FROM OIL SPILL TO ECONOMIC KILL – WHAT’S IT GOING TO COST?

via discoverynews

Take a good, long sip of that morning coffee. Thanks to the recent oil spill, your cup of joe might get a lot more expensive.

What is shaping up to potentially be the worst U.S. oil spill in history isn’t just hurting the environment, it’s also choking the nation’s commerce and industry. University of Rhode Island professor Douglas Hales studies supply chains and their management. He says we could be headed for a “perfect storm” of economic mayhem that could lead to big price hikes down the road for commodities like grain, oil and coffee.

“If the slick reaches mouth of the Mississippi, the Coast Guard will close all of the traffic into the river,” Hales told Discovery News. “That will cost $1 billion a day in commerce going through there, and that’s a conservative estimate.”

The flooding that drowned parts of interstates 95 and 24 through Tennessee, Kentucky, and Mississippi didn’t help either, plugging normal supply channels to the Midwest, Hales said. Goods could potentially be offloaded onto smaller boats and ferried through shallower estuaries, but that would take time and money.

About 70 percent of coffee imported into the U.S. comes through up the Mississippi River, Hales said, and the price of a barge of cottonseed – a major component of livestock feed – costs about $1.3 million. Seafood and fishing industries have already been affected, and tourism and boating are likely to follow.

Still, Hales says investors are betting on British Petroleum’s ability to clean up the slick before oil clogs the river mouth. Nine out of ten of these disruptions are weather-related, Hales estimated, but it’s the 10 percent of man made events that cause the most damage.

With the weather changing, and reports of oil washing up along a large swath of the Gulf coast, Hales said workers have their hands full laying booms and protecting wildlife. But the focus needs to be on the Mississippi Delta region, he added, so people there can receive the help they need.

“Two thousand volunteers are there right now to help with the potential impacts,” he said. “They are going to need help just to try to help stem this. A lot of things are happening at once that can negatively impact the [residents] down there, and unfortunately the first people to get hurt are the poor.”

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