The gulf oil spill is undoubtedly shocking, and is causing massive hardship.
Yet at the same time, the disappearance of the gulf’s offshore industry would cause massive hardship as well.
So there’s a bit of a balancing act to be considered in regards to the U.S. regulatory reaction to the gulf’s catastrophe.
A new CNN report gives a sense of the trade-off involved, explaining, “The oil industry is a $150 billion-a-year business in the Gulf, slightly bigger than tourism and dwarfing the $1 billion fishing industry.”
Thus tourism and fishing are roughly the size of the offshore industry, which means they’d have to double just to make up for a banned industry.
Moreover, even a moderately restricted industry, say whereby regulation reduced the offshore drilling economy by 10%, would wipe away the equivalent of $15 billion. This suggests that even moderate restrictions could have an economic impact similar to 15 gulf fishing industries disappearing, or one quarter of Florida’s $60 billion tourism business gone for the long-term. (Thus the gulf oil industry is 2.5x the size of Florida tourism)
These are obviously rough numbers here, which leave out the large-but-rare environmental impact that drilling can entail.
At the very least though, these numbers show how an over-reaction could gouge the gulf’s economy and create the equivalent of a local economic recession. As the rough numbers above suggest, it would take a substantial amount of new industry expansion to make up the difference, expansion which would be unlikely to appear overnight.