Oil Spill as Stimulus

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Tuesday, June 15, 2010 at 10:39 am

The Wall Street Journal reports on a J.P. Morgan Chase analysis showing that the oil spill choking off fishing and tourism dollars to the Gulf might actually raise GDP a smidge.

Underlining that gross domestic product measures are often not a good guide to an economy’s well being, the bank said in a research note its best guess is that the impact on the U.S. economy of BP’s Gulf Coast spill would be minimal.

“The spill clearly implies a lot of economic hardship in some locations, but given what we know today, the magnitude of these setbacks looks dwarfed by the scale of the US macroeconomy,” said chief U.S. economist Michael Feroli. If anything, he added, U.S. GDP could gain slightly from it.

The six-month moratorium on deep-water drilling may cut U.S. oil production by around 3% in 2011 and cost more than 3,000 jobs, according to J.P. Morgan’s energy analysts. Commercial fishing in the Gulf is also likely to suffer, but that’s only about 0.005% of U.S. GDP. The impact on tourism is the hardest to measure, although it’s fair to expect that many hotel workers who lose their jobs will find it hard to get new ones.

Still, cleaning up the spill will likely be enough to slightly offset the negative impact of all this on GDP, J.P. Morgan said. The bank cites estimates of 4,000 unemployed people hired for the cleanup efforts, which some reports have said could be worth between $3 and $6 billion.

The J.P. Morgan analysts are right that the oil spill will have outsize impact on a few industries, impacts partially offset or even entirely replaced by new economic activity. Vacationers aren’t staying in those Louisiana hotels, but clean-up workers and lawyers and the National Guard are.

My concern is for the hangover. Five years from now, there won’t be anymore clean-up workers, and the federal government and BP won’t be funneling millions of dollars to the Gulf Coast. But my guess is that the fishing industry and the tourism industry will still be suffering from the impacts of the Deepwater Horizon disaster. How long until you would want to swim on one of those beaches, or eat one of those oysters?

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monkey99
Comment posted June 15, 2010 @ 4:23 pm

Is this supposed to excuse what's happening in the Gulf? A corporate opinion on corporate malfeasance is supposed to be believed?

Hogwash. Like Census workers added to the jobs numbers were supposed to bolster economic outlook, but only for a month or two….

That oil will kill the southern coast for generations. President Obama's statement about it bouncing back in a couple of years is wishful thinking. Prince William sound STILL has oil just beneath the top layer of rock and sediment. Nothing can be done about it, but the Exxon Valdez was a SURFACE leak, not one coming from the sea bed.

BP cannot be believed, whatever they say. At the very least, they should be prosecuted for negligent homicide. They can't be for crimes against nature, but they can PAY. And PAY. And PAY!

An example must be made.


Really, the Oil Spill Isn't Good for the Economy | LesBnB.com
Pingback posted June 15, 2010 @ 6:36 pm

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LFKTravelGuru
Comment posted June 15, 2010 @ 9:49 pm

The local businesses in the gulf coast region are going to need our support. Take a vacation to the regions. Those folks had no hand in this mess, and I'm certain they'll be glad for the patronage. There will be some pretty huge travel discounts available this summer for those vacationers who are bold enough to visit: http://www.lowfareking.com/hotels/discount-hotels/


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Pingback posted June 16, 2010 @ 6:15 pm

[...] is to imagine at this point, the spill won’t last forever. But as The Washington Independent asks, “How long until you would want to swim on one of those beaches, or eat one of those [...]


The BP Oil Disaster Might Help the Economy, But Does That Matter?
Pingback posted June 16, 2010 @ 9:31 pm

[...] is to imagine at this point, the spill won’t last forever. But as The Washington Independent asks, “How long until you would want to swim on one of those beaches, or eat one of those [...]


The BP Oil Disaster Might Help the Economy, But Does That Matter? | Stocks!
Pingback posted June 17, 2010 @ 12:25 am

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Oil Spill as Stimulus « The Washington Independent | Louisiana
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