What the Spill Has Already Killed
June 22, 2010
I'm siding with Matt Simmons.
Whether he is right or wrong about the impact of BP's Deepwater Horizon oil spill doesn't even matter. The response from the investment bank he founded was all too typical and reeks of the same transparent palaver we've come to expect from Wall Street.
As a backgrounder, last week Simmons resigned as the chairman emeritus of Simmons & Co. after Mike Frazier, Simmons & Co.'s CEO, sent a letter to clients distancing the firm from its founders' comments about the BP oil spill. In the wake of the oil giant's Macondo blowout, Simmons has appeared on multiple press outlets, expressing concerns the leak is much worse than anyone has let on.
He sounds like an alarmist, but internal BP documents, ironically, side with Simmons too.
Frazier, instinctively, is concerned about what clients think, and he's rightly worried that Simmons' views are probably not what they want to hear. That's why Frazier was careful to note in the letter that the bank also disagrees with Simmons when it comes to the prospects of unconventional gas resources. Simmons, for the record, has been skeptical about shale gas plays and more recently warned that the US Environmental Protection Agency will take a deeper look at the space in light of the BP disaster.
So the question Frazier was faced with was whether or not Simmons & Co. is better off muzzling its former founder to keep its clients in a happy place, where massive oil spills are a creation of the press and shale gas an endless profit stream with no known encumbrances. I actually would have guessed that as a specialist in energy, Simmons & Co. would have prioritized its credibility as an expert versus the role of industry cheerleader.
It's not just Frazier. Texas Congressman Joe Barton turned his back on his country when he apologized to BP CEO Tony Hayward for what Barton termed a government "shakedown." He was referring to the request that the company set aside $20 billion to help cover the cleanup of the spill -- a number, it should be noted, that barely equals a quarter of BP's Ebitda in 2008 and 2009. Does it surprise anyone that Barton's fundraisers have called on BP in the past or that his biggest donor is Anadarko Petroleum, a minority stakeholder in the Macondo well?
I'd just prefer our legislators do away with the suits and assume the same style as a Nascar driver, so their sponsors are identified plainly on their chests. Frazier can do the same thing with his biggest clients, so the smaller ones can put the firm's 'advice' into context.
I was in the local Jeep dealership this morning to pick up my car. In the waiting room sat a recent issue of Newsweek, whose cover declared "What the Spill will Kill." I'm pretty sure the article was about the environmental impact, but the first thought that came to my mind is that it's already doing a number on people's principles.
1 Comments
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