The White House’s answer for Deepwater Horizon…Send in the lawyers!
Apparently the U.S. government has decided the best way to help BP plug the leak in the Gulf of Mexico is to open a criminal probe to “… examine the actions of those involved in the spill.”
We are now into day 44 of Deepwater Horizon. According to Attorney General Eric Holder, the criminal probe “… began some weeks ago…” Thus, whereas it can be said, fairly, that the White House was slow to react and work with BP to find a solution to the spill, its Justice Department wasted no time trying to make a criminal case against BP , Transocean , et al.
Meanwhile, Obama again took to the nation’s airwaves to remind us, for the umpteenth time since James Carville lashed out against him last week, that BP will be held accountable; a charge that BP has never backed away from. The president also reiterated his directive to extend a moratorium on deepwater oil drilling for the next six months.
According to a client of The Schork Report, however, drilling permits have been revoked for all rigs and platforms floating in more than 500 feet of water.
Little wonder then why the complex collapsed and volatility surged to kick off this abbreviated trading week:
Both the Philadelphia Oil Service and AMEX Oil (XOI) indices plunged to their lowest levels since last July: down 7½% to 159.12 and 5.1% to 914.09 respectively. The AMEX Natural Gas index (XNG) fell by 4.1% to an eight-month low, 484.49. At the same time, the CBOE OVX spiked by 13.8% to 46.06.
This begs the question: with a significant amount of U.S. oil and gas production now hostage to the populist whims of the Beltway, why is the energy complex not reacting bullishly?
It just makes you think, with everything that has transpired over the last couple of weeks, if the best the bulls can do is to bid this market into the mid $70s, but well short of the 200-day moving average (76.67), then just how overpriced was WTI a month ago in the high $80s?
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Stephen Schork is the Editor of The Schork Reportand has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.