Due to the oil rig explosion of April 2010 in the Gulf of Mexico, small and medium-sized businesses of the Louisiana energy industry have been cutting salaries, using money from their cash reserves, and moving business out of the Gulf of Mexico to survive in today's economy.
However, the businesses, also known as the "hidden victims", of the federal deepwater drilling moratorium, are having their problems going by unnoticed because they are still operating and are mostly avoiding laying off their employees.
Since the April 2010 accident killed 11 men and caused the largest oil spill in the nation's history, new and existing deepwater drilling had been suspended and the approval of new drilling permits had been halted for months.
When the moratorium was lifted, permit issuance was granted once again, but at an extremely slow rate (66 percent less than the monthly average a year before the spill).
This slowdown truly hurt the operation of these businesses within Louisiana.
As the consequences of this disaster are bringing much more harm than good to this industry, negative externalities are a result, with the small and medium-sized businesses as the third parties affected.
Good point. They did not think of all the businesses that are connected to them therefore they didn't weight the social cost with the margianal cost. This just shows how easily one incident can be multiplied in a negative effect by externalities.
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