Recently around the July 4 holiday, I had the opportunity to visit with clients in the Fort Morgan, Gulf Shores, and Orange Beach gulf coasts of Alabama. I heard their stories of how the BP oil spill has affected their lives and their businesses. Every night on the news we learn of the oil spill and the impact it has had on the fishing industry or on tourism business. The true reality is the rippling effect it has on all businesses like the dentist, the veterinarian, the clothing store owner, the hair stylist, the car dealer… the list goes on. Granted, the subprime mortgage meltdown has already devastated this region of the country in terms of contractors, real estate agents, bankers, and many home owners.
Look at the pictures I have also posted with this blog. From July 5th through the evening of July 8th, this is how the beach looked before the cleanup crews arrived. Finally, at 10:00 p.m. on July 8th, I saw huge lights on the beach and proceeded down to the sight only to find cleanup workers. These individuals are paid $18 to $20 an hour to cleanup on the beach. However, OSHA requires that they only work 15 minutes and then rest for 45 minutes because they are working in a toxic area. The next day, the beach looked immaculate and was ready for the arrival of guests for the Jimmy Buffet concert.
The point I want to make is that even after the oil rig is capped and oil has stopped pouring into the gulf, and if BP and these cleanup efforts stop, this region of the country will continue to feel pain as people relocate to find better opportunities, new families, and businesses will not move into such an economically depressed area.
In some ways, I feel like I am reliving the early 80’s as I see Boone Pickens tout alternative fuels or hear John Hofmeister, the ex-president of Shell Oil, announce that he has formed a non-profit named Citizens for Affordable Energy. Once again, leadership speaks out in a reactive way after the disaster occurs, just as they did in the late 70’s and early 80’s.
I always say within our firm, we need to anticipate financial planning scenarios before they actually occur. Should’ all government leaders and corporate leaders apply this standard to attempt to prevent all the scenarios that could be devastating to their organizations and their customers?
The reality is, BP’s stock has moved up recently on news that they are closer to capping the oil rig. BP will recover once the oil spill has been capped. They may not return as the BP we once knew, but they may recover in the same way Philip Morris did when they renamed themselves Altria following the tobacco lawsuits. The question becomes, will the people who live and work in the Gulf recover, and how many years will it take?
We are closely watching how the oil spill will impact the economy and if it will delay the economic recovery from looking better. From a historical perspective, this too shall pass, but I am worried that the Gulf as we use to know it will take decades to return to the economically vibrant place it use to be to work, live, and walk on the beach.
So what do you think? Do you believe the Gulf Coast will ever totally recover economically from the oil spill?[polldaddy poll=3476348]