Life after the BP oil disaster

Why we need a Gulf Recovery Fund

The condition of the Gulf region today is the result of hundreds of business and economic development decisions made by the states, the federal government, and the oil and gas industries over many decades. It calls for a long-term solution that involves all those players alongside the communities that have been most affected by generations of compromises made in favor of short-term economic gain over long-term sustainable growth. It is time to face and address our addiction to oil.

In this repost, CAP’s Kate Gordon and Richard Caperton propose a Gulf Recovery Fund.

When the Deepwater Horizon oil rig burst into flames in April, the beginning of this epic oil catastrophe in the Gulf of Mexico was by no means the Gulf Coast region’s first brush with the powerful oil and gas industries. Nor will the ultimate solution to this BP gusher mark the end of the severe economic and environmental damage that will be felt by this region for years to come.

The BP oil catastrophe is not the first oil spill in the gulf“”not by a long shot. An exploratory well blew up in 1979, dumping 140 million gallons of crude oil into the ocean. In 1990, 2000, and 2008, oil tankers spilled millions of gallons into gulf and lower Mississippi waters. And the U.S. Coast Guard estimates that after Hurricane Katrina in 2005, over 7 million gallons of oil were spilled from a variety of sources, including pipelines and storage tanks.

Not only the water but also the land in the five major gulf states of Texas, Louisiana, Mississippi, Alabama, and Florida, is affected by the region’s long-term relationship with oil. Researchers at Southern University, for example, find strong evidence that land erosion in the Louisiana coastal wetlands occurred parallel to oil and gas development in the region. And according to a recent White House report, the canals, pipelines, and other infrastructure the oil and gas industry constructed across Louisiana over the past eight decades resulted in the loss of over 2,000 square miles of coastal wetlands.

This very erosion””and the levees built to compensate for it””is widely considered to have been a major factor responsible for the massive flooding in New Orleans following Hurricane Katrina. Without question oil and gas exploration has left the gulf both environmentally and economically vulnerable.

What’s worse, there is an asymmetric relationship: The pain of each oil spill or related disaster is concentrated in the gulf, while the gains from oil exploration are funneled past the gulf to oil company shareholders, stock traders, and car drivers. The gulf states carry the costs and risks, while others reap the gains. As a Times-Picayune editorial put it just last week: “The nation benefits from the oil extracted by BP and others off our coast. But we are the state that bears the brunt of the oil industry’s collateral damage.”

That same editorial went on to demand an immediate share of the oil and gas royalties from new drilling in the gulf. But this solution brings with it a perverse incentive””the more new drilling, the more money going to the gulf states to reverse the impacts of drilling.

We at the Center for American Progress recommend a different approach. We believe a new nongovernment economic development fund would enable the Gulf Coast region to collect its fair share of historical gains by the oil and gas companies without depending on future profits from oil and gas royalties to fund its operation. This is a new idea””one that we have not yet fully fleshed out. But we do strongly recommend that this new Gulf Recovery Fund be financed primarily by the major oil and gas companies engaged in offshore drilling in the region.

Over the past 25 years, these companies have collected nearly $60 billion in profits, according to CAP estimates based on U.S. Energy Information Administration data on oil production, oil prices, and profit margins to producers. We recommend that these same companies place a small fraction of this amount””perhaps $3 billion, representing just 5 percent of those historical profits””into a long-term economic development account to be administered by the Gulf Recovery Fund. Private industry contributions could be matched by state or federal dollars or used to leverage further private investments.

The important thing is that these companies would be putting profits earned doing business in this region into a fund to secure the long-term health and growth of that same region. Just as the tobacco settlement of 1998 used some of the oney from Big Tobacco to attack the long-term problem of youth smoking and smoking-related health problems, and to help tobacco farmers diversify into new crops, so would this new fund use resources from Big Oil to attack the long-term economic and environmental consequences of years of U.S. addiction to oil and gas extracted from the gulf.

The Gulf Recovery Fund would be a nonprofit corporation, administered by a nongovernmental, nonindustry chief executive with strong credibility in the region. It would bring together stakeholders from state and local government, academia, industry, and the communities along the gulf to develop a truly sustainable economic growth strategy for the region.

This strategy would absolutely not focus on the immediate and quantifiable economic and environmental damages caused by the current BP oil disaster, such as the loss of fishery business and the coastal cleanup. Paying for these damages is the sole responsibility of BP PLC, which is legally required to pay all quantifiable claims.

Instead, the Gulf Recovery Fund would focus on a long-term sustainable development plan for the region. Ideally, projects stretching over 2 years to 20 years would focus on wetland restoration alongside regional and local investments specifically aimed at weaning the region from its dependence on the fossil fuel industry for jobs and economic growth. These latter projects might include:

  • Intercity transit systems
  • Sustainable housing development, including potentially raising sections of coastal cities above flood plains
  • Green building and retrofit projects
  • Investments in the most promising local innovations, whether at the research, development, or deployment stage, of cleaner energy and fuel technologies

The Gulf Recovery Fund itself should be nongovernmental, but it would necessarily work closely with local, state, and federal government institutions also engaged in economic development planning for the region. This might be an opportune moment to combine some of these efforts in an organized intergovernmental compact or commission””call it the Gulf Recovery Compact””involving all five gulf state governors along with representatives from key federal agencies such as the Departments of Commerce, Housing and Urban Development, Agriculture, and Interior, the Federal Emergency Management Agency, and the Environmental Protection Agency.

This new Gulf Recovery Compact could serve a coordinating role for the myriad state and federal agencies working on some aspect of the longer-term gulf recovery. For instance, the compact could act as a hub of information for the region, aggregating available public data on regional industry and environmental trends, providing Global Information System mapping services for the region, and ultimately measuring the economic impact of the on-the-ground work proposed by the Gulf Recovery Fund.

The compact could also coordinate efforts of the new fund with existing federal plans, such as the White House’s Roadmap for Gulf Coast Ecosystem Restoration, and state or regional plans such as the many economic development proposals coming out of Hurricane Katrina. Together, the nonprofit Gulf Recovery Fund and the governmental compact would form a public-private partnership focused on moving the gulf region toward a new and more sustainable economic future.

Had such a partnership existed in the past, the gulf region would likely be in a stronger economic position today. It would have more resources to invest in infrastructure, education, and innovation. These are areas where many of the gulf states lag behind the rest of the country, and where more investments could make large contributions to future economic growth.

The condition of the Gulf region today is the result of hundreds of business and economic development decisions made by the states, the federal government, and the oil and gas industries over many decades. It calls for a long-term solution that involves all those players alongside the communities that have been most affected by generations of compromises made in favor of short-term economic gain over long-term sustainable growth. It is time to face and address our addiction to oil.

Kate Gordon is Vice President for Energy Policy and Richard Caperton is a Policy Analyst at the Center for American Progress. Be sure to visit the Energy and Environment page of our website for updates on our proposed Gulf Recovery Fund.

19 Responses to Life after the BP oil disaster

  1. prokaryote says:

    Worldwide – watch now

    Blind Spot is a documentary film that illustrates the current oil and energy crisis that our world is facing

    Blind Spot is a documentary film that illustrates the current oil and energy crisis that our world is facing. Whatever measures of ignorance, greed, wishful thinking, we have put ourselves at a crossroad, which offers two paths with dire consequences. If we continue to burn fossil fuels we will choke the life out of the planet and if we don’t our way of life will collapse.

  2. Leif says:

    The “Gulf Recovery Fund” looks like it would a very good practice run for the world and humanities efforts mitigating the ravages of hundreds of years of Capitalism as well. That much larger pool could be funded by a small, better yet BIG, tax on international monetary transactions for starters.

  3. Raul says:

    If the restructured oil slick (oil-dispersant) goes to the land fills
    won’t there be need to deal with the such as it then makes it slowly to the water supplies.

  4. Jane says:

    Whatever measures of ignorance, greed, wishful thinking, we have put ourselves at a crossroad, which offers two paths with dire consequences. If we continue to burn fossil fuels we will choke the life out of the planet and if we don’t our way of life will collapse.

  5. fj2 says:

    The similarities of the profound corrupting influence of Big Oil and Big Tobacco are uncanny as extremely destructive addictions with the potential for killing billions of people by mid-century 2050 AD although Big Oil is much worse as it is in the process of rapidly destroying — with cancerous speed — the vast array of natural resources required by life on this planet.

    The Gulf Recovery Fund is an excellent strategy and replicable model for remedying the accelerating environmental and human capital devastation caused by corporate malfeasance similar to that of Big Tobacco and in this case Big Oil.

    In the effort to provide scale-appropriate solutions to the oil addiction it is crucial for remediation to focus on low-cost extremely small environmental-footprint net-zero or near net-zero transport and transit energy strategies through intense innovation, research, development and or deployment.

    This is something that has never been done at the requisite scale and intensity and most likely not nearly as difficult as Big Oil-corrupt “conventional transportation wisdom” has long dictated for obvious personal gain.

  6. Leif says:

    Jane, @4: The creative solution is to develop a NEW way of life that learns from our FAILED approach and presents us with new and rewarding options for humanity to adapt to a sustainable future. It does not need to be, and should not be a step backward. It will be backward however if we continue to let disaster upon disaster dictate the terms of the future.

  7. mark says:

    ……The condition of the Gulf region today is the result of hundreds of business and economic development decisions made by the states, the federal government………..

    “and the oil and gas industries”

    This group should be removed or minimized in decision making processes concerning where, when, and how, to extract oil.

    Just taking some more money from them, won’t make any difference.

    They are not to be trusted.

  8. fj2 says:

    In “Iron Man 2” Robert Downey Jr. plays the hero Republicans could die for: He’s “privatized world peace!”

    It’s the villain who is best played by Mickey Rourke as a seething lump of evil flesh (from “The Wrestler”) avenging, with lightening whips of unimaginable destruction, the death of his father; he goes after Downey, excruciatingly slow barely moving lips in deep deep Russian voice one must be near-psychic to understand something like:

    “God will bleed.

    When there is blood in the water

    The sharks will come.”

    There seems to be prescience, of unclear meaning or maybe nothing; but, maybe it is reality in a toxic mix of Satin and oil as the blood of a machine civilization and water crucial to life somehow bringing on a violent death.

  9. prokaryote says:

    There is a new series called “The Story Of Science” by the BBC.

  10. Jeff Huggins says:

    A Point Regarding The Media (and hopefully a sharp one)

    Thanks for this post, Kate and Richard.

    I’d like to offer a point related to my least favorite (but frequent) subject, the media.

    We humans, of course, have to get ourselves out of the cycle of messing things up big-time and then having to try to recover them and recover from them.

    This makes me wonder, do the media understand the parallels here and the critical assessment of the media that those parallels make crystal clear?


    The media these days are falling over themselves to highlight the disaster in the Gulf, the negligent practices that brought it about, the unwarranted and irresponsible risks taken, the dismal credibility of the particular corporations involved, and so forth. The media make it clear, and have a fine time pointing out, that in the quest for ever-increasing profits, and in perpetual pursuit of that black gold that we call oil, companies have embarked on risky practices that ultimately result in mighty messes when things go wrong.

    As usual, the media can see all of these things IN HINDSIGHT. They can jump all over this sort of thing AFTER it has happened, when it becomes fashionable and cool and self-serving (to the media themselves) to jump all over these problems.

    Are insight and hindsight the same things? No!

    Consider, now, the nature of the climate change problem and the media’s coverage (if you can call it that) of that problem.

    In the quest for ever-increasing profits, and in perpetual pursuit of that black gold that we call oil, and in order to perpetuate our addiction to oil, a number of companies want us to continue to pursue habits that we KNOW (in all likelihood) are going to cause a magnificent mess on an unprecedented scale and from which we will not be able to fully “restore” matters, not even close. Yes, it’s a bit harder to “see” CO2 than it is to see black oil on beaches. But the scientists have been clear. So, why haven’t the media been doing THE BEST POSSIBLE JOB of accurately and energetically informing the American public?????! Why haven’t the media been diligent on that matter? Why have the media chosen not to be diligent on that matter? Why are the media doing the same old thing that they’ve done on every other important matter — “playing” with it, or ignoring it, or diminishing it, or treating it as a “controversy”, or etc., until AFTER disasters happen, and then jumping on board with the harsh criticism and the supposed insight of hindsight, too little and too late?

    The industry that will deserve the most criticism, by far, if we allow global warming to proceed and if we don’t face and address the matter, will indeed be THE MEDIA. And I’m talking names: Bill Keller, Rupert Murdoch, Glenn Beck, and etc. etc. …. even including (in my view) others such as Andy Revkin and so forth. The news media are allowing wholly ineffective aspects of their coverage of climate change to proceed, unaltered and unfixed, and ultimately the public and world will suffer the consequences. They have received plenty of warranted criticisms on this, but nothing is changing. They seem to be waiting, again, for disasters to happen — although many of them may be gradual disasters in this case — before waking up to facts that they already should know. It’s not heroic, or insightful, or wise, or responsible, or good journalism, to wait until problems have already happened, and then to reflect back on them with intensity and with intense coverage. Too little, too late.

    (This has been a critique of the mainstream media, not of Climate Progress, of course. I’m putting it here because I’d rather prevent problems than have to recover from them.)


  11. Leif says:

    Well said Jeff. Your statement deserves to be at the top of the list for the day or more. As well as seen by the media and taken to heart.

    Joe: is there a way to vote for comments to appear at the top for extended periods? So much quality gets lost in the shuffle in my view. Perhaps even a separate page?

    This is my vote for you Jeff.

  12. Dan B says:


    Great comment! Here are some questions that should be asked and soon:

    1. Why would anyone invest a penny in any area within 10′ of mean high tide?
    Note(s) to media: Scientists are predicting more rapid sea-level rise than the IPCC concluded. Scientists also predict a high probability of catastrophic hurricanes that will spread flooding far inland.

    2. Why are we continuing to discuss “where to drill”?
    Note to media: Let us talk investment in simple terms. Assume we invest $50 billion in infrastructure improvements in the Gulf. Assume we invest $50 billion in electric and hybrid vehicle deployment. Assume fossil fuel subsidies – is that $50 ten years worth? Then throw nuclear plants in for laughs. What’s the payback time? Who benefits? Who gets the jobs?

    3. How about a few stories a week on the growing renewable energy sector? Or have you even heard of anything but hybrids and wind turbines?

    We could come up with more questions but let’s get started on these three glaring voids in mainstream media’s discussion of our current situation and our future.

  13. Hendo says:

    Yes I’ll go with Jeff Huggins (June 6, 2:23pm) Media has a case to answer. But they will tell you in a moment of candor, that their function is entertainment. They are not any kind of oversight medium, unless it happens to be in their interests. They saw long ago that bad news excites us and gets our attention. Go to U-Tube and note the hits on disasters compared to “nice” stuff.

    Noticeably absent from media comment has been the question about “what else” is at risk because of the same policy application by BP. If BP (and maybe Haliburton)was applying marginal policy to this oil well, what other oil wells are at risk? And if the previous administration was so “trusting” of corporate US, what legacies remain that we are yet to hear about? I’m not a gambler, but I will bet that the chances for more disasters are high, especially if you broaden the scope to include other natural resource areas, industry etc.

    That’s why blogs are so important now, because there is a vent for truth.

  14. catman306 says:

    Leif, I second your motion to rate comments and to move the highest rated ones to the top of the comments. It might even be possible to have two ways of viewing the comments: one in chronological order, the other would be highest rated down to troll comments.

    Jeff, it’s the way that the GDP is behind all political economic decisions that makes the media ignore solutions that prevent problems and focus in on solving the problems once they are revealed. Smart, preemptive actions, don’t raise the GDP. Dumb activities, like oil spills, certainly do raise the GDP. That’s why fossil fuel conservation hasn’t yet caught on. Oil is too cheap. Saving oil is bad for the GDP. Burning oil is good.
    Horse feathers, we both could say, we all should say.

  15. Jeff Huggins says:

    Thanks and Stuff

    Thanks, everyone, for your comments. This whole matter — of how the media offer dismally insufficient and unclear coverage of problems as they progress, and then jump into things with passion after the disasters happen and it’s safe and cool to jump on the angry bandwagon — is a huge and obvious problem. It might be the largest, loudest, and foulest smelling of all of the big elephants currently on the table that few people want to notice and name.

    Yet, more and more people are noticing and naming it. (It’s impossible to ignore.)

    That said, I have a bunch to do over the next few weeks. So, for now, I can’t really write about it with any verve. Maybe (hopefully) folks from Climate Progress will write a great piece specifically on this obvious problem, shouting it out loud and clear. Or, maybe someone else here will do such a guest post?

    If not, then I’ll try to attack the matter in a month or so. I doubt that the media will change by then, and they’ll probably just give us more ammunition with which to point out the problem.

    Anyhow, thanks again for your comments.

    Be Well,


  16. Andy says:

    Great idea.

    How would the funds be pulled out of the oil companies’ pockets?

    Also, I’d add that using the funds to wean New Orleans and other coastal cities off of the Mississppi River’s flow. The most effective way to restore Louisiana’s coastal wetlands is allow the River to flow unimpeded and undredged into Atchafalya Bay where its sediment would build marsh in the area’s shallow water. The need to keep the Mississippi where it is means almost all of its sediment ends up flowing off the continental shelf.

  17. prokaryote says:

    Russia wants global fund after Gulf oil spill

    June 5 (Reuters) – Russian President Dmitry Medvedev called on the world’s leading economic powers on Saturday to consider creating a fund to insure against large-scale environmental disasters like the Gulf of Mexico oil spill.

  18. prokaryote says:

    Deputy Prime Minister Igor Sechin on Saturday said Russia would introduce stricter safety requirements for oil producers as a result of the Gulf spill, now considered the largest environmental disaster in U.S. history. [ID:nLDE65401Z]

  19. Jim says:

    Check out this BP folk song on YouTube.
    Search mynation123
    Listen to BP song.