The Great Debate UK
–Kathleen Brooks is research director at forex.com. The opinions expressed are her own.–
The oil market is about to face one of the largest probes in years, following the EU announcing that it is investigating some major players like Shell and BP for price fixing. The probe concerns the way that large oil companies submit prices to Platts, the independent oil pricing service, which publishes prices for oil benchmarks like Brent.
The concern is that oil traders have been reporting prices that are higher than what they are actually selling oil for, in order to push up the price and cream the profits. This might all sound similar to those who followed the Libor fixing scandal that saw the end of Bob Diamond’s career at Barclays and global condemnation of bankers who set benchmark interest rates at levels that suited them, rather than the consumer.
So could this be a case of greedy traders pushing up prices that we, the consumer, have to pay at the pump? Could it be the actions of a few crude desks around the globe that may have pushed up UK inflation, which then limited the amount of stimulus the Bank of England has been willing to feed into the UK economy?
By Fiona Maharg Bravo and Christopher Swann
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
MADRID/NEW YORK -- BP has the hallmarks of a bid target -- a discount share price, a strategic setback and weakened management. Almost a year since the Gulf of Mexico spill hobbled the company on its Western front, the UK oil major has got bogged down in Russia, leaving it exposed again.
BP may have felt the public relations tide was turning in its favor. Probes into its Gulf of Mexico spill have so far unearthed no direct proof that a culture of corner-cutting at BP caused the disaster and investigators have even spread part of the blame to the firm's contractors. But the reprieve may be cut short by writer Loren Steffy's deeply critical history: "Drowning in Oil: BP and the Reckless Pursuit of Profit."
Like the financial crisis, BP's record-breaking oil spill is sure to spawn a shelf full of books. Steffy's readable account has surfaced before the release of much important evidence relating to BP's greatest mishap. Still, the author makes a convincing case that the Macondo blunder can be traced to a longstanding BP culture of neglecting safety.
It will be a long time before BP is back to business as usual following the Gulf of Mexico disaster. The UK oil and gas major has just upped its estimate of costs by $7.7 billion to $39.9 billion, in what investors must hope is the second kitchen-sinking exercise following the disaster—albeit the first under new chief executive Bob Dudley. But the hit can't mask what looks like the makings of BP's recovery.
The upward revision to the spill cost was twice as big as some analysts had expected—BP blamed delays in capping its leaking well—but the shares still rose on the news. That isn't so strange. The Gulf of Mexico disaster has already wiped some $60 billion from BP's market value, while global markets are little changed from when the Macondo well blew out in April. After tax, the hit falls to $27 billion. That number is still probably a best guess. A gross negligence charge for BP would send the bill skyrocketing. Equally, the costs could fall if BP's partners in the stricken well end up assuming their 35 percent share of the liability.
It's potentially hazardous to swallow a meal a third your size. But it could make sense for Apache to grab $10 billion of BP's Alaskan assets. The U.S. firm's flair for squeezing oil from older wells makes it an ideal buyer -- and BP is a keener seller than it was.
With a market capitalization just shy of $30 billion and only $2 billion in cash on hand, Apache might not find it easy to digest a big deal. Nor is it coming to the table with an empty stomach. Just days before BP's Gulf of Mexico rig explosion in April, Apache snapped up Mariner Energy for $2.7 billion and bought $1 billion of assets from Devon Energy.
-Lindsey Nefesh-Clarke is the founder of Women’s Worldwide Web – an online charitable organisation designed to help empower women with access to micro-finance loans, education, mentoring and networking. The opinions expressed are her own.-
“To reach a tipping point towards a new era of sustainability”: this is the urgent goal of the business, government and civil society leaders who convened in New York City for the recent U.N. Global Compact Leaders Summit.
BP’s chief executive Tony Hayward branded “the most hated man in America” may be surprised to find himself cast in the role of victim by a growing clan of web-based supporters on Facebook.
One such group ‘Support BP’ calls itself the defender of an “undeservedly harassed institution” and seeks to show that the public opprobrium BP faces over its now 60-day-old Gulf of Mexico oil spill is not universal.
from Global Investing:
Bank of America-Merrill Lynch's monthly poll of around 200 fund managers had a few nuggets in the June version, aside from the usual mood-taking.
Gold is too expensive. A net 27 percent of respondent thought it overvalued, up from 13 percent in May. Then again, the respondents to this poll have reckoned gold is too pricey since September 2009.
Being a CEO should be one of the best jobs in the world, argue the authors of a new book.
“It offers the chance to make a real difference,” Steve Tappin and Andrew Cave write in The New Secrets of CEOs: 200 Global Chief Executives on Leading.
-Kees Willemse is professor of off-shore engineering, Delft University. The opinions expressed are his own.-
The news that a huge metal cap has been successfully placed over several of the leaking oil vents at the Deepwater Horizon site marks a potential turning point in the Gulf of Mexico crisis.