6 Months of Madness

The Obama administration is coming under more criticism for its emotional and political cover move to ban offshore drilling. The move is not only costing us much needed jobs but is also damaging the economy now and in the future as energy prices rise mainly because the the market is unsure as to what the administration will do next.

They have added to market uncertainty by opening the possibility that BP could also be liable for losses of workers laid off due to the U.S. government's unwise and ill conceived drilling moratorium. This means that BP may have unlimited liability in this spill as Obama tries to make up laws and rules as they go along.

What they lack in experience they make up for in arrogance as they continue to cover their ineptitude with anger and bad decisions that will do more to hurt the welfare of the average American more than you  know. The whole world is watching and learning and our credibility is on the line.Over the weekend Obama got ready to address the nation on the spill when came word that the US wants BP to put up a substantial fund rumored to be as high as 20 billion dollars to pay back those individuals damaged by the spill.

While BP is open to the idea of the fund, they want to make sure that the fund is not abused while the Obama administration controls who gets compensated and who does not. Obama wants to get its hands on the money before he forces the company into bankruptcy and getting around bankruptcy law and perhaps even the constitution. That darn constitution keeps getting into the Obama's way.

So while Obama continues to ban off shore drilling, the job losses and production losses are starting to mount. The Wall Street Journal reports, Chevron Corp. has come out swinging in its fight to continue drilling in the deep waters of the Gulf of Mexico, arguing that not all oil firms should be tarred with the brush of BP PLC's Deepwater Horizon disaster.

In an interview with the Wall Street Journal, Chevron chairman and CEO John Watson said he accepts the need for tighter drilling regulations in the wake of the spill, which since April has fouled the waters and coastline of the Gulf. But Mr. Watson, 52, called unnecessary the six-month moratorium on deep-water drilling imposed by the Obama administration.

The second-biggest U.S. oil firm by market capitalization after Exxon Mobil Corp., San Ramon, Calif.-based Chevron owns more Gulf of Mexico drilling leases than any other company and is the third-biggest oil producer there, after BP and Royal Dutch Shell.

It was considered a growth area for Chevron. Now, access to deep water may be in jeopardy. In addition to the six-month moratorium on drilling in more than 500 feet of water in the Gulf, Obama has put on hold plans to expand drilling off the coast of Alaska. Norway, too, has put a temporary halt to new deep-water exploration.

While Mr. Watson wouldn't directly criticize BP, he said that even before the current disaster, Chevron had in place policies and procedures that might have avoided the oil-well blowout that caused the spill. This incident was preventable, Mr. Watson said In the early days of the Gulf disaster, the oil industry mostly presented a united front.

But as the crisis has dragged on, companies have begun to distance themselves from BP.Mr. Watson and the CEOs of several other big oil companies are almost certain to try to draw distinctions when they face questions from a congressional panel on Tuesday.

Chevron shares have fallen nearly 10% since the Deepwater Horizon drilling rig caught fire April 20; though that drop is small compared with the drop in BP's market valuation has declined 46%.Mr. Watson said he understood the decision to halt drilling in the immediate aftermath of the disaster, which he called a humbling experience for the industry.

But he said the industry's overall safety record is strong, and that both industry and government panels have drawn up new safety recommendations in light of the spill. We favor rapid adoption of those recommendations, Mr. Watson said.

There was big commodity news in today's New York Times. The Times reports, The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

The previously unknown deposits - including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium - are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe. 

An internal Pentagon memo, for example, states that Afghanistan could become the Saudi Arabia of lithium, a key raw material in the manufacture of batteries for laptops and Blackberrys. The vast scale of Afghanistan's mineral wealth was discovered by a small team of Pentagon officials and American geologists.

The Afghan government and President Hamid Karzai were recently briefed, American officials said. While it could take many years to develop a mining industry, the potential is so great that officials and executives in the industry believe it could attract heavy investment even before mines are profitable, providing the possibility of jobs that could distract from generations of war. There is stunning potential here,

Gen. David H. Petraeus, commander of the United States Central Command, said in an interview on Saturday. There are a lot of ifs, of course, but I think potentially it is hugely significant.  The value of the newly discovered mineral deposits dwarfs the size of Afghanistan's existing war-bedraggled economy, which is based largely on opium production and narcotics trafficking as well aid from the United States and other industrialized countries.

Afghanistan's gross domestic product is only about $12 billion. This will become the backbone of the Afghan economy, said Jalil Jumriany, an adviser to the Afghan minister of mines. American and Afghan officials agreed to discuss the mineral discoveries at a difficult moment in the war in Afghanistan.

The American-led offensive in Marja in southern Afghanistan has achieved only limited gains. Meanwhile, charges of corruption and favoritism continue to plague the Karzai government, and Mr. Karzai seems increasingly embittered toward the White House.  So the Obama administration is hungry for some positive news to come out of Afghanistan.

Yet the American officials also recognize that the mineral discoveries will almost certainly have a double-edged impact. Instead of bringing peace, the newfound mineral wealth could lead the Taliban to battle even more fiercely to regain control of the country.

The corruption that is already rampant in the Karzai government could also be amplified by the new wealth, particularly if a handful of well-connected oligarchs, some with personal ties to the president, gain control of the resources. Just last year, Afghanistan's minister of mines was accused by American officials of accepting a $30 million bribe to award China the rights to develop its copper mine. The minister has since been replaced.

Natural gas is strong! Hot weather may bring troublesome weather conditions in the Gulf. Not only will the hot weather have us turn on air conditioners but it also means the possible developments of tropical storms. The National Hurricane Center reports that, An area of low pressure located about 1425 miles east-southeast of the Windward Island continues to show signs of organization.

Environmental conditions are expected to remain conducive for development during the next day or so as the system moves west-northwest at about 145mph. The remains a high chance, 60%, of this system becoming a tropical cyclone during the next 48 hours.   

Oil Prices are rebounding on strong euro data. The range for oil is changing. Make sure that you call to get the latest trade recommendations while they are still free! Just call me at 800-935-6487 or email me at pflynn@pfgbest.com also check me out on the Fox business Network every day.

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