How Are Oil Stock Prices Affected by Oil Spills?


Quick Answer

Oil stock prices will usually fall after an oil spill and if the spill is bad enough to affect production the stock will be paused, according to USA Today. This all depends on the size of the spill and if the company can handle this loss.

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Full Answer

When an oil company experiences a spill, there are several negative effects to the company. The company loses possibly millions of dollars worth of oil, gets a bad reputation and the stock prices will fall or possibly get frozen among many other things. Five years after the infamous BP oil spill the company is still paying to help repair the local community with repairs estimating at more than $20 billion and climbing, according to NASDAQ. This had a huge negative impact to BP investors, companies and individuals alike.

The best way to figure out how an oil spill will affect stock prices is to watch it steadily in the week following the crisis. This will always cause the stock to go down but the company's preparedness and funds can determine how long this decline lasts. It is always beneficial to fully research the company before investing to have a better chance at accurately determining the engineering the company employs and the chances of an oil spill. The federal government formed the National Contingency Plan in 1990 in response to the Exxon oil spill to govern safety regulations regarding crude oil and what companies need to do afterwards, as reported by the Environmental Protection Agency.

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