The Buncefield oil depot explosion: where there's smoke, there's (stock market) fire?

摘要

This study examines the stock market response to the Buncefield oil depot explosion in 2005. Like previous studies on technological disasters, we find an adverse effect on security prices. However, average abnormal return is only -0.58% for the four oil firms involved in the accident; that is, the explosion did not throw shareholders into panic selling. On 11 December 2005, the Hertfordshire Oil Storage Terminal known as the Buncefield depot, near London, experienced a series of explosions. The resulting fire lasted three days and was described as the largest ever in peacetime Europe. Around 400 businesses on the site were directly affected. Miraculously, no one was killed and only 43 people were injured. A huge cloud of black smoke spread across the area, but was not toxic. The cost of the damage was expected to run to several million pounds, including business interruption, the cost of rebuilding and third-party liability claims. Several months after the explosion, operators and their insurers still continued to dispute liability.