Abstract
Employing a market-based approach, this study provides an approximation of the total cost of non-conformance for BP and firms in the oil and gas industry associated with the 2010 Gulf of Mexico oil spill. Based on changes in market capitalisation of the firms being investigated, this study documents that, at the time the leak was sealed, the spill had resulted in a net loss of approximately $61 billion to BP, $17 billion to partners, $13 billion to the drilling sub-industry, and $19.0 billion to other integrated oil and gas firms. Results strongly support contagion effects for firms directly associated with BP and/or offshore drilling. Competition effects were also found for firms and sectors of the oil and gas industry not related with BP and/or drilling. Those benefiting from the oil spill (in relative terms) include the main rivals of BP and firms in other oil and gas sub-industries such as exploration and production, storage and transportation, and equipment and services.