Sample Paper on Impacts of the Deep water Horizon oil spill in the Gulf of Mexico

The environmental economic impacts of the Deepwater Horizon oil spill in the Gulf of Mexico


 In April 2010, the Macondo well belonging to the BP Oil Company in the Gulf of Mexico blew up in the 1500 meters deep water causing an exploding in the Deep Horizon drill that killed about 11 workers and injured 17 others (Turner et al 57). This explosion and the oils spill were considered as the worst to environmental disasters in the history of the United States of America. About 87 days after the explosion the United States and the rest of the world watched as numerous efforts to control the oil spill in the Macondo well failed. At the end of the disaster in July 2015, more than 170 million gallons of had leaked into the diverse and highly productive Gulf of Mexico. In addition, about 1.7 million gallons of toxic chemical dispersants were used to mitigate the possible effects of the oil spill on the water (Fisher et al 11744).

The main objective of this research paper is to assess the environmental economic effects of the Deepwater Horizon oil spill in the Gulf of Mexico. This will be through an analysis of the effects on not only marine life and the surrounding environment but also the resulting economic effects that arose from the environmental damages of the oil spill.

Environmental economic effect of the Deepwater Horizon of the spill in the Gulf of Mexico

Following billions of gallons that were deposited in the seawater, the Deepwater Horizon oil spill, from an environmental perspective, was considered to have caused harm to the living organism that inhabited the ocean and the coastal areas surrounding the Gulf of Mexico. The coastal areas were susceptible to damages because oil that was washed away by the waves was stranded on the coastal shores and wetlands of the coastal ecosystem (Turner et al 58). The harmful effects arose from the understanding that dissolved oil components are harmful to marine life, planktons, and invertebrates. In addition, the environmental danger posed by oil is in its ability to coat plants and animals that inhabit the coastal areas and the wetlands in the Gulf of Mexico. A reduced population of the fish such as blue fin tuna and the planktons was because the oil spoil coated the eggs, larvae, and planktons increasing their mortality rates (Fisher et al 11744).

In the period during and after the spill, the coral reefs in the Gulf of Mexico were also damaged by oil below the Gulf. This led to a reduction in the health standards of the affected organisms. This resulted in an increase in the mortality rates and a decrease in the reproductive capacity of marine life. The long-term effect of this spill was therefore an envisioned reduction in the future abundance of the marine life (Turner et al 60).

The impact of the oil spill in the coastal region is not only on a single fish species. This is because the Gulf of Mexico is a composed of interrelated ecosystems such as bays, open ocean zones and coastal wetlands. This makes it possible for an affected species in one ecosystem to affect others due to the ecological interactions (Fisher et al 11745).

The oil spill and the subsequent oil biodegradation processes were negative contributors to the growth and development of the planktons. The negative effects were because if the inhibition of gaseous exchange in sea and a reduction of light penetration causing intense degradation of the planktons due to toxic responses. Research indicates that there was low concentration of oxygen in oil plumes and in the surrounding water hence high levels of hypoxia among the planktons (Fisher et al 11746).

In terms of the availability of fish and seafood, there are numerous potential and actual effects of the oil spill on the population and availability of fish. This is in relation to their mortality are, the effects on markets and the closure of fisheries. The Bluefin tuna fish is considered as one of the commercial fish species in the Gulf of Mexico. The oil spill coincided with the period of its laying, the fish may have ingested larvae stage, and the oil toxins dissolved in water. In the years following the oil spill there was a reduction in the consumption of the Bluefin tuna fish since the consumers were suspicious of the possibility of consuming oil toxins from the fish. This explains why there was limited consumption of the fish in the years following the oil spill (Turner et al 63).

During the spill, crude oil, which is composed of a mixture of different chemical materials that have different attributes when released to the atmosphere, was spilled in water. According to the existing estimate of the crude oil, suggest that it was a largely degradable and had the potential of readily evaporating (Turner et al 63). The ultimate fate of all the oil that was spilled is yet to be clarified considering that there was oil that was directly recovered, oil that was burned, oil washed to the shore and buried in the sand and that, which remained on the surface (Turner et al 65).

Microorganisms, which played a major role on the degradation of the oil in water, were significant contributors to the reduction of the overall environmental impact of the oil spill. Inasmuch as there were several attempts of removing or dissolving the oil, the microorganism played a significant role in the reduction of the possible effects. During the explosion in the mile deep drilling, methane gas was released. The hydrocarbon was released in to the water but did not evaporate. In the deep-sea temperatures, which were as low as 4°C, methanotrophic bacteria adapted these low temperatures and degraded a large percentage of the hydrocarbons reducing the possible negative environmental effects of the oil spill in the ocean (Turner et al 66).

Existing documentation suggest that the oil spill contaminated a larger population of Sargassum mats floating in the Gulf of Mexico. These were considered to have adverse environmental effects since the mats were an oasis of biodiversity that provided essential ecosystems services to the marine population in the sea (Turner et al 64). Additional evidence suggests that harmful oil agents contaminated the upper water column waters more than two years after the oil spill at the Macondo well. The organism in contact with that could face DNA damages some of which may not be ostensible for years. Despite the speculative nature of this assertion, it is a possible to argue that it signifies the possibility of adverse long-term effects following the oil spill at the Gulf.

Researchers engaged in monitoring of adverse effects of the heavily oiled Louisiana coastal wetlands discovered that polycyclic aromatic hydrocarbons (PAH) levels in sediments samples was at 30 times higher than the pre-oil spill levels. Studies suggest that it will take more than three decades for the PAH concentration in the wetlands to return to the normal baseline levels (Turner et al 65). The PAH levels in Alabama beaches has remained relatively constant for the past four years. This is an indication that the weathering of PAH ceases when the oil in water is submerged. The environmental threat in such a situation is that it will prolong the levels of health risks to organisms that live in the affected beach environments (Turner et al 67)

Economic effects of the oil spill in the Gulf of Mexico

Economically, the damages not only affected the communities surrounding the Gulf of Mexico but also affected individuals and businesses on a partial and full-scale level. By December 2014, British Petroleum (BP), which was the company in charge of the Gulf of Mexico, more than $12 million in damage claims (Boufadel 9496). This is inclusive of $1.3 million that the company paid to governments due to economic damages and about $11 million paid to compensate for economic damages in the form of claims from individuals and businesses that operated along the coast of the Gulf of Mexico. There is a possibility that the number of individual and business claims following the spill is bound to increase considering that the court settlements agreements are not inclusive of a cap for the payments of legitimate claims yet there are many outstanding legal claims against the courts. At the end of 2013, the reports from the claim center overseeing the payment for compensation had a projection that the cost of claims could increase to $19 billion. BP has also set apart about $2 billion for companies in the seafood industry and about $1 billion had been paid to the company by 2013 (Boufadel 9497). In a separate platform, the company has also set apart $1 billion for compensating businesses and property owners who were affected by the oil spill. The company is yet to determine the amount of financial resources that can be used in compensating the affected states.

Economic effects in the fishing industry

A day after the explosion at the Gulf of Mexico, the federal and the state governments began closing down fishing grounds some of which were considered the richest fishing grounds in the Gulf region. Prior to the spill, the gulf region was considered rich ground for fish species such as Shrimp, oysters and menhaden. A few days after the spill the US federal government had ordered for the closure of about 37% of federal waters in the Gulf of Mexico (Boufadel 9497). In addition, the state of Louisiana, which was the most affected among the American states, had closed most of its state waters to fishing to minimize the possibility of fishing contaminated fish. By December 2014, some of the directives for the closure of fishing grounds were still effective due to the ongoing spilling. One of the effects of the closure of most of the federal and state waters was that by the end of 2010, the amount of shrimp landing on the federal waters had decreased by 30% in Louisiana, 58% in Mississippi and 55% in Alabama. There were regions that experienced an increase in the number of shrimp landing from state waters such as Florida. The state witnessed a 15% increase. In terms of the amount of menhaden landings in states such as Louisiana, there was a 17% decrease (Fisher et al 11748).

From an overall perspective, the commercial fishing in the Gulf of Mexico experienced a loss of $246 million following post-fishing closures. According to the studies on the effects of the oil spill in the Gulf of Mexico, BP was also faced with the need to provide compensations arising from claims from recreational anglers (Boufadel 9498). The company was to provide these compensations in the form of restoration investments. The recreation anglers claimed that the restoration investments were results of lost fishing opportunities, which cost $580 million (Fisher et al 11748).

Furthermore, the damages resulting from the spills are expected to cause lasting impacts. Studies project that potential overall economic effect of degraded or lost commercial, mariculture fisheries and recreational facilities in the Gulf of Mexico will be at $8.6 billion by 2020 (Boufadel 9498). These studies also have a projection that by 2020, the more than 20, 000 employment opportunities will be lost die top the effects of the oil spill on the fisheries and recreational facilities. The perceived fear among the customers and anglers of the potential health related complication may result to a reduction the population of fish available in the market and a decrease in consumption rate (Fisher et al 11749). Furthermore, the recreational sites at the coast of the Gulf of Mexico are expected to experience some decline the population of customers accessing the available recreational facilities due to fear of contamination and health related complication arising from contact with contaminated waters at the Gulf.

Economic effects in the tourism industry

According to a 2010 study by the Knowland Group, two months after the oils spill, about 58% of hotels surveyed in Mississippi Florida, Alabama, and Louisiana had experienced customer cancellation in terms of those seeking to access the recreational facilities along the coast of the Gulf of Mexico. Furthermore, about 40% of these hotels were having trouble in booking future events (Boufadel 9497). Hotels in Louisiana for instance reported losses arising from a reduction in visitor spending throughout 2010 and totaled $32 million. The loss was expected to spread to 2014 and the loss adding up to $150 million in Louisiana. Other than loses in form of a reduction in visitor expenditure rates, there were also expectations that there would be loses in the tourism sector in terms of brand damage. These were projected to coast states in the Gulf of Mexico region about $22 billion by the end of 2013 (Fisher et al 11748). The brand damages were resulting from the perceived health complications among the customers who held the assertion that the damaging effects were not only in the marine food that they were expected to consume while at the Gulf but also possible contamination due to contact with  sea water. Destruction of coral reefs and marine habitat in the coastal gulf region was also cited as one of the reason for a reduction in the number of tourists accessing the region. The tourist held the assertion that there was a seeming decline in the population of marine animals and destruction of tourist attraction sites within the gulf region. The reduction in the number of tourist in the affected states is detrimental to the economic growth of these regions. In addition, it is also loss of employment positions especially in hotels where the management was forced to close down business premises until corrective measures were applied to restore the coastal gulf to its original state prior to the oil spill (Fisher et al 11749).

Despite the rise in the number of tourist cancelling their visits to the Gulf Mexico especially after the spoil, the hotel industry however recorded relatively higher number of visitor. These were most those who were hired by BP company to work for the company in removal of the oil from the water (Boufadel 9499). These cannot be classified as tourist since most of the visitors were arriving in Louisiana and other affected states to deal with the problem of oil spill that had kept tourist away. The hotels were experiencing a reduction in their profits because most of these individuals were staying in relatively smaller hotels and eating in restaurants. Previously successful tourist destination sites and activities in the coastal states such as sports fishing were declining due to a reduction in the number of tourist (Boufadel 9500).

Economic effects of the oil spill on BP Company

At the time of the spill in 2010, BP was the largest corporation in the UK. According to media reports, the large size of the corporation in the UK was of major significance since a pound in seven pension funds and investments in the UK was derived from BP. This made it possible for the company to offload billions of dollars in the form of assets (Sumaila et al 505). The company however suffered about $3.1 billion loss inclusive of the cost of spill response, grants to Gulf of Mexico States, relief well drilling, federal cost and containment costs. Other than the compensations, the US Oil Pollution Act (1990) limits the company’s liability for non-cleanup cost to about $ 75 million unless in situations where there is proof of gross negligence. Other than acting in accordance with the liability Act, the company was also charged to pay about $100 million to pay the offshore oil workers who were unemployed following the oil spill in the Gulf of Mexico (Sumaila et al et al 506).

About two months after the oil spill in the Gulf of Mexico, the stock of the company fell by 53% at the New York Stock Exchange (NSE). The stock went from $60 on April 2010 to $29 by June 2010. This was considered as the lowest level of the company’s stock since 1996. Since April 2010, the company’s total value experienced $105 billion (Sumaila et al et al 499). The holdings of investors in BP shrunk to $27 BP gas stations in the United States reported sales-off of 40% because of the backlash against the company. Most of the gas station owners who lost sales opted to change back to other successful companies such as Amoco. The company was therefore losing in terms of the number of associate companies (Sumaila et al et al 500).


The Deepwater Horizon oil spill at the Gulf of Mexico, from an environmental perspective, was considered to have caused harm to the living organism that inhabited the ocean and the coastal areas surrounding the Gulf of Mexico. The Gulf of Mexico is a composed of interrelated ecosystems such as bays, open ocean zones and coastal wetlands. This makes it possible for contaminated species in one ecosystem to affect others due to the ecological interactions. Economically, British Petroleum (BP), which was the company in charge of the Gulf of Mexico, more than $12 million in damage claims. There were also loses on fishing and tourism due to closure of federal and state waters.


Works Cited

Boufadel, Michel C. “Simulation of the Landfall of the Deepwater Horizon Oil on the Shorelines of the Gulf of Mexico.” Environmental Science & Technology, 48(16)(2014): 9496–9505.

Fisher, Charles. R. et al. Footprint of Deepwater Horizon blowout impact to deepwater coral communities. Proceedings of the National Academy of Sciences, 111(32)(2014): 11744–11749.

Sumaila U. Rashid et al. Impact of the Deepwater Horizon well blowout on the economics of U.S. Gulf fisheries. Canadian Journal of Fisheries and Aquatic Sciences, 69(3) (2012): 499–510.

Turner R. Eugene et al. Distribution and recovery trajectory of Macondo oil in Louisiana coastal wetlands. Marine Pollution Bulletin, 87(1-2) (2014): 57–67.