British Petroleum Oil Spill - Long Term Detriment? (NYSE: BP)

Scan the news headlines of any major website on the Internet and you’ll find the top story is BP’s oil extravaganza occurring in the Gulf of Mexico. On April 20th the company’s drilling platform exploded, creating a giant oil slick that is slowly creeping towards dry ground. 5,000 barrels of oil are gushing out into the ocean on a daily basis and BP is allegedly spending 6 million a day on fixing the accident. At least 11 workers died in the accident.
All sorts of analysts are saying that the incident will overshadow all of the progress that this company has made over the past 3 years, and that the money they are losing attempting to fix the problem will be greatly overshadowed by the ruination of the BP’s brand image.

The truth is that although this slip up is horrible for the company’s image, and will be a supreme pain the ass to clean up environmentally, long term, it really will not matter, at least to BP.
The gulf drilling program contributes to 11% of the company’s worldwide production….therefore the other 89% continues to operate full blast. The demand for oil is inelastic, we need it, and regardless of oil spills, dead sea animals and the determent to the oceanic topography, everyone is still going to hit the pump before going to work on Monday.
Whichever gas station has highest value according to price and proximity to your living arrangements, that’s where you are going to go, regardless of how many sea turtles and baby seals are dying all over the planet…sorry I had to say it.

Of course the company is going to embark in a worldwide social responsibility binge to clean up their image…but I have to wonder whether they actually need to. The company’s stock dropped to $51.35 this morning in early trading and by 11:30 it was above opening price at 53 and change. Currently the company is down .5% or $.31, for the most part leveling out the day. Although the stock has plummeted from the 60’s I wouldn’t be surprised to see them back, or up even higher as investors take this opportunity to get into a large, non-volatile oil company for cheaper than usual.