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Trading Lessons

Offshore Drilling Moratorium: Hear It From The Little People

Politics / Oil Companies Jul 06, 2010 - 10:14 AM GMT

By: Static_Chaos

Politics

Hornbeck, a $400-million vessel company in Louisiana, filed a lawsuit against the administration on June 7, a month after the moratorium started.


CNN Money reports that Hornbeck, like many Gulf oil service providers, has one-third of its sales coming  from contracting its 200-plus-foot vessels to provide transport services for deepwater drilling operations in the Gulf. Without drilling, vessels were sitting idle. While larger players may seek work in the international water by redeploying vessels and personnel, it is quite cost inhibitive for smaller companies like Hornbeck to pursue that route.

A dozen other Gulf-based businesses with more than 10,000 employees joined Hornbeck in the suit, while Louisiana governor Jindal also threw in his support. Their argument centered on the legality of the ban when many drillers met all regulatory requirements. Gulf of Mexico driller Diamond Offshore also filed a separate law suit against the Administration over the legality of the moratorium on June 17.

The Hornbeck case culminated with an injunction against the ban issued by U.S. District Judge Martin Feldman in New Orleans. However, no one is going back to work in the Gulf due to the lingering uncertainty. White House has filed an immediately appeal, while the Interior Dept. is mulling a "modified" moratorium.

Not surprisingly, a lot of hoopla is going around about Judge Feldman's stock portfolio. Various media reports indicated that Judge Feldman sold stock in Exxon Mobil Corp just hours before his ruling.

In reality, if we look around, almost everyone owns Exxon stocks in some shape or form through pensions, 401K's, mutual funds, ETFs, etc. since Exxon is a typical blue chip with nice dividend payout. The bottom line is that it would be quite difficult for anyone to extricate from the "Exxon stock association."

Last but not least, Exxon is like 20 times removed from the BP Macondo well explosion. The conflict of interest argument some are attempting to hang on Judge Feldman seems nothing more than a political ploy.

Meanwhile, this news video from CNN gives a refreshing perspecitve on BP and ofshore drilling from the regular working people in Louisiana.

By Static Chaos

http://static-chaos.blogspot.com

© 2010 Copyright Statoc Chaos- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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