Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Selling Snake Oil


Nationalization worst case scenario for economy, consumers.

Rising oil prices don't necessarily mean rising oil stocks.

One reason: nationalization.

ExxonMobil (XOM) took a hit after Venezuelan President Hugo Chavez forced the oil producer to leave the Orinoco Belt, one of South America's most productive areas. The stock recently fetched $88.13 a share, off a 52-week high of $96.12.

BP (BP) fell when the Russian government announced plans to take over the Kovykta deposits in Siberia, now owned by BP's Russian affiliate, TNK-BP. The stock recently changed hands at $69.57, down from a 52-week high at $79.77.

Shell got nicked in London when Russia grabbed the Sakhalin-2 field, valued at about $22 billion.

So far, ConocoPhillips (COP) and Chevron (CVX) haven't taken similar hits.

Publicly traded oil companies go head-to-head for supplies and also compete against government-run companies for access to oil fields. In the past, nationalization has led to uneven production – think Mexico's Pemex.

If the pattern is repeated with the latest round of nationalizations, look for prices at the pump to go still higher.

At home, John McCain, the presumptive Republican presidential nominee, is a latecomer to the party but now calls for an end to the ban on offshore drilling. But he's still opposed to exploration in the Arctic National Wildlife Refuge (ANWR).

The proposed drill site near Prudhoe Bay, where production has been filling the Alaska pipeline for years, is an arctic plain that makes Kansas look scenic. The ANWR does have stunning scenery, but it's hundreds of miles from the proposed drill site.

Barack Obama, the presumptive Democratic presidential nominee, turns thumbs down on drilling offshore and in the ANWR.

But it could get worse. (No kidding.)

Democratic Representative Maurice Hinchey of New York told Fox News, "We [the government] should own the refineries. Then we can control how much gets out into the market."

It's hard to compete with such brilliance.

However, this week's award for sophomoric understanding of how the economy works goes to Democratic Rep Maxine Waters of California, who made colleagues smirk when she said, "And guess what this liberal would be all about? This liberal would be all about socializing - er, uh. (Pause)…Would be about…basically…taking over, and the government running all of your oil companies."

As Casey Stengel, manager of the 1962 Mets -- a lovable bunch of losers he dubbed "the Amazins" -- said, "Can't anybody here play this game?"
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos