Background

On 20 April 2010, the Deepwater Horizon drilling rig exploded in the Gulf of Mexico, killing 11 workers and causing the largest marine oil spill in history. Over 87 days, approximately 4.9 million barrels of oil were released into the Gulf. The environmental damage was extensive, affecting marine ecosystems, coastal wetlands, fisheries, and tourism. The subsequent legal proceedings and compensation processes raised fundamental questions about how we value environmental damage and ecosystem services.

Focus Syllabus Points

Code Content
HL.b.2 Environmental economics is economics applied to the environment and environmental issues
HL.b.7 Environmental accounting is the attempt to attach economic value to natural resources and their depletion
HL.b.8 In some cases, economic value can be established by use, but this is not the case for non-use values
HL.b.10 The economic valuation of ecosystem services
HL.b.13 Economic growth has impacts on environmental welfare

Research Questions

Metric Figure
Oil released 134 million gallons (4.9 million barrels)
Duration of spill 87 days
Workers killed 11
Total settlement $20.8 billion
Natural resource damages $8.8 billion
Clean Water Act penalty $5.5 billion
Lost recreational use value $661 million
Contingent valuation (total value) Up to $17.2 billion
Oysters lost Up to 8.3 billion
Area oiled 43,000+ square miles
BP gross negligence finding September 2014
Settlement approved 4 April 2016

Section A: The Event and Its Causes

  1. What were the immediate causes of the Deepwater Horizon explosion?
  2. What role did economic pressures (cost-cutting, time pressures, profit motives) play in the disaster?
  3. How does offshore oil drilling contribute to economic growth in the United States?

Link to HL.b.13: Consider both the economic benefits of oil extraction and the environmental costs when those activities go wrong.