Exxon Valdez Oil Spill Facts: Causes and Effects on Economy

What Were Its True Costs?

Oiled bird being rehabilitated
Justin Sullivan / Getty Images

Definition:  The Exxon Valdez oil spill occurred when an oil tanker crashed onto the shore of Prince William Sound in Alaska on March 24, 1989. It  contaminated 1,300 miles of coastline with 250,000 barrels (11 million gallons) of oil. 

Direct contact with the oil slick killed at least 140 bald eagles, 302 harbor seals, 2,800 sea otters and 250,00 seabirds within a few days. Four people died as part of the clean-up efforts.

Its impact on the Alaskan shoreline made it the nation's biggest environmental disaster since Three Mile Island, even though it was only the 34th worst oil spill in history, (Source: Exxon Valdez Oil Spill Trustee Council; Fry, D. Michael,How Exxon's "Video for Students" Deals in Distortions)

Effect on Alaska

Fisheries for salmon, herring, crab, shrimp, rockfish and sablefish were closed, with some shrimp and salmon commercial fisheries remaining closed through 1990. Herring and salmon species never fully recovered, which means the commercial fishing industry that depends on them haven't either. Over 2,000 Alaskan Native Americans and 13,000 other subsistence permit holders lost the source of their food. This continues today, as many are afraid of being poisoned by contaminated fish.

The tourism industry immediately lost over 26,000 jobs and more than $2.4 billion in sales. By 2003, it had recovered somewhat.

Passive use cost the state $2.8 billion, and it too has never fully recovered since vacationers still think of the area as contaminated. (Source: NOAA)

Economic Impact of Wildlife Loss

Wildlife value is measured by the cost to obtain or rehabilitate them. For example, zoos pay as much as $50,000 dollars to capture an otter.

The cost of losing 2,800 of these endangered species is $140 million. Exxon paid between $40,000-$90,000 to rehabilitate them, confirming the otter's value. Harbor seals go for $20,000, so losing 302 costs $604,000. Most seabirds cost $300 each, so losing 250,000 costs $75 million. Eagles cost $22,000 to rehabilitate, so 140 are worth $3 million. Total cost for just these four species in the first week was $218.6 million. (Source: Replacement Costs of Birds and Mammals)

Nearly 30 years after the spill, about 20 acres of Prince William Sound shoreline are still contaminated with 21,000 gallons of oil. Surprisingly, the oil is just as toxic as it was right after the spill. It is decomposing no more than 4.0% a year. It could take centuries to completely dissipate.  Four species have not recovered, including a 36-member pod of killer whales that lost 14 members. Until all species recover, the economy that depends upon them cannot fully recover, either.

Clean-up Costs

Exxon spent over $3.8 billion to clean up the site, compensate the 11,000 residents and pay fines.

But it could have been $4.5 billion more. The Alaskan court ordered Exxon to pay $5 billion in punitive damages in 1994. After 14 years of lawsuits and appeals, the U.S. Supreme Court ruled that Exxon only owed $507.5 million. That was only about 12 hours of revenue for the giant oil company.

Caused by Captain

The Exxon Valdez disaster was caused by ​the negligence of its captain, Joseph Hazelwood. He was cleared of felony charges. He was convicted of a misdemeanor of negligent discharge of oil, for which he performed community service.

Hazelwood had been drinking during the day, but did not appear intoxicated when he boarded the ship that night. He violated company policy by not being on the bridge during the transit of Valdez Narrows. Instead, it was steered by Third Mate Gregory Cousins. He had been working for 18 hours prior, and could have been impaired by fatigue. As a result, he steered the ship off course to avoid ice. He did not correct in time to avoid grounding on Bligh Reef.  (Source: Final Report, Alaska Oil Spill Commission, February 1990) 

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