Many blame British Petroleum (BP) for destroying life in the US as well as for those who import goods from the US or have any financial ties to the country. But there are five reasons especially why BP has a lot to answer for.
Seafood Price Hike
Sales of seafood to the Midwest have fallen by 15%-30% since the oil spill disaster says HamptonRoads.com. Oysters were once very popular food items because of their low cost. They make up 41% of the fish consumed by the US’s seafood market every year, states Money Watch. Americans can now expect to pay $6 more per dozen ($15) because of the oil spill disaster! According to the same source, local seafood restaurants in the Gulf Coast area are reporting a 50% increase in the cost of oysters alone because of the environmental disaster.
Real Estate Disaster
As if the recession wasn’t enough of a blow on the economy and the real estate market, a estimated 600 mile stretch from Louisiana bayous to Clearwater, Florida has lost at least $4.3 billion dollars in the real estate market. Housing Predictor goes as far as to say that “20 to 25 million acres of oceanfront houses and condos in Florida that sold at $400 to $1,000 per square foot during the boom years are now are selling for half that”. If the tragedy with the oil spill continues, the prices of homes in the affected real estate market will fall further. When the oil spill occurred in April, the real estate market in the affected coastline areas saw an immediate 25% drop in market value of homes.
Those who own hotel and tourist attraction sites are hurting as well. The affected hotel and tourist industries had an average 7.2% rate hike between May 1st and May 29th, says Bloomberg.
$5 a Gallon for Gas?
It might be a possibility! Experts differ on the exact impact that the oil spill will have on gas prices. Some contend that gas prices will jump 25 cents to 50 cents by this fall. Other experts counter that “the affected Gulf rigs don’t supply a meaningful share of world production”. But one thing is for sure. If there is a loss of product, environmental disaster continuing to erode consumer and market confidence and widespread hysteria globally, gas prices will likely be the first thing to jump up.
Does anyone in the US believe that BP will pay for the billions of dollars lost by this oil spill disaster? For some, it is obvious that there is a lack of judgment, leadership and fiscal stability with BP. According to this source, the US government and taxpayers, who have already shelled out $138 million dollars on the clean-up, will likely be stuck holding the bag. Even if BP claims bankruptcy, there is no surefire way to know if the company will actually pay for the oil spill bill that President Obama has recently enforced. Presently, CNBC is reporting that BP has sold a $10 billion bond and plans to sell $20 billion from banks and another $20 billion from asset sales over the next two years. Without being a financial guru, doesn’t this mean that whoever had stock in this company will also be a part of the losses accrued? The same source speculates that even if these measures take place from BP, only 10% of what is owed by BP would be recouped.
Bananas, Shoes, and Everything Else Becomes Scarce
If fish and birds are having a rough time in this gooey, messy sludge of a mess, so are the boats required to ship and handle consumer goods. Boats can’t pass through these waters. That means a record loss of jobs, increase in all consumer goods like bananas, shoes, etc. in and out of the affected areas. But, the good news, if there is any, is that trucks and trains will see an increase in business. However, this is not good for the consumer or the energy industry. It costs more to ship consumer goods via rails and trucks and is a drain on energy resources. The environment would be further devastated by this route of shipment.
Interestingly, BP stock is very popular in pension funds across America for any corporation. Because of the oil spill, BP will not be able to financially contribute to a dividend now. This is the first time that this has occurred since WWII according to Deal Book.
Whether you live on the West or East Coast, in the Gulf Coast region or elsewhere, everyone will be affected by this oil spill disaster for years, even decades, to come.