Comments on: The BP downgrade cycle http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: MarkC123 http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/comment-page-1/#comment-16051 Mon, 21 Jun 2010 09:18:35 +0000 http://blogs.reuters.com/felix-salmon/?p=4305#comment-16051 > Were [BP’s safety violations] from employees smoking near flammable liquids? Were they from employees not wearing required PPE? Or were they design flaws that ignored obvious hazards? The number means nothing.

Why would BP be 750 times more likely to be violated for smoking near flammable liquids or employees not wearing required PPE? More importantly, does it even matter?

The number means everything. Assuming BP was not being singled out by regulators as a form of corporate harassment, with a statistic like that it’s probably safe to assume BP was–and is–operating with a significantly more lax attitude towards safety than the industry norm.

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By: silliness http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/comment-page-1/#comment-15983 Thu, 17 Jun 2010 17:41:13 +0000 http://blogs.reuters.com/felix-salmon/?p=4305#comment-15983 @unsympathetic: I should stop talking because I refuse to jump to conclusions? OK. By the way, what were those 750 violations? Do you even know? Were they from employees smoking near flammable liquids? Were they from employees not wearing required PPE? Or were they design flaws that ignored obvious hazards? The number means nothing.

I’m not defending BP, I’m criticizing the American tendency to assume that errors in engineering judgement are the same as criminal negelct. Get it?

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By: DanHess http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/comment-page-1/#comment-15974 Thu, 17 Jun 2010 14:23:24 +0000 http://blogs.reuters.com/felix-salmon/?p=4305#comment-15974 If it weren’t for BP’s production, which is a decent chunk of the global total, oil and food prices would be quite a bit higher.

That would be no big deal for the rich but rotten for the lower income people of the world.

Folks needs to be careful what we wish for. Oil has to come from somewhere and corn stalks or chicken grease are not going to do it.

Gee, how about Iran, everybody? That is also a way to support our other favorite regime, North Korea.

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By: Unsympathetic http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/comment-page-1/#comment-15972 Thu, 17 Jun 2010 13:39:32 +0000 http://blogs.reuters.com/felix-salmon/?p=4305#comment-15972 “It is not clear to me that they really did anything wrong”

Aside from possessing 750 times the number of safety violations in the US alone than their next closest competitor, right?

It’s time for you to stop talking, “silliness” – that dog won’t hunt. Your pro-BP shtick is inane and flat-out wrong.

“Rarely are these decisions clearly right or wrong”

This statement is incorrect. Industry standards exist for a reason. A correct statement would be: “Rarely are BP’s decisions clearly right.”

“What are you going to do about it?”

In a free market, the court is the check on private industry profits. Get ready to be bankrupted.

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By: silliness http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/comment-page-1/#comment-15970 Thu, 17 Jun 2010 12:02:19 +0000 http://blogs.reuters.com/felix-salmon/?p=4305#comment-15970 I can’t agree, yet, with the demonization of BP. It is not clear to me that they really did anything wrong other than exercise some bad engineering judgement.

And, as others have pointed out, they provide a product we really want.

Sorry to get philosophical, but to one degree or another, every company pollutes intentionally. Every company makes design and operational decisions based on risk/cost/benefit. Rarely are these decisions clearly right or wrong. This event is no different than the explosion of the space shuttle Challenger or the break up of Columbia – terrible accidents cause by the under-appreciation of risk. What are you going to do about it?

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By: DanHess http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/comment-page-1/#comment-15959 Thu, 17 Jun 2010 04:18:27 +0000 http://blogs.reuters.com/felix-salmon/?p=4305#comment-15959 As for ethics of investing in BP, this is an interesting question. I bought BP at around 37 recently, and frankly I lose no sleep over the ethics of it. I am someone who refuses to buy Altria for ethical reasons.

Look, oil feeds us all. It transports us all. For the time being, it is about the most important tangible thing in our economy, with viable and scale substitutes far off on the horizon.

For anyone in 2010 to demonize oil companies is silly and hypocritical — even a NYC cyclist must eat, and we all like to fly around.

Tom Friedman nailed this:
http://www.nytimes.com/2010/06/13/opinio n/13friedman.html

BP is the largest and most productive driller in the Gulf, it is not unexpected that a spill should be theirs.

We all pay good money for oil companies to go hell-for-leather for the sake of our needs. While I hope for alternatives, I am glad as heck that oil is feeding our children in the meanwhile.

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By: HBC http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/comment-page-1/#comment-15955 Thu, 17 Jun 2010 03:50:25 +0000 http://blogs.reuters.com/felix-salmon/?p=4305#comment-15955 Whatever it is that leaves a sinking oil rig last, and rats it may be, they’re not all there any more. This could mean all the more room for bottom feeders. At the same time, that “millions of flies can’t be wrong, so buy BP” argument is rapidly losing viscosity and isn’t liable to adhere forever.

For those on the wrong end of the slick, though, it may seem like it.

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By: DanHess http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/comment-page-1/#comment-15953 Thu, 17 Jun 2010 03:18:05 +0000 http://blogs.reuters.com/felix-salmon/?p=4305#comment-15953 Bill Gross said he was happy to get 10% yields on what he just now called an AA credit. An AA has an extremely small chance of going bust.

Folks who really think BP will go broke are not using their thinking caps. If there is any chance of that, BP has a duty to its shareholders and to the Queen to throw its US subsidary under the bus and walk away.

BP is, by sales, as big as the next four British companies combined (HSBC, Vodafone, Tesco and Barclay’s). This is a horrible spill, but Obama and his merry band of thugs are not going to shout this company into oblivion and force the British people into poverty.

We are all still waiting for team Obama to come up with their first idea to help stop this spill.

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By: raghuveern http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/comment-page-1/#comment-15951 Thu, 17 Jun 2010 03:06:27 +0000 http://blogs.reuters.com/felix-salmon/?p=4305#comment-15951 I bought BP’s 1-yr bonds @ 11% and 2-yr bonds@ 9.5% YTM this morning.

I think the near-term bankruptcy fears in CDS and Bond markets are perhaps overblown. The corporate structure of BP is such that, in the event of massive losses
or claims: BP PLC should be able to let BP Holdings North America go bankrupt and cut its losses at that level. Claiming compensation from the parent company beyond that could be difficult as that will be fought over in London courts which might toss
out a lot of claims filed by Americans.

I do agree with your point that BP common stock is not yet attractive. Even if BP survives, you could be stuck holding it for years that too without a dividend.

I’m quite sympathetic to BP’s situation. A broken pipe 5″ in diameter, 5000ft below sea level is tough to fix. Given 70% of future oil is expected to be extracted from Deep Sea, it is almost guaranteed to happen again.

I think they have been a bit too nice in agreeing so quickly to a 20billion escrow account and suspending the entire dividend. I would like to have seen them put up a bit of a fight (at least till a court judgement).

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By: sds-pm http://blogs.reuters.com/felix-salmon/2010/06/16/the-bp-downgrade-cycle/comment-page-1/#comment-15947 Wed, 16 Jun 2010 23:30:34 +0000 http://blogs.reuters.com/felix-salmon/?p=4305#comment-15947 It seems the 975 to 1075 bps quotes on BP 1yr CDS are the quotes in Euros. In fact, I was told that the bid/offer is Euros is 937.5/1062.5. From a different source, I was told that bid/offer in USD is 575/675. How reasonable is it that the CDS levels are so different when denominated in different currencies, since there is no systemic risk in BP? Any insights?

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