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.



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