Many Americans Think Oil Spill Damage Will Be Permanent

The two most pessimistic views of the BP plc (NYSE: BP) disaster are that the flow of oil from the well cannot be stopped by human intervention and that the environmental damage from the spill will never be repaired.

The first concern has some basis in history. The Mexican Ixtoc I spill in June 1979 went on for ten months. There in no guarantee that caps and relief wells will stop oil from gushing into the Gulf from the wreckage of the Deepwater Horizon rig. It may be the flow of oil will not be stopped until the pressure of the  crude is topped by the pressure of the water 5,000 feet under the Gulf. US government maps already show that oil could move up the East coast of the US and out into the mid-AtlanticA more realistic prediction is that if hundreds of miles of Gulf beaches will be  polluted by the oil and the effects on sea life and animal life will last for decades. Some species might even become extinct. If a hurricane drives the crude inland, that problem will be even worse.

A poll by Gallup shows that half of those queried believe some beaches hit by the oil spill will never recover. Another quarter expect the recovery to take more than a decade. Those numbers are astonishingly high especially because the well is still spewing oil and most of the crude has not reached land.

The  poll also found that eight of ten Americans think the spill will hurt the economy and increase fuel prices. There is actually little support for the concern about fuel. The BP well is only a tiny part of global oil production. Even a shuttering of deepwater drilling in the region proposed by President Obama is not likely to have much impact on the price of crude.

The effect of the spill on GDP is another matter. If the economies of several Gulf states are severely damaged, it could ripple through the US economy and slow  growth in the second half of the year.

One of the conclusions that can be drawn from the poll is that the spill is likely to be a larger and larger political issue. People are concerned about the economy already. The Deepwater Horizon catastrophe only increases that anxiety.

Douglas A. McIntyre