The now infamous Deepwater Horizon oil rig disaster has sent millions of gallons of oil into the Gulf of Mexico and threatens to destroy the once-pristine beaches and wetlands of much of the Southeastern United States. This disaster could not have come at a worse time for the struggling region, which has seen higher-than-average unemployment figures and anemic growth levels. This trend looks likely to continue as thousands of fishing and tourism jobs disappear from the Gulf due to the spill and fears over the safety of eating products from the region or visiting the coast. In fact, some studies believe that the cost to the Gulf, in terms of lost tourism dollars, could approach $23 billion and last for three years. While this disaster has had a devastating impact on the environment and local businesses, it has also dealt a heavy blow to a variety of multinational companies involved in the oil industry as well [see Energy ETFs: Six Very Different Ways To Play].

BP (NYSE: BP), the British oil giant, has been singled out as the main culprit in the disaster and has been under fire almost continually since the incident began in late April. Many in the public have not been happy with the company's response to the spill and have forced the firm to suspend its dividend and create a fund in order to help pay for the cleanup. In response to this, BP has amassed a $20 billion fund in order to cover spill-related costs and has already spent close to $4 billion of that war-chest in cleanup costs and payments to people affected by the spill [also read Uncertain Future For Energy ETFs].

While reports of the company going bankrupt or being bought out by the likes of ExxonMobil (NYSE: XOM), seem to have been exaggerated, the company has taken a beaten nonetheless. BP ADRs have sunk by almost 40% since the spill, and the company has been forced to sell some assets -- most recently a $7 billion sale to Apache (NYSE: APA) -- in order to raise extra cash for the spill, which could end up having a negative affected on future earnings of the company. However, some analysts believe that the long-term effects of this disaster could doom the company especially if the costs for cleanup rise to $33.5 billion and keep BP out of the once-lucrative (and politically friendly) Gulf region. "Of greater concern to us is the incident's potential implications incident on BP's long-term business operations, particularly when we consider that BP is currently the largest producer in the Gulf," wrote Argus analyst Philip Weiss in a note to clients Friday. "In short, the biggest unknown about the accident is what impact it may have on future offshore exploration and development activity."

Despite the disaster and the offshore oil ban hovering over the company, BP looks to report solid earnings for the most recent quarter later today. The embattled giant looks to post profits of $1.39 a share and revenues of $72.6 billion, which represents a 28% spike over the past year's revenue numbers. Due to this crucial earnings report and the fact that the S&P 500 International Energy Sector SPDR (NYSE: IPW) has the largest holding in the London-listed shares of BP of any ETF in the Energy Equities ETFdb Category, we have decided to make IPW Tuesday's ETF to watch [see Finding The Right Oil ETF For A Crude Rally].

IPW tracks the S&P Developed Ex-U.S. BMI Energy Sector Index which represents the non-U.S. energy sub-industry of developed countries included in the S&P Broad Market Index. The Global BMI Index captures the full universe of institutionally investable stocks in developed and emerging markets with float-adjusted market capitalizations of at least $100 million. In addition to a 8.5% weighting in BP, the fund has a heavy allocation toward Total (NYSE: TOT) (10.1%) and Royal Dutch Shell (NYSE: RDS-A) (NYSE: RDS-B) (14.4%). The fund has a heavy focus on European firms, which make up 58.3% of the total fund assets, with Canadian firms coming in second with 29.7% of IPW's assets. The fund has been down 12% over the course of 2010, but it has posted a gain of 8.9% over the past four weeks as the price of oil has approached $80/bbl. and concerns over the long-term health of BP have diminished. Should BP report solid earnings and offer quality guidance for the rest of 2010, it could go a long way in terms of alleviating investor concerns over the sector [see Are Energy ETFs Now A Buy?].

For more ETF news make sure to sign up for our free ETF newsletter.

More from ETFdb.com:

Disclosure: No positions at time of writing.

ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships. Read the full disclaimer here.