**STUDY TITLE**: Economic Impact of Oil Spills on the Texas Coast, FY
1980.

**REPORT TITLE**: IXTOC I Oil Spill Economic Impact Study.

**CONTRACT NUMBER(S)**: BLM: CT0‑65; MMS: 14‑12‑0001‑29143.

**SPONSORING OCS REGION**: Gulf of Mexico.

**APPLICABLE PLANNING AREA(S)**: Western Gulf of Mexico.

**FISCAL YEAR(S) OF PROJECT FUNDING**: 1980.

**COMPLETION DATE OF REPORT**: April 1982.

**COST(S)**: FY 1980: \$249,790.

**CUMULATIVE PROJECT COST**: \$249,790.

**PROJECT MANAGER(S)**: C. Restrepo.

**AFFILIATION**: Restrepo & Associates.

**ADDRESS**: P.O. Box 13165, El Paso, Texas 79912.

**PRINCIPAL INVESTIGATOR(S)\***: R. Ditton, C. Gunn, F. Lamphear, J.
Nichols, C.  Restrepo, L. Restrepo.

**KEY WORDS**: Western Gulf; Texas; socioeconomics; hydrocarbons; oil
spill; assessments; modeling; recreation; commercial fishing; tourism;
coastal zone.

**BACKGROUND**: An exploratory oil well, the IXTOC I, blew out on June
3, 1979 in the Bay of Campeche, Gulf of Mexico.  The IXTOC I was the
world\'s largest and probably most expensive oil spill.  The oil
released by the IXTOC I was carried by Gulf currents into American
waters by August 1979.  In addition to the oil from the IXTOC I, the
Texas coast was affected by fresh unweathered oil from the sinking of
the oil tanker BURMAH AGATE in November 1979.  These events had multiple
effects on local, State, Federal, and international economies.  As a
result, an economic assessment of the spills on the Texas coastal region
was initiated.

**OBJECTIVES**: (1) To apply traditional economic methods to assess the
events that occurred as a result of the IXTOC I blowout and the sinking
of the BURMAH AGATE and, if needed, to develop innovative methods to
assign dollar values to the various services, products, and goods that
were affected by the oil spills; (2) to measure the economic effects of
the IXTOC I blowout and the sinking of the BURMAH AGATE upon the
tourism, recreation, and commercial fishing industries in the Texas
coastal region; (3) to document and quantify the economic losses so that
the appropriate form of compensation could be made to the affected
parties; and (4) to identify and compile the cost of the cleanup
procedures to the local, State, and Federal governments.

**DESCRIPTION**: Nineteen counties along the Texas coast were selected
for the three‑year (1979‑1981) study.  These counties were grouped into
five subregions.  The Texas coastal industries selected for study
included: tourism, recreation, and commercial fishing.  Two separate
analytical models were developed to assess the direct and indirect
economic impacts of the spills.  Relative density gradient models were
used as a mechanism for estimating the relative degree of direct
economic impacts to each subregion\'s industry groups.  The use of such
models shifted the methodology from an \"expenditures\" approach to an
\"output\" approach.  Onsite interviews with the owners and managers of
study site Standard Industrial Classification (SIC) coded businesses
were made to obtain qualitative assessments of direct economic impacts. 
These qualitative estimates were transformed and used within the model
to develop impact or lost revenue estimates by industry sector at the
subregional level.

Current indirect (\"induced by\") economic effects were assessed with an
input‑output model.  Current indirect effects were defined as the
effects in the industries that are dependent upon, or associated with,
the primary direct effect industries.  An existing 1972 Texas State
Input‑Output Model was regionalized and updated to construct the models
for the study region and subregions.  An instructional manual further
discussing the input‑output model was developed and included with the
study\'s Final Report.  In addition, a general analysis of the role of
the media coverage and cleanup costs of the oil spills was made.

**SIGNIFICANT CONCLUSIONS**: The results of the economic impact analyses
conducted following the IXTOC I and BURMAH AGATE oil spills indicated
that: (1) the only significant decline in tourism within the 19‑county
region of the Texas coast was noted in the South Padre Island area;
(2) there was no negative impact upon tourism from the BURMAH AGATE
spill at the subregional level, while the IXTOC I spill was estimated to
have decreased tourist activity by approximately four million dollars;
this difference was attributed to the seasons during which the spills
occurred; and (3) the estimated costs of the IXTOC I spill to industry
and government made it one of the world\'s most expensive oil spills.

**STUDY RESULTS**: The study of economic impacts to the tourism industry
identified four main modes of tourist activity (Beaumont‑Port Arthur,
Houston‑Galveston, Corpus Christi, and Harlingen‑Brownsville) in the
19‑county region.  Using ratios of auto expense, food, and lodging to
total business activity to estimate the amount of county tourism, the
only significant decline in tourism was identified in the South Padre
Island area.  Impact of the IXTOC I oil spill was estimated as a
decrease of tourist activity in this subregion that totalled from 3.979
million to 4.444 million dollars.  There was no negative impact upon
tourism from the BURMAH AGATE spill identified at the subregional
level.  The overall indirect economic impacts of the spills related to
tourism were quite small.

Data for economic impacts to recreational business indicated that losses
were concentrated within a small number of businesses close to the
water\'s edge and in the recreation oriented subregions.  The IXTOC I
oil spill reached the major effected regions during the height of the
summer tourist season and incurred an estimated economic loss to
recreational sectors of approximately three million dollars.  Oil from
the BURMAH AGATE reached the study area during the off‑season and had no
significant measurable economic impacts to the area.  The estimates of
indirect economic effects to the recreation industry from the spills
were judged insignificant, particularly when examined from the regional
level.

There were no significant direct or indirect economic effects of either
oil spill on the commercial fishing industry measurable on either the
regional or subregional levels.

Estimated costs of the IXTOC I oil spill to private industry and
government bodies placed it as probably the world\'s most expensive oil
spill.  Costs of the estimated five million barrels of oil, the
SEDCO‑135 semi‑submersible drilling platform, and the PEMEX capping and
cleanup operations totaled approximately 498 million dollars.  Damage
claim suits that were pending in U.S. Courts total in excess of 400
million dollars.  Expenses to the U.S. Government and the State of Texas
were estimated at over 15.3 million dollars.  Extensive media coverage
devoted to the oil spills may have influenced the public\'s viewpoint of
the Texas coastal region and economic loss to the tourism and
recreational industries along the coastline may have resulted.

**STUDY PRODUCT(S)**: Restrepo, C. E., F. C. Lamphear, C. A. Gunn, R. B.
Ditton, J.  P. Nichols, and L. S. Restrepo.  1982.  IXTOC I Oil Spill
Economic Impact Study.  A final report by Restrepo & Associates for the
U.S. Department of the Interior, Bureau of Land Management Gulf of
Mexico OCS Office, New Orleans, LA.  Vol. I ‑ NTIS No. PB82‑217852;
Vol. II ‑ NTIS No. PB82‑217860.  Contract No. AA851‑CT0‑65. 282 pp.

Lamphear, F. C. and C. E. Restrepo.  1982.  IXTOC I Oil Spill Economic
Impact Study ‑ Input‑Output Model for Economic Analysis.  A final report
by Restrepo & Associates for the U.S. Department of the Interior, Bureau
of Land Management Gulf of Mexico OCS Office, New Orleans, LA.  Vol. III
‑ NTIS No. PB82‑217878.  Contract No. AA851‑CT0‑65.  110 pp.

Set (3 volumes) ‑ NTIS No. PB82‑217845.

**\*P.I.\'s affiliation may be different than that listed for Project
Manager(s).**