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As oil spill ends, are Gulf Coast economic woes just beginning?

BP says it will stay for years, but some oil spill relief operations are winding down. The loss of BP jobs, along with the drilling moratorium, could mean tough times for the Gulf Coast.

By Staff writer / August 9, 2010

Commercial fisherman Harry Cheramie speaks on Aug. 4 in front of a boat he uses to shuttle to and from his shrimp boat, which his son and grandson are operating in the Vessels of Opportunity oil skimming program, in Grand Isle, La.

Patrick Semansky/AP

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BP and federal officials say that the bid to permanently close the runaway well that sent 4.9 million barrels of oil into the Gulf of Mexico is nearing an end. But an economist called to testify before Congress last week suggests that the Gulf's economic woes might now be accelerating.

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Local workers not only face a wave of unemployment as BP winds down some parts of its operations in coming weeks, but intermittent fishing closures and the six-month moratorium on deep water drilling could create challenges in the months ahead.

Since oil started spewing in late April, BP has become one of the region’s largest employers. At the peak of the crisis, the company employed 48,000 workers and contracted 6,000 vessels. But the Vessels of Opportunity program, which used shrimp and oyster boats and crews in the relief effort, is being pared back.

More important is the moratorium, says Joseph Mason, a finance professor at Louisiana State University.

The combined economies of four coastal states affected by the moratorium in particular — Louisiana, Texas, Florida, Alabama, and Mississippi — are “widely expected to fall off a cliff when BP exits,” says Mr. Mason.

In his testimony to the Senate Small Business Committee last week, Mason said the area is poised to lose $2.1 billion in economic activity, which translates to a loss of over 8,000 jobs and nearly $500 million in wages.

BP vows to stay

Last week, BP's Mike Utsler stepped into the new role of chief operating officer for the BP Gulf Coast Restoration Organization, which will coordinate response efforts related to the spill across all five coastal states.

“We are in for the long term,” he told reporters Friday.

Yet there are signs that BP is pulling back resources – money that served as vital income to area residents who lost money through seafood closures and the federal moratorium on deep water drilling.

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