Who’s Making Money From the Oil Spill?

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BP is inching closer to collecting all the oil spewing from its out-of-control well in the Gulf of Mexico, but cleanup efforts could drag on for months even after the responders plug the leak. The cash from BP’s contractors and their armies of cleanup crews is just one way the catastrophe in the gulf will alter the economic landscape of the region and even the entire country, wreaking havoc on some industries but providing others with opportunity. Here are some of the ways entrepreneurs, businesspeople, and even potential scam artists have approached the disaster.

Niche Companies With Oil Experience

Companies that specialize in oil services are undoubtedly doing well. Applied Fabric Technologies, which manufactures booms to gather floating oil and skimmers to remove it from the water, got so many orders at its Buffalo, N.Y., office after the spill began in April that president Peter Lane was calling past customers and asking them to send back products they had already bought. His and other firms in the oil industry’s Little Black Book of Oil Spill Contractors(yes, it does exist) were among a finite group that could get BP what it was asking for in the gulf. For Lane’s company, the volume of orders made up “four years’ worth of work in about three weeks.” But for every firm that’s getting work, there are others waiting for a call. Engineers, both amateur and professional, have dreamed up ways to stop the leak or mitigate the oil’s environmental impact.

BP says it has received more than 110,000 ideas—or, put another way, sales pitches—already.

One came from Kimre, Inc. in Miami, which makes floating oil-water separators that use a fine mesh to pull oil off the water. Chris Pederson, a design engineer for Kimre, says the company’s previous customers include Petrobras, Brazil’s oil giant. For $100,000, BP could buy a 120-foot separator from Kimre large enough to clean a square mile of oil-covered ocean in a day—a good thing for the environment, but also, Pederson has to admit, a sale. “It’s tough times overall…There’s no question we’re working harder for the same sales,” he says. “I have literally spent four hours a day on this every day since the early part of May.” So far, he says, he hasn’t heard back from BP.

Donald McCallum, an 83-year-old engineer, may have spent even more time than Pederson dreaming up ways to improve the oil-spill response. He’s already developed three ideas for BP, including a plan to protect beaches by covering them with an absorbent “geomembrane,” held in place with concrete panels. Though he owns the patent on the unique concrete product that he’s recommending, the Canadian retiree says it’s not about the money: “I think any self-respecting civil engineer…would set his mind to thinking what I would do to solve this problem.”

Scammers Preying On Fears

When the news turns to a disaster, so too, unfortunately, do con artists. “That was covered in Scam Artist 101. You take advantage of the headlines,” says Pat Huddleston, former enforcement chief of the Securities and Exchange Commission’s Atlanta branch and CEO of Investor’s Watchdog, a private investigation firm. The catastrophe unfolding in the gulf is no exception. The SEC warned investors last month about companies claiming to have contracts with BP or special technology that will help the cleanup effort. The agency hasn’t filed any charges, but it has already suspended trading on two over-the-counter stocks it found questionable, raising doubts about the accuracy of statements that the companies made to investors.

On June 22, the SEC suspended trading in shares of New York–based Green Energy Resources, questioning the accuracy of press releases from the company “concerning, among other things, the company’s involvement in the Gulf of Mexico oil spill cleanup effort.” The SEC did not provide further details about the suspension and filed no charges, though the agency sometimes follows up an action like a trading suspension with something more serious. USA Today reported that Green Energy had touted a plan to use wood chips to absorb oil in the gulf and claimed it had contracts to sell the oil-soaked chips to power plants, then later issued an apology to shareholders in advance of the SEC’s action. When NEWSWEEK checked on Wednesday, Green Energy Resources’ Web site did not show a press release concerning the gulf spill, nor an apology.

About a month earlier, on May 25, the SEC suspended trading on ACT Clean Technologies, whose Web site highlights a “patented cleaning fluid” purportedly ideal for removing oil from hard surfaces. The SEC cited “questions about the accuracy and adequacy of publicly disseminated information” from ACT, including statements about “field tests” of its products in the gulf and BP’s “purported expression of interest” in buying it. Neither company returned phone calls.

Both the trading bans last for 10 days (the maximum length for an SEC trading suspension, according to a spokesman), but the SEC warned investors to stay vigilant. Other red flags: pressure to invest immediately and guarantees of a return on investment.

Investors Circling the Carnage

Much as it might make some observers grit their teeth, investors on Wall Street and elsewhere will be looking for opportunities that present themselves in the wake of the disaster, and they are already examining ways to take advantage. Companies involved with the spill are one obvious target, but mere involvement in the cleanup does not necessarily translate to a rise in stock price. Shaw Group of Baton Rouge (sand-berming for Louisiana) and Nalco of Naperville, Ill. (dispersant purchased by BP), have both worked with the spill response, but that income constitutes a drop in a much larger bucket for those firms, and their share prices have not spiked with the spill. And if you were thinking of investing in shrimp futures in anticipation of rising prices, forget it: it’s not possible to speculate on the price of seafood in the same way an investor might buy corn futures on the Chicago Mercantile Exchange.

More likely, investors are trying to anticipate what companies might benefit over the longer term as a result of the spill’s fallout. New regulations for the deepwater drilling industry, for example, could mean more business for helicopter companies because federal inspectors and oil-industry engineers may need to make more frequent flights. Then again, some of those same companies could lose revenue as a result of a moratorium on drilling new wells.

Indeed, many businesses are weathering a negative impact from the spill, and BP’s shares are not the only ones taking a beating. Look no further than The St. Joe Company, a real-estate developer and the self-proclaimed largest landowner in northwest Florida. Its stock price has dropped more than a third since late April as it became increasingly clear that the Panhandle would suffer the spill’s effects. Hotels, restaurants, retailers, and others who rely on tourism have also suffered from the perception, if not always the reality, that the Gulf Coast is not a worthy vacation spot this year. The oil started washing up on some parts of Florida beaches in June, but as Florida State Sen. Don Gaetz put it, “The economic catastrophe reached our shores a month ago.”