President Obama is pledging to "explore every possible option" for limiting economic damage from BP's Gulf of Mexico oil spill. But in a widely quoted report, analyst David Kotok of Cumberland Investors warns that the oil slick, if it continues to grow in the weeks ahead, could enter the Gulf Stream and spread up the East Coast. This would magnify the economic damage and exponentially hike the cost of the cleanup, Kotok says — and possibly cause the U.S. economy to fall into a "double-dip" recession. Could the BP spill really derail the recovery? (Watch a Fox report about the oil spill's resulting economic uncertainty)
Yes, an oil spill recession is entirely plausible: We're potentially talking hundreds of billions in additional deficit spending, says Ezra Klein in The Washington Post. Plus tourism losses and a devastated fishing industry in five important states, which will hammer an already "sagging economy, causing joblessness, loan defaults, reduced GDP growth, and on, and on." Kotok's grim forecast isn't far-fetched. "Oof."
"The economic consequences of the oil disaster"
Let's not be overly alarmist here: The spill is definitely very serious, say John M. Broder and Tom Zeller Jr. in The New York Times. But the the experience from past spills — including a much larger one in the Gulf in 1979 — doesn't justify this level of pessimism. Sure, the "potential for catastrophe remain[s]" — but there are "reasons to remain guardedly optimistic."
"Gulf oil spill is bad, but how bad?"
Regardless, it's already hurting consumers: Gasoline prices were already rising, and the BP oil spill only nudged them up faster, says Greg Burns in the Chicago Tribune. And "a bigger jump could be in store as the summer driving season and improving global economies keep the pressure on." Even if the crisis doesn't cause deep economic pain, it will hit drivers in the wallet.
"Gasoline prices on the rise"