What Economic Impacts Will the Gulf Region Face?

The Deepwater Horizon oil rig explosion that took place April 20, 2010, in the Gulf of Mexico will have economic impacts on the region for decades to come. Of the four biggest industries in this area — oil, tourism, fishing and shipping — three are directly affected by the leaking oil well that is yet to be plugged. A 2007 study published by the Texas A&M University Press found that these four industries account for approximately $234 billion in economic activity each year in the entire Gulf region — two-thirds of that economic activity was in the U.S. portion of the region. The study noted that if the Gulf region were a country, it would be the 29th largest economy in the world. While it is far too early to speculate what the total economic impacts from the oil spill will be in the Gulf region, a look at the historical role these industries play can offer some perspective. Below are some statistics on the role these industries play in the Gulf’s economy:

Oil (sources: Energy Information Administration, 2010; Bureau of Labor Statistics, 2006)

The Gulf of Mexico Outer Continental Shelf is the largest U.S. oil-producing region, and the Louisiana section holds more than nine-tenths of the crude oil reserves in that region. Louisiana ranks fourth among the states in crude oil production, behind Texas, Alaska, and California, with a reported 107,210 reported petroleum-related workers employed in the Gulf Coast region.

Tourism (source: Bureau of Labor Statistics, 2006)

Eight percent of employment in the Gulf Coast region is in tourism and recreation fields, totaling more than 620,000 jobs. Eighty-seven percent of tourism and recreation jobs in the Gulf Coast region are created by eating and drinking establishments.

Fishing (source: National Marine Fisheries Service, 2006)

As of 2008, the region boasted 1.3 billion pounds of commercial fishery landings per year, yielding a value of $662 million. Eighty-three percent of U.S. shrimp landings and 56 percent of U.S. oyster landings are in the Gulf of Mexico. The Gulf of Mexico accounts for over 40 percent of all U.S. marine recreational fishing catch.