BP -- Big Producer of Black Gold

The hysteria of the Gulf Oil Spill has passed and oil is trading at more than $90 a barrel. That's good news for BP, but oil prices are impinging on drivers and others who are now paying more for refined petroleum products. Obama, with his moratorium on Gulf well-drilling, did his best to push oil prices higher. However, in a moment of clarity, he removed the drilling ban on some Gulf drilling. Of course if he were truly thinking of ways to stimulate the US economy he would remove all limits on domestic oil drilling and end all mileage requirements on US-made vehicles.

But Obama is a job killer, so empowering business leaders to decide how to build their businesses is out of the question -- unless the business involves sunshine, wind or batteries. Then the government tries to help. However, the word from consumers will arrive soon. They won't spend $40,000 for electric cars that travel only 40 miles on a single charge of the battery. And they do not want to pay more for electricity because it was made from sunlight.

BP is back. The stock price is up and will surpass its levels of last spring before the well catastrophe. This year the company will resume payments of dividends and hopefully it will find a way to extract oil from places that have been off-limits to oil drillers since the environmental nuts have been driving our energy policies.

BP shares hit 6-month high after Shell bid report

January 4, 2011

LONDON (Reuters) - Shares in oil major BP hit a six-month high on Tuesday after The Daily Mail newspaper reported rival Royal Dutch Shell had considered a takeover bid during the Gulf of Mexico oil spill.

BP shares were up 5.0 percent to 488.85 pence at 1000 GMT (5 a.m. ET).

The paper, citing sources close to the Anglo-Dutch group, reported Shell weighed an opportunistic bid for BP as crude gushed into the Gulf, but was discouraged by the potentially uncapped legal liabilities.

The newspaper said Shell could yet bid for BP if another suitor emerged but Europe's largest oil company by market value was unlikely to be the "first mover."

Mic Mills, head of electronic trading at ETX Capital said BP was also being boosted by comments late on December 31 from the lawyer running BP's gulf spill oil compensation fund that suggested damages payments could be half the expected level.

Ken Feinberg told Bloomberg Television about half the $20 billion fund set up by BP should be adequate to cover claims for economic losses.

One dealer said the news reports focused minds on the fact BP shares were cheap compared to rivals. "BP remains cheap and vulnerable at these levels but I do not think a bid is likely."

BP shares trade on a price-earnings ratio of 6.5 times, consensus 2011 earnings, while Shell trades at 8.9 times, partly reflecting the fact BP's actual earnings could be far lower if it was found to have been grossly negligent in causing the oil spill which would boost legal costs and fines.

However, Feinberg's comment highlighted how the picture could also be brighter than the company has predicted.

Analysts and industry sources said during the crisis last summer it was likely that both U.S. oil giant Exxon Mobil and Shell -- the only companies considered large enough to mount a bid -- would run the slide-rule over BP.

However, the two notoriously conservative companies were seen as likely to be discouraged by the open-ended nature of BP's liabilities.

Now BP's shares have rebounded 65 percent from their June low at 296 pence, to give BP a market value of around $140 billion, a bid would be much harder to mount, especially for Shell which is worth over $210 billion.

Exxon has a market value of almost $370 billion.

It is uncertain whether regulators on either side of the Atlantic would support a tie-up in top tier of the industry.

Where's the Oil? BP's Y2K

Since the oil leak in the Gulf of Mexico opened a few months ago, speculation about the volume of escaping oil has been constant. Inasmuch as the diameter of the pipe from which the oil flowed was known, and the pressure forcing the oil out was reasonably estimable, an acceptable ball-park calculation has been at hand.

People huffed and puffed and spewed hysteria about the destruction of the Gulf and the death of regions in the Atlantic. Global media delivered the rantings and ravings and readers showed their worries and fears.

What now? Five million barrels of oil appear to have vanished. Gone. Dissolved in the water, destroyed by chemical dispersants, the warm water, the sun and collected by special boats skimming it from the surface of the Gulf. For the oil that slipped by and made it to shore, there were armies of citizens armed with shovels to scoop up the globs from the beaches.

This disaster is looking like the Y2K of Oil. A near non-event for which BP was expected to allocate $20 BILLION as a minimum outlay for clean-up and compensation to injured parties.

What will the worry-warts, hysterics and disaster queens do now? Like Bush leaving the White House, their reason for living has vanished.

Breaking News Alert The New York Times Mon, August 02, 2010 -- 7:49 PM ET---

U.S. Puts BP Spill Total at Nearly 5 Million Barrels

Nearly five million barrels of oil have gushed from the BP'swell since the Deepwater Horizon spill began on April 20, federal scientists said on Monday in announcing the most precise estimates yet of the well's flow rate. The estimates would make this spill far bigger than theMexican rig Ixtoc I spill of 1979, previously believed to bethe world's largest accidental release of oil.

Oil -- Builds Economic Strength in Many Ways

To no one's surprise, oil remains a primary source of energy. The Gulf of Mexico oil leak did nothing to change our demand. Oil is holding onto its dominance because there are no competitive alternatives or substitutes. Sure, it's possible to power cars with natural gas -- and the government should urge auto-makers to build more natural-gas powered vehicles -- but no other fuel matches oil for cost and versatility.

Sure, we could use more ethanol -- if we opened our economy to imports. Brazil has plenty to sell us, if only we would remove the import tariff that makes their product at least as expensive as our domestic product. Unfortunately, diverting huge quantities of corn away from animal feed and into ethanol production has led to increases in the cost of animal feed. In turn, those increases have led to higher food prices. If we were to eliminate the tariff on ethanol imported from Brazil, we would see a drop in many food prices and an increase in ethanol mixed with gasoline.

Furthermore, without oil the airline industry would crash land. Never will we see an electric airplane.

If we were to mix more ethanol with gasoline, we would reduce our need to import oil from nations that are enemies of freedom.

Meanwhile, if we were to increase our domestic oil drilling activities, we would further reduce our need to import oil from muslim and other unfriendly nations. Moreover, when it comes to paychecks, oil industry jobs pay at least double the national average. What are we waiting for?

Gulf Spill Triggers New Oil-Field Work

Cameron International Corp. could emerge as an unlikely beneficiary in the Gulf of Mexico oil spill

The company came under intense scrutiny in the first days after the Deepwater Horizon drilling rig exploded April 20, killing 11 workers and sparking the worst offshore oil spill in U.S. history. Cameron built the rig's blowout preventer, a critical safety device that failed to shut down the well.

In the weeks since the disaster, however, investigators have focused on decisions made by BP PLC, the well's primary owner, and Transocean Ltd., which owned the rig and the blowout preventer and was responsible for their maintenance.

Now, it appears the disaster could help generate new sales for Houston-based Cameron, which reports second quarter earnings on Wednesday. In the wake of the well accident, regulators in the U.S. and overseas are expected to require stronger, more reliable blowout preventers. Oil companies, fearing liability, also are looking to beef up their safety systems even before any new rules go into effect.

Other major manufacturers of oil-field safety equipment are already seeing increased business. Oceaneering International Inc., which makes deepwater drilling equipment, including the underwater robots that monitor and control blowout preventers, last week said it anticipated increased demand for its products due to the Gulf disaster. On Thursday, executives from National Oilwell Varco Inc., the second biggest maker of blowout preventers for offshore rigs after Cameron, said they are ordering new equipment to meet a surge in orders for new or enhanced blowout preventers.

National Oilwell Varco Chief Executive Pete Miller said the company is also developing a new, more powerful blowout preventer that had already been in the works before the Gulf disaster. He said the device will be able to cut tougher drill pipe and require less hydraulic force to operate than previous models.

Mr. Miller also said he expects to see more business for maintaining safety equipment. Investigators into the Deepwater Horizon disaster have uncovered signs that the rig's blowout preventer was modified after it was built and may not have been properly maintained. Transocean has said it conducted all required maintenance.

Cameron's stock tumbled more than 30% in the weeks after the spill began. It has rebounded somewhat since then, but remains well below its pre-disaster level. Jim Crandell, an analyst with Barclays in New York, said Cameron maintains a strong reputation in the industry and shouldn't suffer in the long term. Cameron declined to comment.

Two other companies with ties to the Gulf disaster, Transocean and Anadarko Petroleum Corp., also report earnings this week, and may not fare as well as Cameron.

Transocean, which releases its results on Wednesday, has faced increased scrutiny in recent weeks as investigators have probed its maintenance practices and the decisions made by its workers aboard the rig. Transocean has defended its workers and said BP was responsible for most major decisions on the well.

At the same time, Transocean has also suffered from the Obama administration's deepwater drilling moratorium. Transocean, the world's biggest deepwater driller, is battling with customers that are trying to cancel contracts due to the moratorium. Even when the moratorium is lifted, the company and its competitors are likely to see increased costs due to tightened maintenance requirements and higher insurance rates, says Arun Jayaram, an analyst with Credit Suisse in New York.

Anadarko, which owned a 25% stake in BP's well, is unlikely to see the effects of the spill in its second quarter earnings, which it will release Tuesday. But The Woodlands, Texas, company could ultimately face huge costs.

Obama the Vigilante

In Obama's fevered mind the future might give us regenerative medicine, educational software and intelligent prosthetics. But in his delirium he sees something standing in the way of our promising future:

Lobbyists. Especially lobbyists for the banks or the insurance industry that don't want more regulation; or the corporation that would prefer to see more tax breaks. However, among the visions dancing in his head is a vision of huge tax credits to fund the research & development of his favored technologies. It seems he's missing an epic irony -- the fact that he is the ultimate lobbyist. Appalling.

He'll sacrifice BP, possibly believing that strangling an oil company will produce a successful biomedical company. He's losing touch with reality.

The President's Animosities

Since when was the American idea us versus them?

The oil company formerly known as British Petroleum is starting to look kind of beaten up. So it goes when a business finds itself tossed into the ring with the current president of the United States.

"We will make BP pay," Mr. Obama said Tuesday night.

There is a mood in the land that BP is getting what it deserves. Maybe so. But players in the political game who've found it convenient to join the president in the BP bear-baiting should not delude themselves that BP is a free hit. In politics, nothing happens in isolation.

The beating Mr. Obama is giving BP isn't the exception. It's the rule when this president finds himself in tension with the private sector. I can't recall any previous president with this depth of visceral, antibusiness animosity.

Amid the BP crisis, the president traveled to Carnegie Mellon University to give what was billed as a major speech on the economy. In its entirety, the speech is a guided tour through Mr. Obama's mind. The pundits carping yesterday that the president's oil-spill apologia was limp—even as BP gave him $20 billion in tribute—should check out this one.

That Pittsburgh speech wasn't just about "the economy," but the way Mr. Obama sees life in 21st century America: a tooth-and-fang world of private interests in constant struggle against the benevolent goals of government. All of this described in a tone that is extraordinary for a president.

"As November approaches," the president said, "leaders in the other party will campaign furiously on the same economic arguments they've been making for decades." They gave "tax cuts . . . to millionaires who didn't need them. They gutted regulations and put industry insiders in charge of oversight."

The beating Mr. Obama is giving BP isn't the exception.

Mr. Obama believes that "if you're a Wall Street bank or an insurance company or an oil company, you pretty much get to play by your own rules, regardless of the consequences for everybody else." Al Gore campaigned hard against these same targets, but never with such ill will.

Americans, he says, want to compete but can't "if the irresponsibility of a few folks on Wall Street can bring our entire economy to its knees." A president is not some backwater pol running for sheriff. But his explanation of the financial crisis—the whole economy brought down by "a few" on Wall Street—is a scenario found nowhere outside a James Bond movie.

He punched out WellPoint and other insurers verbally for months until they dropped and the Democrats passed the president's health-care bill. And they'd better stay down. No longer, said Mr. Obama, would it be possible for people to be "thrown off" their coverage for reasons "contrived" by an insurance company.

He complains his predecessor left him with projected deficits of $8 trillion caused by unpaid-for tax cuts, a familiar analysis, except that Mr. Obama adds that the cuts were "skewed to the wealthy."

When in the Carnegie Mellon speech Mr. Obama turns from what he called "the dangers of an unfettered market" and discusses government—"only government has been able to do what individuals couldn't do and corporations wouldn't do"—he is virtually delirious with joy.

Of his proposed research and experimentation tax credit he says, "The possibilities of where this research might lead are endless." Regenerative medicine, educational software, intelligent prosthetics. "Imagine all the workers and small business owners and consumers who would benefit from these discoveries."

He then identifies what stands in the way of "a better future." It's that "there will always be lobbyists for the banks or the insurance industry that don't want more regulation; or the corporation that would prefer to see more tax breaks . . ." A president seeking tax breaks to the horizon for green industries wouldn't say this, unless whacking "corporations" was just too much fun.

The agenda Mr. Obama described at Carnegie Mellon is so vast you'd think he'd at least enlist the private sector's help. But there's nothing in the speech's enumerations to suggest any desire to have them along on these projects. If they contribute or comply, it will be out of intimidation. It's all him or the government or its "investments."

Some might say that instead of being a cheerleader for business, Mr. Obama is simply a tough-minded public official holding well-shod feet to the fire. I don't buy it. His tone and vocabulary, in use since he took office, goes beyond public policy. It sounds personal. Too personal for a president.

Populism in the United States is a trickier proposition than in, say, South America. Here, the private sector isn't automatically a suspect proposition. Bill Clinton played the populism card as well as anyone. Harry Truman and JFK had famous fights with big steel. But none of these Democratic presidents routinely pistol-whipped private interests in the language this one does. No previous president assembled a Cabinet with not one member from the private sector, as now.

The worldview in this White House is distinct and unusual. It wasn't a voting issue in 2008. The opposition should make it an issue in 2012, and this November. Since when was the American idea us versus them?