Oil Fears May Hurt Gulf States’ Economies More Than BP Spill

June 18, 2010

Fear that oil from a huge BP Plc spill will damage Mississippi’s coast is hurting the state’s economy more than oil damage itself, according to a new report.

Tourists are staying away from restaurants and hotels and sport fishing is in “free fall” with bookings down 70 percent overall and 90 percent in some cases, said the report by the University of Southern Mississippi.

Fishermen and hotel owners in Louisiana and Alabama have reported a similar phenomenon in which fear of damage from the gusher in the Gulf of Mexico — rather than actual damage — is hurting businesses by keeping visitors away.

Workers are cleaning up tar balls and caked oil from two of Mississippi’s barrier islands, Petit Bois Island and Horn Island, but so far no oil sheen let alone thicker oil has washed up along the state’s coast.

Bookings at casino hotels, a mainstay in cities such as Gulfport and Biloxi, are holding up well in part because of incentives used to attract tourists, said the report by the university’s international development program.

But at hotels not linked to the industry, bookings are down 50 percent from the same period last year.

“No oil has washed up on Mississippi beaches, yet the economic impact is very significant to the people of the Gulf Coast,” said David Butler, the program’s director and an author of the report, with Edward Sayre.

Hardest hit are charter boats. Without additional sources of revenue there is a chance the industry could shrink significantly, triggering a ripple effect through related industries, Butler said.

The report is the first to look systematically at the economic impact of the Gulf oil spill, which began in April.

In all, Mississippi’s three coastal counties, Hancock, Harrison and Jackson, are projected to lose 5 percent of their combined gross domestic product, or $120 million, in the next three months, said Butler. Annual GDP for the counties stands at $4.1 billion, he said.

Seafood restaurant takings are also down 30 percent, while the cost of seafood has risen by around 30 percent due in part to federal closure of some Gulf waters to fishing.


President Barack Obama has stressed that Gulf seafood is safe to eat and urged people to continue to visit Gulf beaches. He was speaking in a bid to boost the beleagured seafood and tourism industries during a two-day visit to Alabama, Mississippi and Florida this week.

But images of oil on beaches and wildlife have a disproportionate power to dissuade people from visiting the coast because they give the impression all beaches and marine life are tainted, Butler said.

His comments are echoed by Gulf business owners who say recent media attention has been a mixed blessing, drawing attention to their plight but also encouraging viewers and readers to think the spill’s impact is uniform.

In one example of its impact, the Mobile Jaycees canceled its Alabama Deep Sea Fishing Rodeo, a week of July events normally attended by 4,500 families and fishermen, for the first time in 78 years, said spokesperson Todd Bishop.

Normally, thousands more come as spectators and fill the condos on Dauphin Island but the spill left too few open waters for fishing.

“We do know that our attractions along major beach routes have lower attendance,” said Stacy Hamilton, vice president of marketing of the Mobile Convention and Visitors Bureau. “Things have drastically changed in the last few days.”

Florida could lose at least $2.2 billion in revenue and 39,000 jobs if there is a 10 percent decline in tourism-related business in the 23 counties on the Gulf coast, according to University of Central Florida economist Sean Snaith.

Louisiana has taken the brunt of the oil spill damage, followed by Alabama. Damage in Mississippi and Florida, which has a $60 billion tourism industry, is much less.

(Writing by Matthew Bigg; Additional reporting by Verna Gates in Mobile, Alabama and Michael Peltier in Tallahassee, Florida; editing by Todd Eastham)

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