Oil Stocks' 'Reputational Risk' in Gulf Spill

Talk about reputational risk: On the heels of the Napolitano press conference, in which the Homeland Secretary said the Deepwater Horizon spill in the Gulf of Mexico was of "national significance," energy stocks have come off their highs, and several are in negative territory.

The total costs are not at all clear. I have seen estimates of $500 million, but Credit Suisse this morning cited insurance estimates that total damages could top $1.25 billion.

The reputational costs are much greater. British Petroleum market cap has gone from $190 billion to $164 billion in a few days — a drop of $26 billion or roughly 13 percent.

Transocean owned the rig that BP was using, is down nearly 6 percent today.

Cameron International 13 percent. CAM manufactured the blow out preventer (BOP) for the rig. Traders tell me that both Transocean and BP have openly suggested that the cause of the disaster was a failure of the BOP.

At the same time, Halliburton is also getting hit because, traders tell me, they were doing the cementing on the rig and there is also speculation that this may have caused a problem.

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