Far more than an eyesore: Potential outcomes of the BP spill

The Deepwater Horizon tragedy cost eleven lives on the day it began (April 20, 2010). To state the obvious, the impact of this incident on the wildlife, the waterway and adjacent communities will be far-reaching. (The catastrophe is now recognized as the biggest environmental disaster in U.S. history.) But considered from the context of consumer trends, what are some of the plausible outcomes of the BP oil spill?

There is a fine line between being a trend watcher and being a futurist. And while I usually avoid crossing that line, I decided to give this question a little thought over the weekend. So, as we look out over the next months or years, what kinds of things might we see that could impact consumer behavior? (I encourage you to think about this, too, in terms of the way these issues could impact consumers in your category. If you come up with anything you’d like to share, just send me a note by email.) What I offer here are not predictions, but a range of possibilities.

Regional frustration. In a post-Katrina world, everyone seems more sensitive to the lapse that occurs between a catastrophe and an effective response. One form of regional friction will likely come from the delay, again, that the Gulf region has endured in terms of response time. But that is not the only form of regional friction to watch for.

In Florida, the temptation to generate revenue through off-shore drilling has long been resisted; one reason is the threat a possible spill might pose to the immense tourism industry. Now, Florida residents and public officials are increasingly upset that they stand to suffer environmental consequences regardless of their disciplined approach to offshore oil. For more on this angle, see this story from the New York Times.

Accelerating the pursuit of alternatives. There’s a good chance that the BP oil spill could speed-up the move toward more environmentally responsible energy choices. As the intense barrage of media coverage continues, consumers are more likely to realize that the cost of energy is greater than the price we pay at the pump. Also, consumers are more likely to make the connection between their personal energy consumption habits and consideration of how that energy is created and where it comes from. Another story in the New York Times offers thoughts on this topic, as does this op-ed piece from Thomas Friedman.

Increased scrutiny and regulation of the petroleum industry. It will be politically popular to write legislation that provides for greater protections and more strict performance expectations within the petroleum industry. On a flight to Denver last week, I sat next to a gentleman from the nuclear energy industry. During out chat, he said, “This is the oil industry’s Three Mile Island” (get background on that disaster by clicking here). The implication, of course, was that the accident at Three Mile Island served as a wake-up call for the nuclear industry, which saw a plethora of new rules and protocols after that 1979 incident. (The gentleman also offered that the entire nuclear industry became safer as a result of that accident.)

After a delay, increased prices. The oil industry (and I mean beyond BP) certainly doesn’t need any more ill-will these days. For a time, I would anticipate most producers will make every effort to avoid price increases. But when clean-up costs are tallied by BP, when new preventive measures can be expressed in terms of their expense to the petroleum industry (see previous paragraph), and if the moratorium on deep-water drilling should affect supplies, those price increases are inevitable. Of course, those prices will hit drivers at the gas pump… but they could also be felt in the cost of goods that are shipped from anywhere to anywhere.

Supply & demand implications. From tourism to seafood, prices are likely to mirror demand, whether that demand is high or low. And even in cases where spilled crude has not tainted the tourism or seafood industry, much of the press coverage has. Watch for more marketing campaigns to support industries which are not as bad off as the consumer might assume.

Implications: I apologize if the thoughts I have expressed here seem, in any way, impersonal or removed. The BP oil spill has been a terrible tragedy that has touched—and will touch—many people deeply. But my goal for this conversation was to place the effects of this environmental disaster into the context of consumer trends.

Don’t think of the list above as a set of answers. Think of it as a set of questions… or a simple range of possibilities.

In what ways might higher oil prices, if they happen, impact your company or your consumers? Are there things your organization could do, in particular, to serve people in the affected regions? If jobs are seriously impacted in the region, what new industries might sprout, tapping an eager workforce whose lifestyle and livelihood has been altered, perhaps long-term? If your company strives to practice sustainable energy and operating policies, will consumers give you more credit in the future than they have in the past?

Mike Anderson