August 2010

The Gulf oil spill is a bonanza for some and a bust for others. The worst offshore oil spill in U.S. history has spurred something of an economic boom in some communities where cleanup operations are based, an Associated Press analysis has shown. But BP’s oil spill has delivered a double whammy to areas too far away from the cleanup to serve as a staging ground for masses of workers, but close enough to experience severe losses in tourism, fishing and drilling. But BP’s oil spill has delivered a double whammy to areas too far away from the cleanup to serve as a staging ground for masses of workers, but close enough to experience severe losses in tourism, fishing and drilling. Sales tax revenue in Gulf states showed a stark difference. In Louisiana’s Plaquemines Parish alone, a fishing and oil-and-gas mecca that saw an influx of about 5,000 cleanup workers, state sales tax revenue shot up 80 percent in June over the same month of 2009. By contrast, Vermilion Parish in the Cajun country of western Louisiana, close enough to the spill to turn off tourists but too far to play a significant role in the cleanup, suffered a 45 percent decrease for the same period. The two areas share a common thread: Both have been affected by the closing of Gulf fishing grounds and the threat to oil field jobs posed by a federal moratorium on deepwater drilling. But if there is good news to be found in the oil spill, it is in front-line places like Plaquemines, where thousands of spill workers and companies that serve their needs, such as caterers, have snapped up lodges and rental housing and have spent their pay in local honky-tonks and restaurants. “The cleanup is a whole industry,” said Brooke Andry, whose 20 or so rental properties in Plaquemines are booked up with cleanup workers and BP officials instead of the customary recreational fishermen. The AP analysis showed that, taken together, the 39 Gulf Coast counties and parishes in Louisiana, Mississippi, Alabama and Florida actually saw a modest increase in year-over-year sales tax revenue following the spill. However, this is a tale of booms canceling out busts, of selective prosperity, and of temporary relief that has done little to assuage anxiety about the future. Using year-to-year changes in the amount of taxes collected by retailers or service providers whenever they do business is an imperfect method of calculating the impact of the oil spill since other factors also play a role. Yet the data offers a glimpse into some of the unexpected economic distortions caused by the BP disaster – and the lives and livelihoods it overturned. In Vermilion and other areas on the fringe, tourists have stayed away under the false impression that the whole coast is lathered in oil. And a federal drilling moratorium has cast a shadow on the future of the oil business, a linchpin of the local economy. “People don’t want to be in an area that has problems like this,” said Betty Bernard, owner of Betty’s RV Park in the Vermilion community of Abbeville, which has lost half its business this summer from last year. “The news media has it that we have oil in our backyards, and we don’t.” The economic impact of the April 20 rig explosion that killed 11 workers and sent more than 200 million gallons of crude gushing into the Gulf of Mexico hasn’t yet been fully calculated. BP already has paid out $399 million in claims to residents and businesses who say they were affected by the spill, and the $20 billion set aside by BP at the behest of the Obama administration to compensate spill victims will certainly help ameliorate suffering. Yet the feeling along much of Gulf Coast is high anxiety. “A lot of the revenues come from oil-producing companies, so if they’re not producing, we’re not getting any revenue,” said Ray Dugal, president of the Greater Abbeville-Vermilion Chamber of Commerce. As for tourism, “one of the perceptions … is that we’re in 6 feet of oil,” he said. Given the uncertainty, workers and residents just don’t want to spend money, Dugal said. In nearby St. Mary’s Parish, state sales tax revenue dropped 9.9 percent in May and 3.2 percent in June. At St. Mary Seafood & Marina, sales of fish, crabs and crawfish dropped by a third as out-of-state buyers grew worried about whether Gulf seafood was safe to eat. “Whenever all of the pictures of the birds in oil came out, that is when the sales started to drop,” said owner Daniel Edgar. Of all the Gulf parishes and counties, the biggest boom has been in Plaquemines, where oil from the well about 50 miles offshore first touched the U.S. mainland April 29. Other oil-affected Louisiana parishes saw a sales tax boost in June, too: St. Bernard (15 percent), St. Tammany (14 percent) and LaFourche (9.6 percent), according to the AP analysis. Sharon Couture, 60, runs a convenience store in Yscloskey, a tiny fishing village in eastern St. Bernard. “They come in all the time,” she said of cleanup workers. “They buy beer, energy drinks, cigarettes, that sort of thing. “I’d say I’m about breaking even because of them. The fishermen used to come in and spend $40, $50. These guys come in and spend $5, $10. There’s just more of them.” But she doesn’t know how quickly the fishermen will return, and she is fearful. “I told my husband if BP pulls out, we’ll just close up and leave. We won’t make enough to live on then,” she said. Plaquemines President Billy Nungesser – a frequent and vocal critic of the spill response – said the windfall his parish collected will be banked to offset projected declines in early 2011 as the cleanup effort winds down. He said he expects revenue from marinas to fall by 70 percent and at hotels by 80 percent. “As we go into the winter and next year … we’ll need it to make up the shortcomings in those months after BP is gone,” Nungesser said. The exception to the southeast Louisiana mini-boom is New Orleans, where state sales tax dropped 5 percent in May and 10.5 percent in June from a year ago. The numbers may be less a reflection of the spill than the completion in the past year of several post-Hurricane Katrina construction projects, said economist Loren Scott. Outside Louisiana, which has taken the brunt of oil, changes in sales tax revenue for other Gulf counties were small. In Florida, coastal counties outside the Panhandle, where not a drop of oil washed ashore, revenue grew over last year for the most part. In the Panhandle, revenue rose in every coastal county except one in May. In June, it rose slightly in half the counties and dipped slightly in the rest. Baldwin County, Ala., saw a tiny decrease in state sales tax revenue this summer. Harrison and Jackson counties in Mississippi had slight decreases in May but solid increases in June, helped by the influx of cleanup workers. Hancock County, Miss., which hasn’t had as many cleanup workers, had decreases of 9.6 percent in May and 6.7 percent in June. In other places, it seemed clear that fluctuations had less to do with the oil than other factors. The reopening of a Wal-Mart Super Center in St. Bernard Parish, La., contributed to the 15 percent jump in year-over-year state sales tax revenue in June, said Councilman Frank Auderer. But, he added, the influx of cleanup workers can’t be discounted in the working-class parish just east of New Orleans. Residents of the boom areas, meanwhile, don’t expect their windfall to last long. “Everyone who is local is trying to make good out of a bad situation while they can,” said Andry, the lodge owner. “We’re all riding a wave, but once the spill is cleaned up, or allegedly cleaned up, will there be any fishing? Will the phone be ringing?” ___ AP Writer Mary Foster contributed from Yscloskey, La.