BP and Foreign Oil

In light of the last two months of coverage of the BP oil spill, I have decided to bring into the spotlight some misconceptions about BP and foreign oil. I have heard several comments on TV and read several comments in the paper about the BP disaster. Mainly, the comments revolve around how we should tap our own oil in order to break free from our dependence on foreign oil. It is true that we need to break free from our dependence on foreign oil, but many of us believe that tapping our oil is the answer. First, our oil is being tapped as we all saw with BP drilling in the Gulf of Mexico. Second, corporations are in business to maximize revenues. US oil is being harvested and sold to highest bidder. Much of our oil is being sold abroad. The corporations have a duty to the shareholders to increase the value of their shares, so selling American oil to Americans is not always in the best interest of shareholders.

The way to get off of foreign dependency on oil is to get off oil and find an alternative fuel. If that is not accomplished, then we will continue to depend on foreign countries (as well as foreign and domestic) companies to provide it. I'm not a fan of government control, but the only way to utilize American oil is to create a government owned company that drills and harvests the oil.

As far as BP goes, the amount of money it is going to cost to clean up the spill varies greatly depending on a number of factors. Regardless, the financial hit the company will take and the subsequent destruction of their share price makes BP an attractive take over target. The company does have a large cash hoard, but a huge amount of that is tied up to settle lawsuits filed by residents affected by the spill. If you have BP stock, hold it. If you do not, then refrain from buying until more reliable information about the cost to fix this mess. However, even if BP can come out of this still intact, the damage to the company's reputation may be too much to overcome.