BP Gulf of Mexico spill: The American dream, tarred by oil


BP’s $20bn oil spill compensation fund has done little to cap anger against the company in Louisiana.

“It’s called the American dream because you have to be asleep to believe it,” said Kindra Arnesen, as she listed the medical ailments she says she and her husband, a fisherman in Venice, Louisiana, have suffered from in the past eight months.

She (news) was one of about 200 people who turned up at a hotel in the centre of New Orleans almost six months to the day since BP stopped the oil flowing in the worst spill in US history.

There was huge relief when the Macondo well was eventually capped on July 15, and for BP the attention has now switched to Russia (OMXR.EX – news) and its deal with Rosneft, but for many oil and gas workers, fisherman and shrimpers who make a living along the Louisiana coast the euphoria of the well being capped has long since faded.

In its place is an immediate fight to secure a share of BP’s $20bn (£12.6bn) oil spill fund and worrying uncertainty whether their economic fortunes can ever be revived.

“It’s the unknown in all this that has got everyone nervous,” explained George Barisich, head of the United Commercial Fisherman’s Association.

Like Kindra, Barisich had come to downtown New Orleans this week to hear whether the members of the commission appointed last May by President Barack Obama to investigate the spill had any answers.

The commission’s report was published on Tuesday. It recommended a series of changes to oil exploration and production in the Gulf of Mexico, as it pinned the blame for the spill on systemic failures of the industry and regulators.

That message won some applause from an audience that voiced anger at BP, the government’s response to the spill and Ken Feinberg, the man in charge of handing out the $20bn the UK oil company has sunk into the fund.

With Feinberg fingers on the purse strings, the Massachusetts-born lawyer has become a focus of much recent local criticism. Indeed, he spent this week in another series of public meetings in the region defending the Gulf Coast Claims Facility’s (GCCF) decision to pay out $3bn in approving 168,000 claims.

“I’ve sent emails to Feinberg and the president,” said Theresa Braggs, a New Orleans taxi driver who says her earnings have been cut in half by the spill but hasn’t had any compensation. “I live and breathe the GCCF.”

Unlike most tourists, it wasn’t the music that persuaded the commission to choose New Orleans to explain their findings.

Though oil tarballs reached as far as Florida, and New York (Xetra: A0DKRK – news) restaurants have sought compensation because they’re not selling as many oysters, Louisiana was at the heart of the spill. Many businesses say by the start of 2010, their recovery from Hurricane Katrina, which swept through five years earlier, had found a firmer footing.

The rapid expansion of exploration in the Gulf of Mexico had helped keep unemployment in the state below 7pc in the first four months of the year as America struggled with recession. “I was beginning to see a turnaround [after Katrina],” says Douglas Dawson, who runs an antique shop in the French Quarter, a magnet for tourists in New Orleans. “Since the spill has happened, I’m right back where I was.”

While Dawson and other retailers have suffered a drop in sales, local economists say the oil and gas industry remains the key to the region’s future.

There’s little doubt the decision by the White House in May to impose a six-month ban on deepwater drilling riled the industry. Up to 12,000 jobs have already gone, according to an estimate from Greater New Orleans, a local body that tries to attract businesses to New Orleans. And the lifting of the ban six weeks early, on October 12, has done little to ease anger because no new permits for deepwater drilling have been granted since.

“The government has asked for time to figure out what happened and they’ve had that,” said Sam Giberga, an executive at Hornbeck Offshore (Berlin: HJ2.BE – news) Services, which supplies boats to the Gulf’s 33 deepwater rigs and has cut jobs from its base in Covington, about 40 miles from New Orleans. “The industry depends on the ability to plan and execute projects that cost hundreds of millions of dollars and take years to execute.”

The cycle that governs fishermen, oystermen and shrimpers is a longer one, with the coast’s ecosystem taking thousands of years to evolve. For those whose fishing waters were directly affected not just by the oil, but by measures taken last summer to stem its spread, the anxiety is whether they will again yield oysters and shrimp.

“The most important thing right now is to protect the seafood industry and the coastline,” said Sal Sunseri, vice president at P&J Oyster, one of the city’s biggest oyster wholesalers.

Almost nine months on from the fatal explosion on the Deepwater Horizon rig, the troublesome question for Louisiana seems to be whether Sunseri and Giberga can both get what they want. If the new regulations proposed by the commission do become law, will they prompt the oil industry to scale back its drilling in the Gulf? If not, will the rest of the state’s economy be prepared to live with the threat of another spill?

The sparks on this debate are already flying. Loren Scott, an economics professor at Louisiana State University, describes the fact that none of the seven members of the commission has a background in oil and gas as “a slap in the face” to the industry.

Meanwhile Frank Neelis, local head of the Sierra Club, an environmental pressure group, says that the explosion must be used as a chance to roll back the power of oil companies in the region. Most locals will, at least for now, just be hoping for a better 2011.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

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