This too will pass by Tony Green

The scenes of the oil soaked beaches in the Gulf, fair to say, left an indelible impression on everyone. British Petroleum (BP), the operator of the rig which exploded, has taken a huge hit in its public relations. Every media outlet had taken turns, especially CNN to, bash BP at every opportunity. BP had pledged to pay for the entire cleanup and well as compensate those whose lives were affected so drastically by the spill as well it should.

The fact is the oil industry should boast some extra cash in its coffers. The oil sector as a whole has recorded revenues and profits over the last 10 years. According to a money.cnn article the top two companies of the Fortune 500 for 2008 happened to be oil companies which totaled in profits of over 78 billion dollars.

A CRS report to Congress as of early 2008 stated the oil industry, in general, and its member companies continued to generate high profits since 2004. For example, by most familiar comparisons, the $9.92 billion profit earned by Exxon Mobil Corp. in just three months in the second quarter of 2005 is almost unimaginable.

On the topic of Exxon back in time the spilling of 11 million gallons of crude oil ( 257,000 barrels) of the Exxon Valdez in Alaska was the largest spill prior to April’s explosion in the Gulf of Mexico.

Exxon’s status at the time of the spill the company was routinely posting strong revenues and profits. BP likewise also exhibited strong revenue and profit numbers.

Moreover, Exxon made high profits even in the aftermath of the most expensive oil spill in history. They made $3.8 billion profit in 1989 and $5 billion in 1990. And this occurred while Exxon disputed cleanup costs nearly every step of the way.


In short, Exxon, BP, and the oil industry are doing fine and I expect this will not change when once assesses the facts.

Consumption of oil is all about demand and the economy. We need oil for electricity and transportation. Alternative energy will alleviate but a major impact will not be any time before 2050. The financial market in general goes up and down and will not be down forever.

That is why if I happened to be a BP stockholder I would worry much more about the damage the environment than the Value of their investment. If history says anything about this spill, for BP similar to Exxon twenty years before, this too will pass.