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On 2020 April 20102010, the Deepwater Horizon drilling rig exploded in the Gulf of Mexico, killing 1111 workers and causing an oil spill that became the worst environmental disaster in US history. Following the explosion the Deepwater Horizon sank to the bottom of the Gulf after burning for 3636 hours.

The US Coast Guard quickly became involved with the incident, putting a crisis management plan into place. Environmental experts raised concerns that the Macondo well Deepwater Horizon was drilling could be releasing up to 4000040000 barrels of oil per day into the sea. A few days after the disaster, oil from the leaking well began washing ashore in Louisiana; fragile coastal wetlands were inundated with thick, brown mud and beaches were covered in black tar.

BP made a number of vain attempts to cap the leaking well until it finally stopped the leak in July. BP\mathrm{BP}, under considerable political pressure, announced in June that it would place $20\$ 20 billion in a fund to compensate victims of the oil spill and said it would not pay a shareholder dividend in 20102010. By early July BP\mathrm{BP}'s share price had fallen by 50%50 \% since the start of the crisis. The BP\mathrm{BP} CEO, Tony Hayward, came under pressure because of his perceived mishandling of the crisis. BP\mathrm{BP} seemed to have no effective contingency plan to deal with the crisis. Tony Hayward was eventually forced to resign.

Evaluate the likely benefits and limitations of BP\mathrm{BP}’s contingency planning when preparing for any future disasters like Deepwater Horizon.


One of the worst oil disasters in history occurred on April 20, 2010, when the Deepwater Horizon oil drilling rig exploded in the Gulf of Mexico. One of the most severely affected industries along the Gulf Coast by the oil spill was the oyster fishing sector. What impact will this oil spill have on the following? a. The cost of oysters b. the oyster fishermen's marginal product c. Demand for oyster fisherman


Answered 1 year ago
Answered 1 year ago
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In the following exercise, we have to determine the effects of an oil spill on the price of oysters, marginal product (MP), and demand for oyster fishermen.

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