Nov 23 2010

Wall Street Journal: Shelby Wants More BP Money for Alabama

BP Plc. is back in the crosshairs on Capitol Hill.

Alabama Sen. Richard Shelby, a Republican, asked the oil giant on Monday to provide the same compensation to his state that it has ponied up for Louisiana in the wake of this year’s oil spill in the Gulf of Mexico.

Mr. Shelby’s interest was piqued by an announcement that BP would pay $48 million to protect and market Louisiana’s seafood industry and an additional $30 million to bolster tourism in the state. Louisiana Gov. Bobby Jindal, also a Republican, announced the commitment earlier this month. Mr. Shelby, in a letter to BP Chief Executive Officer Robert Dudley, asked the company to make “a similar payment” on behalf of Alabama.

“The Deepwater Horizon spill has brought devastation to Alabama’s Gulf Coast, and in particular has severely hurt our fisheries and tourism industries,” Mr. Shelby wrote in a letter dated Monday.

In a statement, BP said: “We will respond directly to the senator.”

The fishing industry accounts for more than 18,000 jobs in Alabama and accounts for more than $800 million in annual sales, Mr. Shelby wrote. Tourism generates an additional $2.3 billion in the state’s Gulf Coast, the senator said, estimating the loss of revenue in the aftermath of the spill to be somewhere between $850 million and $1 billion.

“The damages caused by the oil spill could last years as we are faced with a potentially severe decline in fisheries stock and a negative media image of our beaches,” Mr. Shelby wrote. “BP needs to commit to Alabama’s recovery by funding efforts to revitalize our state’s tourism and fisheries industries.”

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The text of Senator Shelby's letter is below:

November 22, 2010

Mr. Robert Dudley
Chief Executive Officer
BP
501 West Lake Park Boulevard
Houston, Texas  77070

 

Dear Mr. Dudley,

I read with interest that BP has finalized an agreement with the State of Louisiana to provide $18 million in seafood safety and monitoring, $30 million in seafood marketing, and $30 million in tourism marketing to the State.  I can only assume that with the Gulf of Mexico’s ecosystem inextricably intertwined and damage not confined by States’ boundaries, a similar payment will be made to the State of Alabama.

The Deepwater Horizon oil spill has brought devastation to Alabama’s Gulf Coast, and in particular has severely hurt our fisheries and tourism industries.  In 2008, the most recent data NOAA has on fish stock assessments, commercial fishermen in the Gulf of Mexico harvested 1.27 billion pounds of finfish and shellfish that earned $659 million in total landings revenue.  In addition, recreational fishermen took 24 million fishing trips in 2008.  Due to the threat of oil, federal waters were closed, resulting in reduced ability to fish the waters and numerous fishing trip cancellations.  Alabama’s fishing industry represents one of the largest economic engines in the State – accounting for more than $800 million in sales and nearly 18,000 jobs.  During the height of federal water closures, $781,693 was lost in total sales per day based on modeling used by the American Sportsfishing Association.  Further, the economic impact to tourism that is drawn by the availability of seafood and recreational fishing opportunities will be hurt, perhaps even more severely than the ecosystem itself.

According to Alabama’s Gulf Coast Convention and Visitors Bureau, in a typical year, the Alabama Gulf Coast generates more than $2.3 billion in tourism and is responsible for creating over 40,000 tourism-related jobs.  Baldwin and Mobile counties generate over 35 percent of the entire State of Alabama’s tourism each year.  Since the BP oil spill, we have seen a nearly 50 percent drop in tourism-generated dollars and a substantial loss of jobs.  Tourism revenues lost to the coastal economies as a direct result of the oil spill are estimated at between $850 million and $1 billion, a figure that does not include the additional losses to the fishing industry and shipyard repair and maintenance operations.  Many locally owned businesses are desperately struggling and are on the brink of shutting their doors permanently.  Consequently, municipalities are also failing to meet their budgets due to the severe decline in local tax revenues, for which they yet remain uncompensated.

The damages caused by the oil spill could last years as we are faced with a potentially severe decline in fisheries stock and a negative media image of our beaches.  The economic impact is severe and extensive, across the Gulf Coast, not simply limited to any one state.  BP needs to commit to Alabama’s recovery by funding efforts to revitalize our State’s tourism and fisheries industries.

I look forward to working with you in developing an appropriate strategic approach to ensure Alabama’s fisheries and tourism industry remain vibrant.

 

Sincerely,

 

Richard Shelby

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