Energy Politics

Well, Oil and Gas Investor is back up, and just in time for the world to come to an end. Okay, a bit of an exaggeration, but woo, what a week! Where do I begin?

Let’s start with Hugo Chavez, because he’s fun. The Latin American dictator democractically elected despot savior recently booted the U.S. Ambassador out of Venezuela for conspiring to have Chavez killed. To add insult to injury, he also kicked out two human rights activists from Human Rights Watch for making criticizing his country’s humn rights records. He accused them of being stooges of President Bush, which must have been a real shock to group since it’s routinely accussed of having an anti-Western nations bias.

After that, let’s talk economic nightmare. Lehman Brothers went belly-up, Merrill Lynch is being bought by Bank of America and insurance provider AIG having to collect on its own life insurance policy. Did you ge the number of that bus who hit our stock market? Talk about a hit-and-run.  And of course the U.S. government has swung in to protect the interests of companies that are “too big to fail,” much like they did earlier with Bear Stearns.

Let’s anaylze that for a second. “Too big to fail.” Now I’m not a socialist or anything, but methinks that if a company has been allowed to become “too big to fail,” then you’re just asking for economic trouble somewhere along the line. No, it doesn’t surprise me that these businesses are failing. Companies that become too big become too complacent in their policies and standards. A younger bank might turn away high-risk loans for fear that it could cause their undoing. But giant megacorporations like Lehman Brothers and Bear Stearns, who have been around the block a few times, think they’ve earned a right to subsidize garbage loans since their success can hide their failures in other areas. Such has proven not to be the case.

And finally, the oil prices. Wow,  $25 in a single day. I feel like the last three weeks were undone in a single day. It’s like the market refuses to correct itself. Insanity has been loosed upon Nymex. So I got to ask how long this will take to undo. Or has the market become so addicted to bad news that any excuse to raise prices will result in increases?

–Stephen Payne, Editor, Oil and Gas Investor This Week; www.OilandGasInvestor.com; spayne@hartenergy.com

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