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http://ssrn.com/abstract=1653078
 
 

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Analysis of Environmental and Economic Damages from British Petroleum’s Deepwater Horizon Oil Spill


Lawrence C. Smith Jr.


Louisiana Tech University (Retired)

Murphy Smith


Murray State University - College of Business

Paul Ashcroft


Missouri State University


Albany Law Review, Vol. 74, No. 1, 2011: 563-585

Abstract:     
This study examines the environmental and economic damages caused by British Petroleum’s Deepwater Horizon oil spill in the spring and summer of 2010. The process of oil exploration and production is extremely challenging, offering significant rewards that are offset by equally significant risks. The world’s demand for energy is constantly growing, thereby leading to extraordinary efforts and gigantic investments by energy companies to find new supplies of oil. The $365 million Deepwater Horizon was an offshore drilling unit designed to operate in waters as deep as 8,000 feet and to drill down 30,000 feet. The Horizon was drilling an exploratory well about 41 miles off the coast of Louisiana, when on April 20 an explosion killed 11 workers and began the release of massive amounts of oil into the Gulf. The well was eventually capped on July 15. Total damages to BP, the environment, and the US gulf coast economy are estimated to be $36.9 billion. The damages are attributed to three major factors: (1) human error and equipment failure at BP’s Deepwater Horizon offshore drilling unit, (2) failure of the US government to assign, and in some cases to permit, resources to assist with the containment of the oil spill, and (3) misinformation disseminated by the news media regarding the amount and location of oil pollution in the water and on the beaches of the Gulf of Mexico.

Number of Pages in PDF File: 25

Keywords: British Petroleum, Deepwater Horizon oil spill, environmental liability, environmental damages, economic analysis

JEL Classification: F23, G34, K32, Q3, Q4

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Date posted: August 5, 2010 ; Last revised: April 27, 2014

Suggested Citation

Smith, Lawrence C. and Smith, Murphy and Ashcroft, Paul, Analysis of Environmental and Economic Damages from British Petroleum’s Deepwater Horizon Oil Spill. Albany Law Review, Vol. 74, No. 1, 2011: 563-585. Available at SSRN: http://ssrn.com/abstract=1653078 or http://dx.doi.org/10.2139/ssrn.1653078

Contact Information

Lawrence C. Smith Jr.
Louisiana Tech University (Retired) ( email )
P.O. Box 3178
Ruston, LA 71272
United States
Murphy Smith (Contact Author)
Murray State University - College of Business ( email )
109 Business Building
Murray, KY 42071-3314
United States
270-809-4181 (Phone)
Paul Ashcroft
Missouri State University ( email )
901 South National Avenue
Springfield, MO 65897
United States
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