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The Oil

June 20, 2010 - news

I can’t let these 30 days go by without saying something about the story that has everyone talking. Everyone has their own theories about how to clean up the disaster in the Gulf. And the blame game has been played by everyone as well, with no clear winners. I’m not going to jump into any of those debates, but I did have a couple of observations that I’d like to share.

First of all, I’m surprised by the reaction (or lack thereof) by all of the other oil companies. Besides being hauled in front of Congress to testify, there hasn’t been a lot of communication from your Exxons and your Shells. I guess that’s to be expected to some extent, their first reaction was probably to sit back and see how bad the backlash against BP would be, and let them take the initial brunt of it. But we’re sixty days into this catastrophe, and I can’t believe that BP’s peers haven’t stepped up and took a more prominent role in the cleanup effort. It would be outstanding PR for them, to come together, form some kind of “dream team” of engineers and leaders, roll up their sleeves, and then take the slow motion walk into the fray, like Bruce Willis and his roughnecks in Armageddon. But that hasn’t happened yet (to my knowledge). And I’m surprised, because the CEOs of all of the other oil companies have to realize that if they don’t jump in and do something voluntarily, the government is going to make them do something they probably won’t like very much. Oh, and it won’t be cheap. So it is in all of our best interests for them to solve this problem on their own, because the government’s regulatory reaction to this mess is going to cost them a fortune, and they will certainly pass that cost on to us. Get ready for five-dollar gasoline.

Which brings me to my second observation. We have not seen the customary increase in gas prices in the run-up to summer, as we usually do this time of year. Gas seems to be about the same price it was all winter. Why is that? Could it be because an oil company that raises gas prices with the Gulf clean-up as a backdrop is likely to wind up on the list of America’s Most Hated, right along with BP? Can we presume that gas prices will remain flat for as long as pelicans covered in goo is the lead story on the news every night? Just wondering what that will mean in the long term. If we make it the entire summer without significant increases, the oil companies will have to come up with a new perennial excuse for summer’s higher prices. Or maybe they will just have to admit that it’s all a scam.

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