Oil spill still stains Gulf Coast’s economy

The first nightmare for John and Kathy Struchen, owners of Lanier Sailing Academy in Pensacola, Fla., was the fear of what could happen — tar balls washing up on shore, black sludge invading bay inlets — after the Deepwater Horizon oil rig exploded exactly a year ago off the coast of Louisiana.

The small-business owners say they dodged a bullet in terms of damage from what became the worst oil spill in U.S. history, but perceptions of oil-stained beaches wreaked havoc on the local economy and left business at their sailing school down 30 percent to 35 percent from a year ago — a stark figure considering the school averaged growth of 24 percent each year for the past decade.

Still, Mr. Struchen said, the real nightmare hasn’t been the lost business; it’s been the endless labyrinth of paperwork, phone calls and meetings as they struggle to get their share of compensation under the $20 billion Gulf Coast Claims Facility established by BP PLC in June and being administered by Kenneth R. Feinberg.

“Maybe he meant well, but so many things he told us would happen never happened,” Mr. Struchen said about Mr. Feinberg, whom President Obama and company executives selected to administer the fund. “I’ve been in business long enough to know you don’t overpromise and underdeliver — especially when you’re talking about people’s lives.”

Wednesday marks the first anniversary of the rig explosion — which killed 11 workers and blew out an oil well that caused the worst environmental disaster in the nation’s history — and a mixed picture of the recovery has emerged.

Unknown damage

Environmental activists say it will be a long time before the full extent of the spill’s impact on local wetlands can be known because the federal government’s Natural Resource Damage Assessment is part of its legal case against BP and much of the information being gathered is therefore kept private for now.

“So there really are, one year out, more questions than there are answers,” said Lisa Suatoni, a senior ocean scientist at the Natural Resources Defense Council. “We have a sense of where the oil went, but we don’t have a sense of what volume went where. … It still exists in the environment, either on the shore or at the bottom of the sea or floating around the ocean.”

In the 87 days before it was capped, the broken BP well spewed about 170 million gallons of oil into the Gulf of Mexico, damaging more than 1,000 miles of marshes and beaches — 83 miles of which remained heavily or moderately oiled as of early this year — and temporarily closing more than one-third of Gulf of Mexico waters to fishing, according to the environmental group.

According to the latest statistics from the U.S. Fish and Wildlife Service, nearly 7,000 birds, sea turtles, dolphins and whales have been found dead as a result of the spill. Ms. Suatoni said that figure likely is a gross understatement.

The economic picture is also cloudy. An analysis commissioned last year by the U.S. Travel Association said effects from the disaster could cost the Gulf travel industry $22.7 billion over three years.

Some tourism officials were able to ward off perceptions of damage, however. After New Orleans spent $5 million on an aggressive marketing campaign funded by BP, the city had 8.3 million visitors in 2010 — the first time it has eclipsed the 8 million visitor mark since Hurricane Katrina, said a spokeswoman for the Convention and Visitors Bureau.

Political fallout

The biggest question for many in the region, though, is over the future of deep-water drilling. In the aftermath of the spill, the Obama administration suspended drilling, and the six-month moratorium cost the Gulf 13,000 jobs and $800 million in lost wages, according to congressional testimony by Louisiana State University finance professor Joseph Mason.

Even now, drilling advocates are locked in a battle with the administration over new permits.

“People who had nothing to do with the BP disaster, who had very strong safety records, have literally been put out of business by the administration,” said Rep. Steve Scalise, a Republican who represents a district in southeastern Louisiana.

Mr. Obama faced criticism for his handling of the spill, and polls at the time said he was doing a worse job than President Bush did in the aftermath of Katrina, which hit the Gulf in 2005.

Trying to counter those sentiments, Mr. Obama made five trips to the region and even took his family on a seafood-filled vacation to Panama City, Fla., in August.

Mr. Bush visited New Orleans to mark one year after Katrina, but Mr. Obama will be far from the Gulf on Wednesday. He is scheduled to fly to California to campaign for re-election and to talk about his new budget proposal.

Over the past few months, though, the president has deflected criticism of his moratorium on deep-water drilling by saying he supports responsible drilling and that domestic oil and gas production reached its highest level ever in 2010.

Mr. Scalise said that’s more of a reflection of exploration conducted years ago, and he predicted a slowdown in production over the next few years.

The lawmaker is sponsoring legislation that would send at least 80 percent of any fines that BP ends up paying under the Clean Water Act to Gulf states to help fund restoration. He said he also is working to ensure greater transparency at the Gulf Coast Claims Facility, which is not a governmental agency.

Waiting for resolution

Several Louisiana business owners testifying Monday at a field hearing for the House Natural Resources Committee said they have received only fractions of the payments they have requested. One shrimper told lawmakers that one year later she has yet to receive even an emergency check that was promised and had to take out a line of credit to prepare for the upcoming season.

Mr. Feinberg, the fund’s administrator, vigorously defended his stewardship of the claims facility. He said he has paid about $4 billion in claims to about 200,000 people and businesses.

“Although the program is not perfect, overall, we are succeeding,” Mr. Feinberg, a D.C. lawyer who also administered the Sept. 11 victims compensation fund, told The Washington Times.

He said he was not able to comment on individual claims, but stressed the need for complete and accurate documentation before issuing payments. The fund, which has a staff of about 3,200 claims adjusters, accountants and lawyers, has received more than 800,000 claims from all 50 states, including at least 8,000 of which appear to be fraudulent, he said.

As for the pace of the claims resolution process, Mr. Feinberg said, ensuring each request is treated in a “tailored” way takes time.

“There’s a lot of frustration and emotion, human nature being what it is,” said Mr. Feinberg, who added that he tries to hold meetings and town hall gatherings in the Gulf region as often as he can. “You take the heat.”

Even frustrated residents such as Mr. Struchen point out that the region is resilient and say it’s only a matter of when, not if, the Gulf recovers.

“We’ll survive,” he said. “We’ll work hard.”