Big Earl is being Squeezed
August 6, 2007 12:16 am
OH MAN, BIG EARL IS GONNA BE MAD! The monster is now awakened and he is gonna fight back!.
Why you aks? Cuz, now they have gone and dun it. After the HofR gang saw all of the massive profits and reasoned that there would be no way that anyone should ever make THAT kind of money (except of course for them), the 435 member (of which 189 dissented) has put forth a bill to tax BIG EARL. In what appears to be a $16 billion shakedown, there is now renewed concern about the escalating price of gasoline.
(BTW, you can tell the members who voted for this by their blue gang colors)
Remember, the Big Cheese will still probably veto this action.
But, what if?…What if it actually passes? Think about it: All that is being done is to take money out of the oil companies hands and put it back with the taxpayers. Unfortunately, the oil companies will have to do something In order to keep their profits up. They are, of course, shareholder owned. So, in the end, the money will flow right back to the EARL, in the form of higher fuel prices.
WHOA, now that sucks! This will be another reason causing the equity markets to pull back with an elevated confusion factor. No doubt, oil companies (OXY, XOM, BP, and others ( Major Integrated Oil Companies Independent Oil Companies ) are in for a shellacking (water based of course). The reason, if not for the $16 billion but the new level of uncertainty it causes. As prices have gone up for oil during the past few years, there has been a great escalation in share prices of the entire sector. In fact the earnings party spilled over to transport companies as well.
Earnings have been skyrocketing for the Major and Independent Oil sectors over the past several years. There has been a consistent anger by many politicians over that. This will surely be cause for concern. The next few weeks should prove to be ugly as this item is debated. Renewable energy or Renewable Earnings, the choice is now up to them.
Horowitz & Company clients are Short OXY as of this post.