Gulf Coast Economic Winners And Losers
Short term spill impacts leave both winners and losers
MOBILE, Ala. — Baldwin County and areas around Destin, Fla., appear to have suffered the biggest economic hits so far from the Gulf of Mexico oil spill, according to a Press-Register survey of sales and lodging tax receipts along the coast.
In contrast, Mobile, New Orleans, and Morgan City, La., appear to have seen big increases in economic activity when the summer of 2010 is compared to the summer of 2009, according to tax receipts for areas from Apalachicola, Fla., to Morgan City. Those gains were driven, at least in part, by BP PLC’s cleanup spending.
The survey offers a snapshot of what happened from May through August, and in no way predicts how the legacy of the Gulf of Mexico oil spill will play out over time. The figures also pick up other economic trends in various locations, some of which are unrelated to the spill. The totals themselves are not perfectly comparable from place to place because of differences in tax collection practices — such as Florida‘s sales tax exemption on groceries and medicines.
Still, the data shows a clear pattern of winners and losers.
For example, retail sales gains in Mobile County were larger than similar losses in Baldwin County. Hoteliers from Mobile west through Louisiana showed large gains, while lodging taxes fell all along the beach from Fort Morgan east to Panama City, Fla.
What’s not clear is whether gains or losses will be lasting. Leaders of beach communities are hoping for a quick rebound next spring. But some Louisianians fear that heavy regulation of the oil and gas industry could more than wipe out any gains from cleanup activity.
“There is a way in which some people are better off for the short term, until BP takes away its resources and we’re left with our negative image as an oil-scarred area,” said Janet Speyrer, an economist at the University of New Orleans.
BP, majority owner of the well that leaked crude into the Gulf, said that it spent more than $11 billion in cleanup efforts over the summer. That included about $3.2 billion in direct claims, grants and other payments to businesses, individuals and other agencies in the affected areas.
The company focused its efforts on responding to the incident, said spokesman Justin Saia, not on how the influx of workers and money would affect the economy.
“We’re encouraged to hear that some communities benefited economically, but at the same time we understand that some were not as fortunate,” he said. “We’re dedicated to working diligently with the negatively impacted areas to provide assistance for legitimate losses related to the Gulf of Mexico oil spill.”
The 22 counties and parishes that the Press-Register sought data from had an economic output of more than $150 billion in 2008, according to federal figures.
Sales tax collections for the entire area are down only slightly, although full data from three Louisiana parishes could not be obtained.
Baldwin County saw a sales tax decline and lodging receipts fell 33 percent, the worst of any county surveyed.
Orange Beach Mayor Tony Kennon said the data are just further indication of what he has been saying all summer.
“We’re the epicenter of financial loss along the Gulf Coast,” he said. “That wasn’t hyperbole. That was the truth.”
In Mobile County, spill workers crammed hotel rooms, boosting lodging taxes by 54 percent. Only three parishes around BP’s regional command post in Houma, La., saw greater percentage increases.
Maura Garino, general manager of the Holiday Inn in downtown Mobile, said her business was up nearly 30 percent over the summer. Summers are normally slow in Mobile, as more people visit the beach communities.
“It was a wonderful summer,” she said. “We had to call in some reserve (employees).”
The combined totals for coastal Mississippi were largely flat. Jack Norris, president of the Mississippi Gulf Coast Business Council, said BP workers and contractors helped offset a drop in tourism from other visitors.
For example, he said, several casinos typically get business from Louisiana residents stopping in on their way to beaches in Florida.
“If Louisiana folks aren’t visiting the Panhandle, then they’re not making stops in some of our casinos,” he said.
Okaloosa and Walton counties in Florida, joined Baldwin as the only counties where sales taxes fell more than 5 percent and lodging taxes fell more than 20 percent.
Tracy Louthain, spokeswoman for the Beaches of South Walton, said workers who came to her area for the cleanup could not make up for the lost tourists.
“They sure weren’t taking in the attractions, if you will,” she said.
In Louisiana, tax revenue generally rose.
“BP hired a ton of people to come down and work, and those people ate in restaurants and stayed in hotels,” said Loren Scott, a Baton Rouge, La., economist. “I don’t think (tax figures) would have gained more without the spill. Increases of any more than 3 percent or 4 percent, it’s got to be the spill.”
Experts said that winners and losers could change over the long run.
The beach communities in Baldwin and the Florida Panhandle could make a quick comeback if oil cleanup efforts are successful and tourists can be lured back. Dan Rowe, the chief executive officer of the Panama City Beach Convention and Visitors Bureau, said that when reporters zero in on the April 20 anniversary of the Deepwater Horizon explosion, he hopes to use the attention to persuade visitors to return.
“That’s when people really begin thinking about beach and spring and the end of school,” he said.
Scott said that new oil discoveries in deepwater parts of the Gulf had promised increases in oil sector employment in south Louisiana. Now, though, he expects jobs will shrink for at least two years in the Houma and Lafayette area, the two cities most dependent on the oil business.
Scott said he doubts that fisheries will suffer long-term biological harm from the spill, although perception may be a problem.
The one lesson that everyone seems to have taken away is that areas dependent on one or two industries need to diversify.
Baldwin County leaders are talking about emphasizing things other than beach tourism, while Vic Lafont, the chief executive of the South Louisiana Economic Council, is pressing oil industry suppliers to sell their wares and services abroad. This could even be the window for longtime shrimpers to seek new work.
“If you ever wanted to get out and do something different, now’s the time to do it,” Lafont said.
(Press-Registers Business Reporters Jeff Amy and Dan Murtaugh authored this report.)