Wednesday, June 02, 2010

The markets finally admit that the BP Oil Spill is a disaster

SHOOT: People don't realise that the consequences of the spill will be permanent - in that a moratorium on deep sea drilling, even a 6 month one, will propel energy prices upward. Imagine rising oil prices in a recession?
clipped from
Chart for BP p.l.c. Common Stock

On Tuesday, Wall Street reversed early gains as investors fretted about the implications of oil spill in the Gulf of Mexico, which President Barack Obama described as the "greatest environmental disaster of its kind in our history."

Worries about the spill were increased Tuesday when the U.S. government said it was starting criminal and civil investigations against BP PLC, Europe's second biggest oil company. That has raised concerns that the sector will now be more tightly regulated.

Shares in BP, which slid 13 percent on Tuesday -- its biggest one-day fall in 18 years -- were down another 3 percent.

"Today's wide-ranging losses testify to a general bearishness, with the crisis in the Gulf of Mexico simply amplifying widespread pessimism in markets," said Will Hedden, a sales trader at IG Index.

Most of the pessimism in recent week has been related to Europe's government debt problems and the many attempts by the continent's policymakers to get a handle on the crisis.

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