Thoughts my friends?
Is this a time to buy BP? Or will it be shortly?
Or sould we wait?
Wait …
do you think it will get worse for this stock?
maybe the everyone jump in beat up feel good effect?
Or?
Long term I think it is naive to think anything will really hurt this company, but maybe I am wrong
[quote=“kfed”]do you think it will get worse for this stock?
maybe the everyone jump in beat up feel good effect?
Or?
Long term I think it is naive to think anything will really hurt this company, but maybe I am wrong[/quote]
Yes it will get worse for the stock. The market knows fines and penalties (for the company) and possible jail time (for the corporate officers) are coming. The question on everyone’s mind is how big will the fine be? The stock is off 20% since the fiasco started (but it still has a pretty decent yield of 8.99%). A big fine will tank the stock price. A small fine will piss off all the environmentalists, be politically unpopular and send the wrong message to “big business”. My prediction is to prepare for a massive fine and a good buying opportunity.
Let’s face it, it’s an oil company. As long as the world runs on petroleum there will be oil companies and they will make profits. Lots of profit. Big profits that piss off certain constituencies and Congressional demigogues. The fine will be a drop in the bucket compared to the profits they will make if they can extract the billions of barrels of oil from the gulf. If not, the US will have to purchase more oil extracted from overseas. It will still be refined here so the oil companies will make their money.
With the middle class growing in China and India (and they all want cars) this is increasing demand. Supply is staying roughly the same in the short term so prices will increase. Short term in this case is 3 to 5 years as it takes time to find new oil fields, investigate their capacity, set up leases, get government ok, build the facility, extract and ship it. The easily extracted oil is running out, which is why they were drilling so deep in the gulf in the first place. Demand is increasing at a faster rate than supply can match it, the current Recession being an anomaly.
The alternatives, electric vehicles, aren’t there yet and there’s nothing to replace oil. Even if you replaced petroleum burning vehicles with electric, you have to worry about what’s providing your electricity and how to charge them. China recently released a joint study between Tsinghua University and Argonne National Laboratory that while electric vehicles will decrease oil consumption but they’ll be worse greenhouse gases polluters due to the source of the electricity (coal). The charging issue was covered in this popular mechanics article on the new Mitsubishi i-Miev. For it to charge the same number of cars per hour as a conventional gasoline station, it would need 67 quick charge stations compared to 8 gasoline pumps. It takes 3 minutes to fill a gas vehicles tank but 25 minutes to charge the battery to 100%. Ohh and it will take half an acre of land to handle all those charging stations.
Oil’s not going anywhere for a while and British Petroleum will get slapped hard but will come back.
Hope you didn’t buy (yet).[quote=“Washington Post”]It was a bad day for most stocks today, but it was a bloodbath for embattled oil giant BP.
Shares of BP dived 16 percent today, driving the stock price to below $30 per share, the worst drop on record for the company. The British energy giant closed at $29.20 per share. More ominously, investors and traders rushed to dump their BP shares: Trading of the stock occurred at four times normal volume today.
As a result, the asset-rich company is now trading for less than its book value, which is essentially all the assets it has – oil fields, oil rigs and so forth – minus intangible assets and liabilities.
In English, this means that investors and traders think that the company is now actually worth less than all the hard assets it owns. That’s a confidence trade.
The company has now lost a staggering half of its value since the late-April explosion of the Deepwater Horizon rig and subsequent oil spill. You calculate a company’s value – called its market capitalization, or market cap – by multiplying its stock price by the number of outstanding shares.
Today, BP is worth $91.4 billion. In mid-April, the company was worth $180 billion. Wow.[/quote]
I said to wait …
Pity can’t buy BP on the local exchange. Electric cars do have a big future, they will be charged at home mostly , not in converted gas stations. They will be the run about car for families, principal usage at 3 GBP for 100 miles. That’s a huge saving.
So it’s down 50%.
Is NOW the time to buy?
They’re still a solid company that isn’t exactly in any danger of going out of business, right?
RIGHT?
Discussions now are about the U.S. government declaring a “receivorship” status, which basically means that the U.S. declares the firm a bankrupt company. A good time to buy? Not in this decade. If the U.S. does this, which is highly likely, BP will be under controf the U.S. Bankruptcy Court or, (EDIT: “probaby”)in this case, Congress, for many years to come. Will their stock rise to meet the conflict. I highly doubt it.
Can you point to me any law that allows the US government to involuntarily put a company under receivership status when they aren’t creditors, temporary or not? If BP went bankrupt, the U.S. Bankruptcy Court has the authority to install a receiver(or trustee or whatever you want to call the person), but that is as a result of judicial proceedings. Congress has nothing to do with that at all.
First either the company has to declare bankruptcy (voluntary) or the creditors can initiate bankruptcy proceedings (involuntary). The government can’t do that for a private company, Robert Reich’s desires aside. This isn’t AIG or Chrysler where the government became the major creditor and could make changes and decide who was in charge.
I can’t see how that wouldn’t be a violation of “Due Process” under the 5th amendment. The Executive Branch can’t take control of BP, by putting them under temporary receivership, without violating the rights of all the shareholders. It’s tantamount to nationalizing BP, even if it’s temporary.
BP’s liability is limited to 75 million USD for losses to private parties as per the Oil Pollution Act of 1990. That’s all they can be held liable for as long as the law is constitutional. They’ll still have to pay every dime for cleanup and damages to natural resources, which will be Billions of USD.
I plan on purchasing BP stock, but not until I have a better idea what the penalties for the environmental damage are. They’ll be hefty and drop the share price more. However BP isn’t insolvent. They have plenty of assets and make Billions of USD a year. If their share price drops low enough, another oil company will purchase them (pending government approval). Maybe they’ll file for bankruptcy. Regardless, we aren’t getting off oil any time soon.
Crazy to even think about buying BP now. Take a quick glance at the chart, the volume tells the whole story.
For short term plays on volatility or a long term (watch Exxon’s price in subsequent years after the spill) play, I see it is a cheap blue chip stock.
Don’t know why the stupid politicians want to make an example of BP. If anything, it was the DOI that fucked up in their granting of exemptions to BP. So let me try to understand the rationale of the posters demanding blood?
Give them an exemption on environmental assessement and then blame them? :roflmao: Government was responsible and fucked up with this mindless deregulation. I say keep the assessment but open up all oceans and land to drilling. The companies that put time into the assessments will have good crisis plans in place.
Well now they’re up 12%.
Shite.
I should have bought yesterday!
Ben Graham wrote very clearly on the difference between investment and speculation. Taking a position in BP equity is, for the moment, pure speculation.
Sometimes Graham used the words ‘gamble’ and ‘speculate’ interchangeably.
In a nutshell, this is a thread about gambling. Pretending otherwise is foolhardy, in my view.
Can you point to me any law that allows the US government to involuntarily put a company under receivership status when they aren’t creditors, temporary or not? If BP went bankrupt, the U.S. Bankruptcy Court has the authority to install a receiver(or trustee or whatever you want to call the person), but that is as a result of judicial proceedings. Congress has nothing to do with that at all.
First either the company has to declare bankruptcy (voluntary) or the creditors can initiate bankruptcy proceedings (involuntary). The government can’t do that for a private company, Robert Reich’s desires aside. This isn’t AIG or Chrysler where the government became the major creditor and could make changes and decide who was in charge.
I can’t see how that wouldn’t be a violation of “Due Process” under the 5th amendment. The Executive Branch can’t take control of BP, by putting them under temporary receivership, without violating the rights of all the shareholders. It’s tantamount to nationalizing BP, even if it’s temporary.
BP’s liability is limited to 75 million USD for losses to private parties as per the Oil Pollution Act of 1990. That’s all they can be held liable for as long as the law is constitutional. They’ll still have to pay every dime for cleanup and damages to natural resources, which will be Billions of USD.
I plan on purchasing BP stock, but not until I have a better idea what the penalties for the environmental damage are. They’ll be hefty and drop the share price more. However BP isn’t insolvent. They have plenty of assets and make Billions of USD a year. If their share price drops low enough, another oil company will purchase them (pending government approval). Maybe they’ll file for bankruptcy. Regardless, we aren’t getting off oil any time soon.[/quote]
This is a "strict liability situation. As I understand it, the U.S. does not have to step through threw hoops of tort law. i.e., Duty, breach, causation and damges.
The currnet laws regarding oil spills are in the field of "strict liability. That is, if it happens you owe. Again, as I read the law, every company involved will owe 1,000 U.S. per barrel spilled. We dont discuss the other elements. Just pay, and they haven’t been doing that. There are several, and as I understand it, Halliburton is one of them. Certainly BP is on the hook.
You ask to understand why the goverment can do that…
There is an act that states in part and summary that wildlife injured because of a spill, the company(s) responsible are 100 percent liable for clean up and restoration. The act does not care about accidents, etc. It came into effect after the Exxon Valdez incident.
A second strict liability law was the law regarding “fowling wildlife habitat”. I if it happens you pay. You suggest that the U.S. goverment has no power to control this - bullocks. After 9-11 Congress gave the President plenary powers to pursue anyone, organization, etc upon a an attack on the U.S. It is my reading that the President could easily decalre “war” on the oil spill, much like he could and can decalre war on the Mexican drug cartels…
Bottom line, Congress is suppossed to control the actions of the Presidency except in exigent circumstances and he has exclusive power over the military.
I you don’t think the U.S. will react over this issue and take forceful action over the issue and the companies, think again.
I really don’t plan on teaching Con law, but maybe you should take a look. You might be surprised. Remarkably, the Executive Branch and the Congress have so far shown remarkable restraint, but if it gets worse, I would certainly not want to own BP stock, except to wall paper my living room.
[quote=“lbksig”]
BP’s liability is limited to 75 million USD for losses to private parties as per the Oil Pollution Act of 1990. That’s all they can be held liable for as long as the law is constitutional. [/quote]
But it looks like criminal charges will be filed against BP, and once they are found criminally negligent, the 75 Million cap disappears as there’s no cap on criminal penalties. In fact, prosecutors in such cases can seek twice the cost of environmental and economic damages resulting from the spill.
They can change the law or do anything they want, this is a critical issue for the Prez, he has to be seen to be dealing ‘furious justice’ to placate the ‘American people’ 
Before he drops the hammer, the President would do well to remember that the retirement funds of thousands of his Americans also depend on BP.
Ex post facto laws are prohibited by Article 1 Section 3 of the US Constitution. They can change the law going forward, but the law that is applicable is the law that was in effect the day the oil spill started.
[quote=“Mick”]
But it looks like criminal charges will be filed against BP, and once they are found criminally negligent, the 75 Million cap disappears as there’s no cap on criminal penalties. In fact, prosecutors in such cases can seek twice the cost of environmental and economic damages resulting from the spill.[/quote]
Yeah that will be an interesting case and will stretch out over years (like the Exxon Valdez case). Voir dire will be a pain in the ass for the prosecutors. Try finding a jury that is impartial and hasn’t been affected by the media coverage.
On second glance at the Oil Spill act, I can’t see how that isn’t a bill of attainder or how it doesn’t violate the Constitution. It’s the legislature imposing a penalty without a judicial trial. If the government is going after BP for double the cost of cleanup and damage, plus the fine under the Oil Spill act, it can’t hurt them to get the act overturned by the SCOTUS.