Recall, if you will, what I said a few days ago:
Unless there is some other serious setback, such as both relief wells managing to snap their drill strings downhole or any other reason preventing their completion, the share price should not fall much lower. There might be some daft political factor which causes it to drop further – some knee-jerk legislation ordering BP out of the US, or something – but what we know now is enough to stabilise the share price.
And whad’ya know, we have just witnessed some daft knee-jerk political posturing which has sent the share price plummeting further:
Shares in BP have plummeted another 12% at the start of London trading, amid fears President Obama will impose massive penalties on the company.
In his latest comments, President Obama suggested that the oil company should pay unemployment benefits to thousands of oil workers laid off during a moratorium on deep-sea drilling triggered by the spill.
There is much to say about this, but I think a comment made over at The Hayride – which is doing a great job of covering the political shennanighans around this spill – put it perfectly:
This is the kind of incompetent, chaotic government which introduces the concept of “political risk” into capital investment decisions about getting involved in American markets that has never been at issue before. America was always preferable to some Third World sinkhole like Ecuador or Angola, simply because it was known that the rule of law would apply here, making decisions simpler and productive endeavors easier. But when nobody knows what the rules of the game are, which is how the Third World works, profit-seekers usually figure the only way to insure they won’t end up getting killed on their investment ventures is to bribe government officials.
Absolutely. I would have no idea how many times I have complained either on my blog or to anyone that would listen that the biggest factor affecting investment into Russia – and thereby keeping it miles poorer than it should be – is the propensity of the government to make up the rules as they go along and clobber any company they feel like simply by applying the law to suit. And now we have that idiot who currently occupies the White House doing exactly the same thing. Vladimir Putin must be crying tears of mirth into his borsch, and I don’t blame him. Next time any American criticises the Kremlin for destroying Yukos with crippling tax bills for political reasons, any Russian will be perfectly justified in saying that Barack Obama is doing pretty much the same thing with BP.
People used to criticise George W. Bush for destroying America’s reputation in, amongst other places, the third world. Barack Obama is doing his best to ensure America joins it.
And as for the British bashing which is going on in the US at the moment, I don’t recall our government and press making hay about dumbass, redneck, cowboy Yanks when Occidental managed to kill 167 of ours on Piper Alpha, having refused to shut in production even when the bloody platform was ablaze. If the aim of some in America is to isolate probably their only friend right now by being the arrogant, insular, pricks the rest of the world accuses them of being, then they’re doing a pretty fine job of it. As John B points out, these idiots are going to put an almighty dent in British pensions if they don’t quit.
The Hayride has accurately commented that what we are seeing here is politics, when what is needed is governance. What a disgrace.