Cost Of Oil Spills

Cost of Oil Spills: Tens of Billions

Gulf of Mexico oil spill

$40 Billion—the reported cost of the BP Gulf Coast oil spill.

But the nominal cost of cleaning up a hydrocarbon disaster only reflects a part of the damages, longer term.

Degradation of marine environments, loss of wildlife diversity, destruction of fisheries and livelihoods… these factors may not enter into the equation until years or decades after an incident.

Add to that the increased regulatory scrutiny following an event, new legislation, higher insurance costs, dropping share price, litigation costs, fines and fees, and consumer backlash and it’s clear—the damage from one spill spread like a slick over rough seas.

In the day, more than 20 years ago, the cost of cleaning up the Exxon Valdez spill reached a nominal $3.8 billion. Yet more than 20 years later, lawsuits persist.

In calculating the true cost of the Deepwater Horizon Spill, American researchers include the following:

  • 405,000 people and 100,000 business made claims for damages, potentially $25 billion in total.
  • BP paid $713 million for lost taxes to various states.
  • Oyster beds decimated by as much as 50% could take up to 10 years to recover.
  • 70% of consumers polled expressed concern over Gulf Seafood contamination, and 23% reported reducing consumption due to safety concerns.
  • Oxford Economics pegged damage to Gulf Coast Tourism at between 7 and 23 billion dollars.
  • Wildlife destruction amounted to 6,045 bids, 609 marine turtles, and over 100 sea mammals. Many carcasses were simply never recovered and dolphin fatalities related to the spill may be 50 times greater than the number of carcasses recovered.
  • Over 1,000 miles of shoreline were heavily or moderately oiled at the spill’s peak.
  • Over 88,000 square miles closed to commercial and sport fishing—an area equivalent to the sate of Utah.
  • Oil covered approximately 40,000 square miles of the Gulf.

Pelican rescued from oil spill at Queen Bess Island.

The IDS early response system can significantly reduce the scale of oil spill damages by getting to and stopping the rapid spread of an oil spill quickly, compared to current methods.

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