current business;
and in Venice, twenty-three percent of the population would not continue
in their current business. It is suggested the reasons for the high
percentages in Galliano and Grand Isle was due to major industries
closing in the restaurant, lounge, rental, and fishery businesses. In
Venice, the businesspeople are fisherman, which has been passed down
from generation to generation. Frankly, this profession is all the
businesspeople know in Venice, Louisiana.
In comparing the results obtained in June 2010 to March 2011, the
businesspeople indicated they would continue with their businesses for
the next five years. In particular, the businesspeople in Galliano,
Grand Isle, and Venice stating they would not continue with their
businesses over the next five years were reduced to single digit
percentages. It is suggested these results occurred since the fisherman
in Venice were hired to clean-up the oil spill and the business people
of Galliano and Grand Isle were compensated for their losses by BP
coupled with the BP sponsored advertising campaign enticing tourist to
visit south Louisiana and for the nation to consume Louisiana seafood.
DISCUSSIONS AND CONCLUSIONS
On a beautiful spring day in April 2010, an explosion and fire
occurred on the BP licensed Transocean drilling rig Deepwater Horizon
which ultimately sank claiming eleven lives and spewing over 200 million
gallons of oil into the Gulf of Mexico. This tragedy caused a horrendous
environmental disaster which was the worst oil spill in U.S. history
having widespread economic consequences from Texas to Florida. A great
toll was placed on businesses such as fishing, oyster harvesting and
charter fishing boats due to the oil in the water. Of course, other
businesses affected included hotels, restaurants, and rental properties
that depend on tourism money.
BP has set aside $20 billion for the recovery of damages claimed by
people from all fifty states and thirty-six countries. Currently, $5
billion in claims has been paid which represents 38% of the 947,892
claims submitted. The majority of the claims paid have gone to five
states: Florida $2 billion; Louisiana $1.5 billion; and Alabama,
Mississippi, and Texas rounding out the top five.
In the distribution of funds Kenneth Feinberg, The Gulf Coast
Claims Facility Administrator, has taken heat from both BP for being too
generous in his payments and from the government for being too stingy in
his payments. In the review process, the U.S. Coast Guard has agreed
with Mr. Feinberg's decisions.
In the long term, no one really knows the effects of the BP Oil
Spill which sent 200 million gallons of oil into the Gulf of Mexico
coupled with 1.4 million gallons of dispersant, 80,806 miles of federal
waters closed to fishing, and 1,360 animals found dead in the spill
area. Of course, consideration also needs to be given to the people that
became unemployed due to the oil spill. In particular, the 25,000 people
are unemployed due to the ban on deep water drilling plus people working
in the fishing and tourism industries.
This research study has looked closely at three towns in south
Louisiana that were hit very hard by the oil spill: Venice, Grand Isle,
and Galliano, Louisiana. Businesspeople were randomly selected in these
towns to be interviewed by students from Southern University at New
Orleans two months into the oil spill and six months after the spill
closed. In June 2010, the students obtained 200 surveys and in March
2011, the students obtained 144 surveys.
The objective of this research was to investigate the effects of
the BP Oil Spill during the spill (June 2010) and six months after the
oil spill (March 2011). The above objective as expressed in terms of a
set of questions which are appropriately reflective of the situation.
Q1. What is the approximate sales revenue per year of the South
Louisiana Business people before the BP Oil Spill?
Q2. What percentage of the South Louisiana Businesspeople revenue
has decreased today (both June 2010 and March 2011)?
Q3. Are South Louisiana Businesspeople willing to do the same
business in Louisiana in the next five years?
When reviewing the results of the survey, the three Louisiana
communities could not be more different. Galliano is 36 miles up the
bayou from the Gulf of Mexico having big box companies servicing a large
diverse town. Grand Isle is an island community located on the Gulf of
Mexico that is composed of fisherman, real estate investors, and
companies servicing the tourists during the summer. The vast majority of
the businesspeople in Venice, which is located on the Gulf of Mexico,
are fisherman.
This paper studied the effects of the BP Oil Spill on South
Louisiana businesspeople in June 2010 and March 2011. The timeline of
the BP Oil Spill was from April 2010 when the Deepwater Horizon sinks
and begins to spew over 200 million gallons of oil plus a variety of
other toxic chemicals into the Gulf of Mexico. In August 2010, the oil
well was capped. Thus, our research was conducted two months into the
height of the oil spill and six months after the oil spill was capped.
During this timeframe significant business decisions were made
including hiring of the people of south Louisiana to help in cleaning
the oil spill in the bayous of south Louisiana. Also, BP created a $20
billion fund to aid in the recovery of the Gulf Coast of the United
States.
When comparing the results of the June 2010 survey to the March
2011 survey, certainly the results show a more positive outcome than at
the height of the disaster in June 2010. In particular, the decreased
income incurred by the businesspeople was certainly lower in March 2011
as compared to June 2010. The most significant outcome was that south
Louisiana stood on the precipice of losing a cherished 'way of
life' that has gone-on for generations. With the dispersing of $1.5
billion by the BP Oil Spill Recovery Fund; businesspeople actually
calculating their losses to apply for BP compensation; BP continuing to
hire fishermen to clean-up the oil spill; and BP sponsored advertising
enticing tourist to visit south Louisiana and eat its wonderful
'oil free' seafood, the businesspeople in south Louisiana are
more hopeful about the future and hopefully the businesspeople of south
Louisiana will be encouraged to continue its cherished 'way of
life' for generations to come.
Future research should be conducted on the same parameters of this
research study in the short-term every six to ten months to show the
effects of the oil spill. The BP Oil Spill is an excellent example of
how a major man-made disaster can have a gumbo of catastrophic effects
on the 'way of life' of a community; economic effects on the
community; the emotional costs on the community; and the environmental
cost on the community.
REFERENCES
"Boothville-Venice, Louisiana."
(http://www.muninetguide.com/states/louisiana/municipality/Boothvill...).
"BP Oil Spill Funding is Winding Down." May 20, 2010.
http://www.naturalgasoline.com.
City Data. "Galliano, Louisiana."
http://www.city-data.com/city/Galliano-Louisiana.html.
Clifford, Catherine (2011). "BP Oil Spill Fund: $5 Billion in
Claims Paid Out." August 23, 2011.
http://money.cnn.com/fdcp?unique=1314119307960.
Frank, Thomas (2010). "Oil fund chief promises fast, fair
payments." USA TODAY, June 21, 2010, p. 8A.
"Grand Isle Jobs." Simplyhired.
http://www.simplyhired.com/a/local-jobs/city/1-Grand+Isle,+LA.
Hargreaves, Steve (2010). "Drilling ban: the jobs at
stake." Cnnmoney.com. June 24, 2010.
http://money.cnn.com/fdcp?1277409388746.
Infoplease. http://www.infoplease.com/ipa/A0763098.html.
Investopedia. http://www.investopedia.com/terms/w/weightedaverage.asp#ixzz1XBZuZqKa
MuniNetGuide. "Grand Isle, Louisiana."
http://www.muninetguideguide.com/states/louisiana/
municipality/Grand_Isl..
Simplyhired. "Grand Isle Jobs."
http://www.simplyhired.com/a/local-jobs/city/I-Grand+Isle,+LA.
US City Home. "Galliano, Louisiana--Demographics."
http://www.us-cityhome.com/louisiana/galliano/demographics.html.
"Work and Jobs in Boothville-Venice, Louisiana Detailed Stats:
Occupations, Industries, Unemployment, Workers, Comute."
http://www/city-data.com/work/work-Boothville-Venice-Louisiana.html.
Ghasem S. Alijani, Southern University at New Orleans
Louis C. Mancuso, Southern University at New Orleans
Adnan Omar, Southern University at New Orleans
Natashia G. Ordogne, Southern University at New Orleans
Table-1: Approximate Annual Sales Revenue--June 2010
Revenue Galliano Grand Isle Venice Total
1) Less than $100,000 11 7 76 94
27.5% 24.1% 58.0%
2) $100,000 to $249,000 6 4 19 29
15.0% 13.8% 14.5%
3) $250,000 to $499,000 9 7 33 49
22.5% 24.1% 25.2%
4) More than $500,000 7 5 3 15
17.5% 17.2% 2.3%
Total Completed Responses 33 23 131 187
82.5% 79.3 100%
Total Responses 40 29 131 201
Weighted Average 2.36 2.44 1.72 1.92
Table-2: Approximate Annual Sales Revenue--March 2011
Revenue Galliano Grand Isle Venice Total
1) Less than $100,000 16 12 32 60
53.3% 50.0% 36.4%
2) $100,000 to $249,000 11 11 28 50
36.7% 45.8% 31.8%
3) $250,000 to $499,000 3 1 28 32
10.0% 4.2% 31.8%
4) More than $500,000 0 0 0 0
0% 0% 0%
Total Completed Responses 30 24 88 142
100% 92.3% 100%
Total Responses 30 26 88 144
Weighted Average 1.57 1.54 1.96 1.80
P = .05 .32 .09 .23 .26
Table 3: Decreased Income Due to BP Oil Spill -June 2010
Percentage Galliano Grand Isle Venice Total
1) 0% 3 1 25 29
7.5% 3.4% 19.1%
2) 1% to 20% 0 0 16 16
0% 0% 12.2%
3) 21% to 40% 5 1 27 33
12.5% 3.4% 20.6%
4) 41% to 60% 5 8 33 46
12.5% 27.6% 25.2%
5) 61% to 80% 13 7 20 40
32.5% 24.1% 15.3%
6) 81% to 100% 8 1 10 19
20.0% 3.4% 7.6%
Total Completed Responses 34 18 131 183
85% 62.1% 100.0%
Total Responses 40 29 131 200
Weighted Average 4.44 4.28 3.29 3.60
Table 4: Decreased Income Due to BP Oil Spill--March 2011
Percentage Galliano Grand Isle Venice Total
1) 0% 12 5 21 38
40.0% 19.2% 23.9%
2) 1% to 20% 5 10 13 28
16.7% 38.5% 14.8%
3) 21% to 40% 5 3 17 25
16.7% 11.5% 19.3%
4)41% to 60% 4 3 19 26
13.3% 11.5% 21.6%
5) 61% to 80% 4 4 11 19
13.3% 15.4% 12.5%
6) 81% to 100% 0 0 6 6
0% 0% 6.8%
Total Completed Responses 30 25 87 142
100% 96.2% 98.9%
Total Responses 30 26 88 144
Weighted Average 2.43 2.64 3.05 2.85
Table-5: Business Continuity for Next Five Years Business--June 2010
Revenue Galliano Grand Isle Venice Total
1) Most Likely 9 4 39 52
22.5% 13.8 29.8%
2) Likely 7 5 37 49
17.5% 17.2% 28.2%
3) Neutral 5 2 25 32
12.5% 6.9% 19.1%
4) Unlikely 10 8 15 33
25.0% 27.6% 11.5%
5) Most Unlikely 3 4 15 22
7.5% 13.8% 11.5
Total Completed Responses 34 23 131 188
85% 79.3 100.0%
Total Responses 40 29 131 200
Weighted Average 2.74 3.13 2.47 2.60
Table-6 : Business Continuity for Next Five Years Business--March 2011
Revenue Galliano Grand Isle Venice Total
1) Most Likely 16 9 25 50
53.3 34.6 28.4%
2) Likely 11 8 32 51
36.7% 30.8% 36.4%
3) Neutral 3 8 28 39
10.0% 30.8% 31.8%
4) Unlikely 0 1 2 3
0% 3.9% 2.3%
5) Most Unlikely 0 0 1 1
% 0% 1.1
Total Completed Responses 30 26 88 144
100% 100% 100.0%
Total Responses 30 26 88 144
Weighted Average 1.57 2.04 2.11 1.99
