Printer Friendly

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.

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
COPYRIGHT 2012 The DreamCatchers Group, LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2012 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Alijani, Ghasem S.; Mancuso, Louis C.; Omar, Adnan; Ordogne, Natashia G.
Publication:Entrepreneurial Executive
Geographic Code:4EUUK
Date:Jan 1, 2012
Words:3530
Previous Article:Letter from the editor.
Next Article:Using biography to teach entrepreneurship.
Topics:

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters