A Crude and Insensitive Question — Is the Spill Good for LA’s Economy?
OK, I know that you probably think that’s a horrible question to think, much less ask, and I don’t want it to be misinterpreted. The death of the eleven men who worked on Deepwater Horizon is tragic, and I mourn their deaths with the rest of the state. The ecological damage is also very sad. No one likes to see pictures of pelicans covered in oil, and my friends who fish are in a state of shock at the damage. I’m not rooting for the oil spill, and I pose this question purely from a financial perspective, because I think it’s an important consideration in the debate over the state budget.
After Katrina, federal aid kept the state fiscally sound long after the rest of the country was dead broke. Insurance money and reconstruction provided jobs and private aid has continued to benefit the New Orleans economy. The disaster aid from Rita helped too, on a smaller scale.
The same thing is going to happen as a result of the spill. BP is going to have to pay everybody for everything that’s been damaged. We can expect a massive federal aid package to aid the residents of south Louisiana due to the damage to the economy from the loss of fishing, etc. Lawyers across the state are licking their chops at the work they will have suing BP and the Obama administration. At the same time, however, a lot of those same residents of south Louisiana are going to get extra work as a result of the cleanup.
I know a cotton farmer whose crop was destroyed last year, relatively early in the season. He had crop insurance and was paid what he would have earned growing the crop. But then had about five months of free time, so he used it in another job and ended up making a lot more money last year than he would have if his cotton crop hadn’t been destroyed.
Many conservatives have worried that the Legislature has been derelict in making the cuts that are truly needed if we are to avoid going off a cliff next year. Could Deepwater Horizon end up solving our budget woes and saving our colleges and universities from massive cuts in a year or two?
I look forward to reading your comments.
MEMO BIO_FUEL BLOG 01 May 30, 2010
Yes– there can be a POSITIVE outcome — SAVE the RESIDUE– not just for an OPEN BURN– but collect and use as BIO_FUEL —–
The millions of gallons — can be collected– with all this cleanup paid for by BP— and all the Gulf Coast Spill RESIDUE as collected at sea and on-land locations– and made into just a de-watered PASTE.
START thinking — BRIGHT COMBUSTION — as in LARGE DIESEL engines and other AFTERBURNERS — than can efficiently drive gas or steam turbines,
This cremation is a much better way than to just dump the dead stuff on the roadside or swamp.
MEMO BIO_FUEL BLOG 01 May 30, 2010
Yes– there can be a POSITIVE outcome — SAVE the RESIDUE– not just for an OPEN BURN– but collect and use as BIO_FUEL —–
The millions of gallons — can be collected– with all this cleanup paid for by BP— and all the Gulf Coast Spill RESIDUE as collected at sea and on-land locations– and made into just a de-watered PASTE.
START thinking — BRIGHT COMBUSTION — as in LARGE DIESEL engines and other AFTERBURNERS — than can efficiently drive gas or steam turbines,
This cremation is a much better way than to just dump the dead stuff on the roadside or swamp.
It takes a TEAM to WIN as NO ONE specific FIX will do. This is NEW THINKING by a very practical, a much lower cost, PAT PEND – BIO_FUEL INJECTOR invention by: Richard G Bowman PhD. from my design lab in Kuttawa KY.42055 — w/good references + solid background. Also worked in oil patch and went to BOP School -making DOWN-HOLE Instrumentation- and other new products as Senior Design Engineer + Aerospace and industrial automation, invention and four new patents in-work. Need HELP getting ACCESS TOP-SIDE–!!!
It takes a TEAM to WIN as NO ONE specific FIX will do. This is NEW THINKING by a very practical, a much lower cost, PAT PEND – BIO_FUEL INJECTOR invention by: Richard G Bowman PhD. from my design lab in Kuttawa KY.42055 — w/good references + solid background. Also worked in oil patch and went to BOP School -making DOWN-HOLE Instrumentation- and other new products as Senior Design Engineer + Aerospace and industrial automation, invention and four new patents in-work. Need HELP getting ACCESS TOP-SIDE–!!!
Any beneficial effects from payments for damages would have to be offset by the long-term consequences of diminished drilling and production activity in the Gulf, along with the loss of revenue from commercial fisheries and recreational tourism. If the ban on offshore drilling in offshore waters deeper than 500 ft. imposed by Obama until the end of the year continues after that, the big bucks a few trial lawyers will make isn't going to offset the tremendous hit the state's economy will endure.
Of course, if the offshore ban is extended, our economy will be devastated, which is one reason that I feel comfortable that it won't. If it expires at the end of the year, then I don't see "long-term" consequences or diminished drilling, and the losses from commercial fisheries and tourism should be paid by BP.
We'll see what happens, but the spill makes me less concerned about this year's budget than I would be otherwise.
What on earth would make you think that this Administration will be the least bit concerned that "our economy will be devastated" after the November elections?
Any beneficial effects from payments for damages would have to be offset by the long-term consequences of diminished drilling and production activity in the Gulf, along with the loss of revenue from commercial fisheries and recreational tourism. If the ban on offshore drilling in offshore waters deeper than 500 ft. imposed by Obama until the end of the year continues after that, the big bucks a few trial lawyers will make isn't going to offset the tremendous hit the state's economy will endure.
Of course, if the offshore ban is extended, our economy will be devastated, which is one reason that I feel comfortable that it won't. If it expires at the end of the year, then I don't see "long-term" consequences or diminished drilling, and the losses from commercial fisheries and tourism should be paid by BP.
We'll see what happens, but the spill makes me less concerned about this year's budget than I would be otherwise.
What on earth would make you think that this Administration will be the least bit concerned that "our economy will be devastated" after the November elections?
[...] Hayride contributor Ryan Booth has posed an interesting though controversial question, Is the Spill Good for LA’s Economy? The question bears further [...]
Make no mistake. The impact of the deepwater drilling moratorium will be 100x greater than the effect of the oil in the marshes, on the oyster and shrimp harvests, or on Grand Isle tourism.
We live in a warm environment where moisture & Mother Nature will take care of the spots of crude oil in fairly short order.
But the drilling rigs are mobile. They can work just as well, and as profitably, in BF, Egypt. They aren't going to cold stack here, waiting for work.
Each deepwater rig probably accounts for something like 1,000 direct jobs. (2 crews @ 125 each, plus shore based support personnel, boats, surveyors, helicopter pilots, truckers, etc, etc.) Then you have a multiplier effect as these salaries cascade through the economy – you could see 100,000 jobs sucked out of the region before we know it.
You can expect to see layoffs in the service sector begin in short order.
Vladimir's point is incredibly valid and has been completely overlooked by everyone, including our Governor. The contractors will NOT allow their high dollar assets to sit idle–they WILL be moved overseas. And once they remove a rig from the GoM, it's REALLy hard to get it back in here.
This will cause a drying up of direct hire jobs, indirect support jobs, tax revenue from the companies and the individuals employed by them, sales tax revenue…
If they had given this some forethought, their tone with BP might have been more one of cooperation than denigration. This leak/spill is bad…but, the real long-term economic consequences are going to be from loss of drililng jobs and tax revenue, immediately and a decline in GoM supply online, long term.
The oil & gas sector's only hope at this point is that the natural gas industry begins picking up the slack for domestic energy production – and that's a heavy lift for two reasons. First, we need to begin converting vehicles to use CNG as a transportation fuel, and while we're beginning to see that happen it's going to take a great deal to effect that change on a scale that would matter. That said, any sort of ban on offshore drilling is bound to drive fuel prices sky-high, which may ease a transition to CNG.
The second reason is the same reason offshore drilling is now in extremis – namely, a federal government run by left-wing ideologues who are attempting to strangle an industry providing highly-paid private-sector jobs which does not require government involvement.
In the short term, Ryan is correct that "disaster economics" will prop up parts of Louisiana's economy. In the medium term, the governmental effects of the disaster will be ruinous.
Make no mistake. The impact of the deepwater drilling moratorium will be 100x greater than the effect of the oil in the marshes, on the oyster and shrimp harvests, or on Grand Isle tourism.
We live in a warm environment where moisture & Mother Nature will take care of the spots of crude oil in fairly short order.
But the drilling rigs are mobile. They can work just as well, and as profitably, in BF, Egypt. They aren't going to cold stack here, waiting for work.
Each deepwater rig probably accounts for something like 1,000 direct jobs. (2 crews @ 125 each, plus shore based support personnel, boats, surveyors, helicopter pilots, truckers, etc, etc.) Then you have a multiplier effect as these salaries cascade through the economy – you could see 100,000 jobs sucked out of the region before we know it.
You can expect to see layoffs in the service sector begin in short order.
Vladimir's point is incredibly valid and has been completely overlooked by everyone, including our Governor. The contractors will NOT allow their high dollar assets to sit idle–they WILL be moved overseas. And once they remove a rig from the GoM, it's REALLy hard to get it back in here.
This will cause a drying up of direct hire jobs, indirect support jobs, tax revenue from the companies and the individuals employed by them, sales tax revenue…
If they had given this some forethought, their tone with BP might have been more one of cooperation than denigration. This leak/spill is bad…but, the real long-term economic consequences are going to be from loss of drililng jobs and tax revenue, immediately and a decline in GoM supply online, long term.
The oil & gas sector's only hope at this point is that the natural gas industry begins picking up the slack for domestic energy production – and that's a heavy lift for two reasons. First, we need to begin converting vehicles to use CNG as a transportation fuel, and while we're beginning to see that happen it's going to take a great deal to effect that change on a scale that would matter. That said, any sort of ban on offshore drilling is bound to drive fuel prices sky-high, which may ease a transition to CNG.
The second reason is the same reason offshore drilling is now in extremis – namely, a federal government run by left-wing ideologues who are attempting to strangle an industry providing highly-paid private-sector jobs which does not require government involvement.
In the short term, Ryan is correct that "disaster economics" will prop up parts of Louisiana's economy. In the medium term, the governmental effects of the disaster will be ruinous.
Vlad has it correct. I am employed by an Engineering firm with much of its work in the Offshore sector. We have already discussed the aspect of the moratorium on Drilling in relation to employment. What you are going to see is a major loss of very high paying jobs. You know. To quote Obama, those “rich people that make over a Quarter of a Million Dollars a Year”.The ones that pay the Taxes for all the “free rides” of the “Professional Poor”.
The Offshore Drilling Equipment is in high demand overseas. Company personnel who wish to retain their jobs will move with the Rigs the same as they did after the Bust of 1982.
How ludicrous is this. The very same Rigs that leave U.S. waters may very well be the same Rigs that get contracted to Drill Offshore Cuba with the exact same BOP’s and equipment that they would have been using in the Gulf!!!
Vlad has it correct. I am employed by an Engineering firm with much of its work in the Offshore sector. We have already discussed the aspect of the moratorium on Drilling in relation to employment. What you are going to see is a major loss of very high paying jobs. You know. To quote Obama, those “rich people that make over a Quarter of a Million Dollars a Year”.The ones that pay the Taxes for all the “free rides” of the “Professional Poor”.
The Offshore Drilling Equipment is in high demand overseas. Company personnel who wish to retain their jobs will move with the Rigs the same as they did after the Bust of 1982.
How ludicrous is this. The very same Rigs that leave U.S. waters may very well be the same Rigs that get contracted to Drill Offshore Cuba with the exact same BOP’s and equipment that they would have been using in the Gulf!!!
[...] effects” and environmental “alarmism” about the spill, and since they recently wondered whether the spill wouldn’t be “good” for the state’s economy… I’m [...]