Impacts of Major Offshore Oil Spill Incidents on Petroleum Industry and Regional Economy

Abstract

Disasters such as offshore oil spills will have a significant negative impact on occupations, incomes, tariffs, and further profits, adding to the struggles of regional area held up in difficulty. Such a broad size of impact can more impair the functioning of the economy of the district. In addition to costs encountered by cleanup activities, industries and individuals dependent on coastal resources can experience huge economic losses. Many other related businesses and sectors can possibly hurt by disruptions and loss of earnings. To better understand different aspects of the problem, we explain the problem through a case study for recent incident in the Gulf of Mexico (GoM), the Deepwater Horizon oil spill (DWH) on April 20, 2010, the worst oil spill disaster in the history of the U.S. start off the coastline of Louisiana in the Gulf of Mexico. We have conducted study to focus on the positive impact of economic compensation on Gulf coast employment and wages. Regardless of estimates of main job losses resulting from the oil spill, we estimated that Louisiana experienced a net rise in employment and wages. Input–output (I-O) model will be applied in this study to approximate the economic compensation created by economic injection due to the Deepwater Horizon accident. Then, we can estimate the gross damages to the Louisiana economy. More importantly, the final results should provide useful information on measuring the economic impact of any future large-scale disasters and for how companies must react to minimize the economic impact of events. One positive side that will come out of the oil spill is the spotlight on the need for new and developed prevention and response strategies to this kind of major disasters. The analysis of losses in the employment and earnings in Louisiana in the aftermath of accidents in petroleum industry makes to know the importance and significance of the oil and gas sector as a powerful economic machine that provides a wide range of opportunity for the state. It is no surprise how remarkable is the influence of oil and gas industry on the income of the state workers and the output of the state. Therefore, having approximation of the impact helps to facilitate strong recovery and to prevent potential harm to the related industry.