No doubt the U.S. administration is working overtime to prevent Deepwater Horizon from becoming its Hurricane Katrina. As such, the U.S. is once again fulfilling Bernard Lewis’ vision that this country is “harmless as an enemy and treacherous as a friend."
To wit, Iran might get a look-away, but not BP (not that BP should). While the former gets a tacit free pass from the White House on its (not so) merry way in developing nukes for peaceful purposes (wink, wink… nudge, nudge), the latter gets raked over the coals for obvious political gain.
The White House did not have much to say last week after leaders from Turkey and Brazil announced a new atomic pact with the mullahocracy in Tehran (despite 16 months of U.S. diplomatic efforts to prevent such an event).
But there has been no shortage of hyperbole employed by administration officials against BP , i.e., Obama’s promise to “keep a boot on the throat” of the company or Homeland Security Secretary Janet Napolitano’s Orwellian promise that “we are on them, watching them…”
By “them” we assume Napolitano is talking about BP — and not the would-be Times Square bomber.
In this vein it should be no surprise that volatility remains high and the prospects for future oil drilling remain low. According to a story from the AP yesterday, the U.S. Congress is getting ready to quadruple (!) — to 32 cents a barrel — a tax that would theoretically be used to help finance future cleanups. As written about in The Schork Report, the reality is that this money will just be sucked into the black hole of Washington fiscal policy.
Bottom line, the CBOE OVX kicked off the new trading week near eight-month highs and the Philadelphia Oil Service Index and the AMEX Oil Index each dropped to nine-month lows.
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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.