Should BP’s Money Go Where the Oil Didn’t?

ST. PETE BEACH, Fla.

IN late April, a week after the BP oil spill began, Keith Overton had an alarming encounter with one of his employees here at the TradeWinds Resort. The guy — an engineer who had worked at the hotel for a dozen years — had just spoken with his mother, who lives in Bosnia, and the conversation went like this:

“Are you going to be fired?” she asked.

“Fired?” the son replied. “Why would I get fired?”

“Because your beach is covered with oil,” she said.

Actually, there wasn’t a drop of oil anywhere in sight. Not then, not in the months that followed and not now. This barrier-island city and snowbird haven is hundreds of miles from the nearest land befouled by the collapse of the Deepwater Horizon platform and the epic gusher it left behind.

“That was the moment I realized how big the problem had become,” recalls Mr. Overton, who runs the resort. “At first we thought, ‘Well, people will know there’s a spill in the Gulf of Mexico, and they won’t think that St. Pete has been affected.’ ”

Not so. After the explosion on April 20, there were some cancellations, but what really wrecked the summer for TradeWinds was the countless number of people who feared that oil was about to hit St. Pete and never called in the first place. By Mr. Overton’s calculations, his profits from April to late October sank by slightly more than $1 million, compared with his average earnings during the same period for the last three years.

Of course, anyone who bothered to look at a map would have known that St. Pete Beach — and hundreds of other vacation spots throughout the Sunshine State — would have pristine beachfronts through the summer, even under the worst of the worst-case scenarios.

But Mr. Overton and others don’t blame tourists or the news media for failing to grasp basic geography and ocean currents. They blame BP, and they think the company should compensate them for money they would have earned but for the onset of black-crude hysteria.

Are they right? Should companies like TradeWinds collect damages from an oil spill even if their beaches were never sullied? Put another way, should BP have to pay for economic hardship caused by the public’s reaction to the oil, even if that reaction was utterly irrational?

The answers involve a sum of money that can safely be described as staggering. The aftermath and legal wranglings of the BP fiasco have focused so far on commercial interests — like fishing, shrimping and food processing — that relied directly on the gulf for their livelihoods. For the most part, these are people in Louisiana, Mississippi and Alabama.

What has scarcely been noted, however, is that virtually oil-free Florida just might hoover up the bulk of BP’s settlement money. The company has set aside $20 billion for a fund intended to make whole both private enterprises (for lost earnings) and the states and the federal government (for cleanup costs), with a promise to throw additional money in the pot if more is needed to cover legitimate claims.

But what if every business in Florida’s $60 billion-a-year tourist trade stands up and demands compensation for what it would have earned this summer had the spill not happened?

And what if hotels, restaurants, gas stations, miniature-golf courses, amusement parks, grocery stores, retailers, movie theaters and others want more than just those losses? What if they demand future lost revenue, too — money that would have come to Florida next year, and the year after, but won’t because people who spent their summer vacations in, say, South Carolina decided that they liked it enough to go back?

None of this should be very hard to imagine — because it’s happening. According to the estimates of plaintiffs’ lawyers, more than 100,000 entities in Florida will make what are known as proximity claims, which are based on arguments of indirect harm.

Already, the sheer number of Florida claims is outpacing those of Louisiana, among claimants who have provided addresses of where they suffered damages to the Gulf Coast Claims Facility, which is administering the BP fund: 35,500 versus just over 31,000, as of last week. Even businesses in Miami and Key West are lawyering up.