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A Massive Impact

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It is an axiom of modern energy politics that energy and environmental issues have become inseparably bonded. The media abundantly demonstrated this reality and the public quickly got the message that an unprecedented environmental disaster was unfolding. The Gulf event quickly engaged hundreds of environmental organizations from international to local in efforts to mitigate the emergency and intensified a continuing environmentalist campaign to reform radically American regulation of offshore energy exploration.

Before the wellhole was finally capped, an estimated 205 million gallons of crude oil and two million gallons of toxic dispersant intended to counteract the petroleum had spilled into the Gulf. The final magnitude of the environmental impact is still unresolved. The oil fouled 1,100 miles of beaches and marshes along the coasts of Louisiana, Mississippi, Alabama, and Mississippi together with 2,400 miles of levees. Despite a massive cleanup attempt involving at its peak more than 47,000 personnel, large patches of buried oil remain along Gulf beaches. The short-term damage to aquatic flora and fauna, especially to the ecology of coastal wetlands rimming the Gulf was severe; the long-term damage to the deep sea ecosystems, especially marine species, and the human health impact from exposure to the toxic dispersant Corexit are still under investigation. Estimates of the economic consequences of the oil spill also defy accurate calculation but will certainly exceed $8 billion, including a multiyear loss of employment and productivity to offshore fisheries, an especially severe problem for Louisiana, Texas, Alabama, and Mississippi because more than 87,000 square miles of commercial fishing grounds—about a third of the Gulf area—was closed for months, throwing thousands of workers out of employment.3

No corporation paid, and continues to pay, a greater price for the Deepwater incident than British Petroleum (BP). Corporate interests are inevitably stakeholders in every form of domestic energy production, but few petroleum producers had made a greater international effort than BP to cultivate a reassuring image of corporate environmental stewardship. The platform explosion made hash of BP’s environmental image and depreciated its political clout. BP’s subsequent frantic, frustrating efforts to cap the oil leak provoked international censure and anger from a growing legion of critics who held BP responsible for the catastrophe. The damaged corporate reputation was further diminished by the inept performance of the corporation’s CEO, Tony Hayward, in a global interview following the event.

BP’s economic damage continues to soar, the final cost unpredictable. By 2014, BP’s own estimated expenses had exceeded $40 billion, including an initial $20 billion trust fund it has provided to satisfy the first public and private claims for damage, state and local response costs, and natural resource related expenses. Ongoing litigation, enough to employ a convention of lawyers, and large federal penalties for violation of the Clean Water Act, have driven some estimates of BP’s total expense close to $100 billion.

American Energy

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