What Obama Didn’t Say (That He Should Have)
President Obama may have addressed BP’s Gulf of Mexico oil spill and the US’s need for an updated energy policy in his first speech from the Oval Office on Tuesday night, but there are a number of important points that he left out. During Wednesday’s Mad Money, Cramer gave a speech of his own to let viewers know what the president missed.
First, Obama and his administration got the math wrong, meaning a simple calculation would have proved the initial reports of just how much oil was spewing out of that well were wrong. If just 5,000 barrels a day were leaking out, then, given the $70 market price for each one, BP was losing a minimum of just $200,000 a day on this spill. But the company was paying as much as $500,000 a day for the rig. Why would they be willing to spend so much to reap so little?
Cramer said his contacts in the oil business think this well could hold as much as 100 million barrels. That means, left uncapped, the well could spew as much as 100,000 barrels a day. Obama’s lack of understanding of the industry day rates and his naiveté in taking BP’s estimates at face value cost us, and they prevented him from getting control of the situation much sooner.
Speaking of that naiveté, Obama never should have let BP take point on this crisis. That responsibility should have fallen to any number of former oilmen, from Exxon Mobil’s Lee Raymond and Chevron’s David O’Reilly to ConocoPhillips’ Archie Dunham and even Statoil’s Olav Fjell. And Andrew Gould of Schlumberger is widely known as the smartest guy in the oil industry. If any of these guys had been brought in, we would have known how big this problem was and how to fix it faster.
“Or at the very least, we would have been prepared to deal with the … spill,” Cramer said, “as we now know that the things BP was doing simply weren’t going to work.”
The third point Obama should have made was on energy policy, and not one based on windmills, Cramer said. It’s time we focus on a transition fuel that’s actually viable in the near term: natural gas. Nat gas is cleaner and more plentiful here in the States than the coal and nat gas – we’re the Saudi Arabia of natural gas – and it’s a lot safer to drill for. Cramer said he couldn’t find a single instance where drilling for nat gas caused the loss of human life. At most there was a small number of water-well contamination. And as bad that may sound, it’s still a lot safer than extracting crude and coal. Plus, it would create much-needed jobs in this country.
Cramer will be the first to admit that he’s a stock guy, not a politician, and he thinks Obama deserves some credit for what he did say last night, but the Mad Money host thinks the president should have approached this situation as an investor: bring in the industry’s old hands and embrace natural gas. But hey, at least Obama took Cramer’s $20 billion bond idea.
“He’s learning,” Cramer said, but “it’s not too late to go with my plan for the rest of the game.”
When this story published, Cramer's charitable trust owned ConocoPhillips.
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