Oil Slick – The Great Depression Dust Bowl Revisited
May 3, 2010
When following coverage of the Gulf of Mexico oil spill (let us call it the
“Oil Slick”), I cannot help but draw comparisons to the Dust Bowl of the
1930s, which exacerbated and prolonged the Great Depression. Both natural
calamities occurred during periods of economic weakness, characterized by
high unemployment and sluggish or negative growth. Both occurred in
relatively impoverished areas of the country where wealth is dependent on
natural resources (agriculture for the Dust Bowl, fishing/tourism for the
Oil Slick). Those who will be directly impacted are people who are most
vulnerable to any sort of unanticipated calamity.
But these comparisons are academic.
What is real is that the Oil Slick can have drastically negative impacts on
our fledgling economic recovery. Sanford Bernstein analysts predict that
the final cost for cleaning up the spill could be $7 billion. The cost to
the fishing industry in Louisiana could be $2.5 billion, while the Florida
tourism industry could lose $3 billion.
Yet it is likely that that cleanup and damages figures are vastly
underestimated. BP’s state-of-the-art safety measures have all failed.
Furthermore, there is no precedent for deepwater leaks – a blowout at the
depth of 5,000 feet has never occurred before. We’re also in the region’s
hurricane season, which could hamper clean-up efforts. To demonstrate how
accurate projections can be, note that BP had previously ruled an accident
as “unlikely or virtually impossible”.
In the worst case scenario, the oil leak continues for months, damaging the
Gulf for a generation. The Oil Slick drifts beyond the Florida coast,
enters the Gulf-stream and sweeps up the eastern coast of the United
States. Years of damage-control costs, in addition to lost revenue from the
adversely impacted states could lead to hundreds of billions worth of
federal deficits. This would impact the broader economy, raise the
possibility of a “double-dip” recession, and thus heighten the Oil Slick’s
likeness to the Dust Bowl.
Veering back to the academic, the Dust Bowl and the Oil Slick share similar
lessons in conservation. Both environmental calamities were caused by
unchecked economic development. The Dust Bowl was caused by unsustainable
agricultural development. The Oil Slick is a symptom of our reliance on
petroleum, which has caused us to drill for it in ever more hazardous places. Let
us hope that the similarities end here.
Key Facts (for when you rant at your friends):
-The Oil Slick is now 130 miles long and 70 mile wide.
-The current leak rate is 200,000 gallons of oil per day
-Oil from the leaking well is lighter than the Alaskan crude spilled by
the Exxon Valdez, which will lead to more toxic impacts.