One Year After Spill, Some Signs of Life Emerge in the Gulf

By LESLIE EATON

WSJ's Leslie Eaton reports on communities along the Gulf of Mexico seeing an economic rebound one year after the Deepwater Horizon/BP oil spill.

A year ago this week, states along the Gulf Coast braced for the economic fallout from the Deepwater Horizon spill. As the weeks passed, disaster loomed, with oil leaking and the government banning drilling far from shore. Tens of thousands of residents would be thrown out of work, experts and politicians warned; industries could disappear, bankruptcies would soar and entire communities might be imperiled.

A year later, many people have suffered economic pain, and unemployment is up along the Louisiana coast. But the number of jobs there has increased, federal data show. In fact, almost a year after the worst offshore oil spill in U.S. history, there is little sign of the economic devastation feared by everyone from the Louisiana Oil and Gas Association to the White House.

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Associated Press

Live crawfish being cleaned at a market in Bay St. Louis, Miss. The Gulf fishing industry's fate is unclear.

Business is looking up across much of the coast. Tourists are returning to the beaches of Florida and Alabama, where real-estate rental companies report bookings returning to pre-spill levels. (Last summer, lodging revenue dropped more than 30%).

Some of Louisiana's coastal counties, called parishes, are collecting more sales-tax revenue, when they had expected double-digit declines. The $20 billion fund set up by BP PLC to compensate people for losses from the company's runaway oil well has paid out more than $3.8 billion, though thousands of long-term claims remain unresolved.

New Orleans, already booming from post-Katrina rebuilding, benefited from an influx of spill-related business. Traffic at the airport last summer was the strongest since the 2005 hurricane and office space is at a premium, in part because of lawyers setting up shop for spill litigation, says Michael Hecht, president of Greater New Orleans Inc., a regional economic-development group.

Even cities with concentrations of oil-drilling employment are faring better than expected.

Lafayette, roughly halfway along the coast between Texas and Mississippi, saw a net gain of 2,400 jobs, an increase of 1.7%, from February 2010 to February 2011, according to the federal Bureau of Labor Statistics. Houma, which is southwest of New Orleans, added 3,600 jobs in the same stretch, an increase of 4%, far above the 1.1% gain notched by Louisiana as a whole.

The jobless rate in Houma climbed 0.8 percentage points in the February-to-February stretch, to 5.8%, while the rate in Lafayette rose 0.7 percentage points, to 6.3%. That remained well below the state's 8% rate in February and the national rate of 9.5%, both before seasonal adjustments.

Of course, the broad trends mask pockets of severe pain for families and companies. Small businesses in particular have been damaged and don't necessarily show up in statistical snapshots.

"It's like trying to kill a dragon with a plastic spoon," says Steve Vayda of his efforts to keep his Mississippi seafood stores operating. Before the spill he owned three markets inland from Pascagoula, Miss.; today he is down to two, and only one is open full time.

After government officials temporarily barred fishing in large swaths of the Gulf over pollution fears, he had to import oysters from Washington state and shrimp from Texas, Mr. Vayda says. High prices are turning his products from a local staple to a holiday treat, he adds—if people aren't too fearful to eat them at all, despite repeated assurances from government officials that Gulf seafood is safe to consume.

The fate of the region's fishing industry is unclear. A few fishermen who were hired by BP for cleanup and containment made so much money that they were labeled "spillionaires," but that financial spigot has been turned off. And scientists are still studying the effects of oil and chemical dispersants on sea life.

The Obama administration recently issued 10 permits for deep-water drilling, and energy companies are hopeful that it will resume in a big way. That's one reason they haven't laid off the 20,000 skilled workers that some economists and industry groups predicted, said Don G. Briggs, president of the Louisiana Oil and Gas Association. "We gave all these doom and gloom figures and there's no blood in the water," Mr. Briggs said. "But that all depends on who you're talking to."

While some energy companies have been able to shift some work onshore, that's not an option for those that operate boats or helicopters, or the suppliers—known in the business as "rope, soap and dope" outfits, dope being a kind of lubricant—that specialize in offshore supplies. He says he fears businesses that have been hanging on will soon run out of money—or patience.

One reason people along the Gulf Coast don't sound as relieved as they might about so far dodging an economic collapse is that before the spill they had expected 2010 to be a banner year. Tourism groups in Gulf Shores, Ala., for example, were forecasting a 10% increase in business. Some shrimpers saw early signs of a record catch.

Rising crude prices, along with a surge in oil discoveries in the Gulf, gave energy companies the impression that they "were sitting pretty," says Loren Scott, an economist who has studied Louisiana for four decades. "Everything looked more hopeful," he says, "before the dadgum spill."

Write to Leslie Eaton at leslie.eaton@wsj.com