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 Environment » BP Spill May Cost Gulf $22.7 Billion in Revenue, Group Says

BP Spill May Cost Gulf $22.7 Billion in Revenue, Group Says

BP Spill May Cost Gulf $22.7 Billion in Revenue, Group Says

BP Plc’s oil spill may cost Gulf coastal communities $22.7 billion in lost revenue over the next three years, more than the amount the company has agreed to set aside to pay claims, the head of a tourism association said.

Roger Dow, president and chief executive officer of the U.S. Travel Association in Washington, gave the estimate in written testimony for a hearing today by the House Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection on the impact of the spill on tourism. The figure comes from Oxford Economics, a U.K. consulting firm, and was based on 25 previous disasters, including oil spills, hurricanes and terrorist attacks.

The estimated cost exceeds the $20 billion BP has agreed to put into an escrow account to pay spill victims. Tourism generates $94 billion in revenues for Louisiana, Mississippi, Alabama and Florida, Dow said.

“This large and vital sector of the Gulf Coast economy is in jeopardy,” Dow said.

The travel group wants BP to set up a $500 million account for a marketing campaign, Dow said. The effort could generate $7.5 billion in tourism, he said.

BP has said that it will pay all “legitimate” claims, and that it will add money to the escrow fund as needed.

Dow said the $500 million account should be directed by Kenneth Feinberg, the Washington attorney tapped by BP and the Obama administration to run an independent claims facility to handle private claims.

‘Shying Away’

Feinberg doesn’t have authority to reimburse local governments, which can seek compensation for lost revenue and cleanup costs from BP.

Subcommittee Chairman Bobby Rush, an Illinois Democrat, said various studies estimate that the oil spill has put 300,000 jobs at risk, or 15 percent of the total in the region.

“Now that BP has created a $20 billion claims pool to compensate victims who’ve been impacted by the oil spill, the purpose of this hearing is to make sure that the travel and tourism industry will not be left behind,” Rush said.

“Tourists are shying away from the areas of the Gulf even where no oil has come ashore,” Energy and Commerce Committee Chairman Henry Waxman, a California Democrat, said at the hearing.

Florida’s beaches remain largely oil-free, said Democratic Representative Kathy Castor, whose district includes Tampa.

The state suffers more from a perception of a problem, she suggested. The “word has gone out” that “Florida beaches are damaged,” Castor said.

“The efforts by BP to date have been inadequate, to say the least,” Castor said.

Keith Overton, chief operating office for TradeWinds Island Resorts in St. Petersburg, Florida, testified that call volume from potential visitors was down by 25 percent since before the spill.

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