Oil Spill Spillionaires
Gulf ‘Spillionaires’ Target Real Estate Market
Spillionaire” is a term coined during the Exxon Valdez spill in 1989 to describe those who make bank after an oil-related environmental disaster. Corporations, small businesses and individuals can profit when they seize opportunity from crisis. That’s capitalism.
So it’s no surprise that spillionaires are at the ready to profit from oil-drenched real estate on the Gulf of Mexico coast. Here are some ways some might be getting their piece of the action — and why it’s often beneficial for the rest of us.
While spillionaires get a lot of negative play in the media, they’re actually a powerful component of a much larger, and largely invisible economic sector — frequently working for good. This sector is described as the “restoration economy” by author and consultant Storm Cunningham.
“Spillionaires and anyone else who profit from disasters are like any other category of businesses or professionals: There are good ones and bad ones,” says Cunningham. “Good ones provide good restoration value for the money, and bad ones take advantage of political connections to get no-bid (or rigged) contracts that allow them to do as little as possible for as much as possible.”
The oil spill can damage real estate in multiple ways. Consider the damage an oil spill has on indoor air quality. As the ocean oil breaks down, it can become airborne and may start entering homes and businesses via air conditioning and heating systems.
“There’s a potential for health problems for people exposed to bad indoor air,” says Steve Levine, president and CEO of AtmosAir Solutions in Fairfield, Conn.
The Environmental Protection Agency has been testing air quality along the coastline for volatile organic compounds like hydrogen sulfide, benzene and naphthalene which, when airborne, can cause odors and symptoms such as headaches, dizziness, nausea, eye irritation and respiratory issues. Long-term exposure can cause cancer and damage the nervous system.
“A lot of time and coverage has been rightly spent on the BP spill and how it’s devastated the Gulf Coast environment and the animals that live there. But the bad air problem may be leaking into area home and offices making a terrible situation even worse for human health,” says Levine.
Cleaner air quality after an oil spill sounds like a fair, and beneficial, way to profit.
When home values drop, it’s a great time to invest — particularly if you believe that the values will eventually return or cash flow can be produced immediately. Investors of all kinds have noticed the significant price drops in the Gulf area. Some estimates predict that homeowners may see drops of $56,000 or more in home values. Ka-ching!Again, the results of this spillionaire-ish move can be mixed. “If people are fixing and flipping abandoned/tax auction/foreclosed houses, I can’t see anything wrong with that,” says Cunningham. “It’s putting the housing stock back into salable condition. The real problem is speculators who buy cheap properties and then sit on them, passively waiting for revitalization to raise the value of the property. They help retard the very revitalization they are hoping for.”
“For a community to achieve comprehensive revitalization,” says Cunningham, “they need to make a focused shift to rebuilding their economy by renewing their natural, built and socioeconomic assets. They need to do that in an integrated manner, for efficiency and synergies. And, they need to do it in a way that effectively engages all stakeholders, for social justice.”
This critical community work will need the coordinated efforts of volunteers, organizations and for-profit businesses.
Cunningham is among them. “On Oct. 1, my firm will be introducing Revitalization Forum, the world’s first web tool to help communities and regions achieve [comprehensive renewal]. If BP sponsored subscriptions to Revitalization Forum for all communities affected by the spill,” he claims, “it would cost next to nothing (by spill cleanup standards), but would do more to help achieve rapid, resilient renewal (and goodwill!) than any other investment they could make.”
Who Wants to Be a Spillionaire?
You, too can “cash in” — in a way that might just help reduce the magnitude of damage caused by the next oil spill.
The Wendy Schmidt Oil Cleanup X Challenge just launched. It’s named for the wife of Google chairman Eric Schmidt, who donated the grand prize: $1.4 million to the person or team with the best oil-spill cleanup idea. Wendy Schmidt said, “We need to come up with better ways to respond quickly and to minimize the harm we are causing to marine life, coastal wetlands and beaches, and to our livelihoods.”