It started with the explosion of an exploratory drilling rig on April 20th off the coast of Louisiana. That event has spawned what some are calling a “Valdez-like oil spill.” The U.S. Coast Guard has said that oil is escaping from the well at a rate of about 5,000 barrels a day and Louisiana Governor Bobby Jindal has declared a state of emergency and requested aid for commercial fishermen.
Jindal, a Republican, also requested federal funding for 90 days of military duty for as many as 6,000 National Guard troops and demanded extra oil barriers from BP and the U.S. Coast Guard to protect wildlife reserves that nurture a $1.8 billion seafood industry, the richest in the U.S. behind Alaska.
And it’s the members of Louisiana’s seafood industry who are taking action against those responsible — class action that is. Shrimpers and fishermen filed suit Wednesday against BP and Transocean Ltd. claiming, and rightfully so, that the oil spill is hurting their livelihood. The suit, Cooper v. BP plc, claims that the defendants “knew of the dangers associated with deep water drilling and failed to take appropriate measures to prevent damage.” The suit was filed on behalf of Louisiana fishermen, commercial boaters and shrimpers, but is likely to spread as the oil slick starts does, effecting the offshore industries of other coastal states such as Alabama, Texas, Mississippi and, eventually, Florida.
The insurance industry will also take a severe hit from this mega-spill. As PartnerRe has stated:
The ultimate insured loss for this event is unclear given the multiple parties involved and the on-going situation regarding control of the oil spill. The Company [PartnerRe] estimates that insured losses from the explosion have the potential to exceed $1 billion. Given current information, the Company expects its second quarter 2010 results will include claims relating to the explosion in the range of $60-$70 million. These losses are expected to be contained primarily within the Global Specialty and PARIS RE sub-segments.
So far, efforts to shut down the well have failed and though a partial burning of the slick was successful, the oil continues to spew at an alarming rate from miles beneath the water’s surface. At the current rate of leakage, the volume of oil released “would exceed Alaska’s 1989 Exxon Valdez accident by the third week of June.” If something is not done quickly, we may be facing the largest oil spill in history. A scary thought.