Oil Spill Crisis as a Result of the British Petroleum

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Oil Spill Crisis as a Result of the British Petroleum

The oil spill leaking into the Mexico gulf is as a result of the British Petroleum drilling rig which exploded at a rate of five thousand barrels a day. It was reported that about eleven workers died in the explosion that took place on 20^th of April (Jones, 2010). The likely cause of the disaster was a cementing operation when the drilling by BP contractor Deepwater Horizon was at the verge of completion. The oil spill is going to affect the lives of the people in the coastal region in one way or another and it also poses serious threats to the survival of the biodiversity along the shoreline of Gulf coast. The commercial fishing in the regions affected might be permanent or last for a long time (Rank, 2010).

The spill is also going to impact the economy negatively since all activities associated with coastline are going to be affected. The coastal area which is densely populated normally attract several recreation activities and related activities such as boating, snorkeling, fishing and scuba diving, swimming, beaches, nature parks and preserves among others which do not occur as a result of the oil spill and this has serious effect on local economy and the society as well. If the spill gets to the coast then Florida, Alabama, Gulf shores and Panama City will be affected by the disaster.

Despite the stability of the economy and growth of pipeline industry in the Gulf coast, the current oil spill spells doom for the industry. Most oil used in the region is produced in the Gulf coast and the coast according to Murray (2005) is also the hub for major producers of refined products which are produced by the power generated by natural gas whose source is still the Gulf Coast. The oil spill in the Gulf Coast is by all means going to affect the economy of the region which is also likely to trickle to other nations.

The oil spill is going to affect the production of petroleum in the region thereby reducing the supply of the oil which many industries depended upon for different reasons. Once the oil production comes down the demand of the product is going to go up thereby forcing the oil prices to go up as well. When the oil price goes up the prices of products that depend on it for their production is also going to increase. Refine products prices will increase because they are products of petroleum and the power that produces them is generated from the oil.

Other basic commodities prices are also going to up thereby exerting pressure on the consumers of the oil and its products which is going to impact the sector quite negatively. In addition the cost of transportation is going to increase because major means of transport in the region depend on the oil which is produced in the Gulf coast. The high transportation cost is going to be reflected on the fare in the public transport sector which will make movement of people to become more expensive. When the coast of living goes up in the region there will be demand for increase in wages and salaries and the pipeline sector is going to feel the heat which will affect is overall economy.

There are very many people who are employed in the pipeline sector in the Gulf coast. Jobs are going to be lost in the industry due to the loss and damages the sector has suffered (Achenbach & Fahrenthold, 2010). The loss and the damages that have resulted from the oil spill is going to be met by the companies that are directly or indirectly involve which will increase the expenses of the industry and thereby lowering profit margin. There are many other activities along the coastline that are going to come to a standstill because of the oil spill. Coastal regions all over the world are known to be tourist attraction centers and Gulf coast is one of them where the tourism sectors seriously booms.

All the tourist related activities are going to stop among other activities like fishing, harbor related activities, hotel and lodges related activities among many others. All these activities need fuel to operate consequently the pipeline is going to make a loss due to reduced consumption of its products along the Gulf coast. This is going to affect the sector immediately and in the long term.

Transportation by sea is also going to be stopped for some time and the effect is going to be even greater to the pipeline economy. Most oil and oil products are transported by sea and when the means of transport is interfered with then it means the supply of the product is going to be reduced greatly. Low supply of oil means low stock for the sector and the impact will be low profitability which is going to be realized in the short term.

The effect may also be long term since it will take pipeline considerable time to recover from such a loss and destabilization of the pipeline economy. Transportation and export of oil and its product is also going to be affected as a result of the oil spill. When this happens, there will be reduced production of the oil products and reduced export of the commodities. Both the pipelines economy and the general economy of the region are going to be negatively impacted in the short term and the long term. The industry is going to resort to other means of transport like air, road and rail which is more expensive. Here again we see a reason why the pipeline is going to spend more than they have been doing.

The international implication of the oil crisis on the five major transport modes is by all reasons going to be great. Firstly, in the sea transport mode, the crisis is going to affect the movement of people, goods and services in and out of the region. Most oil which is produced in the region is exported to other states and nations and due to the crisis the service is going to stop hence the states and countries that depend on the oil produced in the Gulf coast is going to suffer the consequences of the oil spill.

Therefore most transportation is going to be done by other modes such as trucking, pipeline, air and rail. Rail and air transportation is going to be used to transport people, goods and services that were transported by sea. This extra pressure will not be healthy for the sectors and transportation will not be as convenient as before due to congestion and limited transport. This means that the international community is also going to suffer the consequences due to the fact that transportation cost is going to be higher and less convenient. In the pipeline mode only countries and places that are connected by the pipelines are going to get services in a normal basis.

Trucking is also going to be used to transport oil and its products to neighboring states and nations but the implication is going to be great because trucking is more expensive than sea transport. The international community is also going to feel the negative impact of Gulf coast oil spill.

References

Achenbach, J. & Fahrenthold, D. (2010). Robotic submarines cap leaking oil pipe in the Gulf of Mexico. Web.

Jones, S. (2010). Gulf oil spill threatens economic, environmental catastrophe. Web.

Murray. B. (2005). Oil and gas on the Gulf Coast. Web.

Rank, J. (2010). Oil spills: Impact on the ocean. Web.

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