Author: Vince Veneziani

Yesterday, President Obama gave his first speech about the current situation in the Gulf of Mexico involving BP, Transocean, and one massive oil spill.

In an odd turn, Obama announced he’d be sending SWAT teams out to all oil rigs and platforms in the Gulf to inspect them, as pointed out by RealClearPolitics. We’re not sure what a Special Weapons And Tactics team is going to do on an oil rig but we’re pretty sure it’ll make good fodder for Tom Clancy’s next book.

More generally though, the broader lesson here is that responding to an environmental disaster is now a Homeland Security issue. A Department formed after 9/11 has grown into an all-encompassing beast, taking over environmental issues that nobody would have imagined would have been in their purview.

Full transcription follows; RealClearPolitics has video:

PRESIDENT OBAMA: “Earlier today, DHS Secretary Napolitano announced that this incident is of national significance and the Department of Interior has announced that they will be sending SWAT teams to the Gulf to inspect all platforms and rigs. And I have ordered the Secretaries of Interior and Homeland Security as well as Administrator Lisa Jackson of the Environmental Protection Agency to visit the site on Friday to ensure that BP and the entire U.S. government is doing everything possible, not just to respond to this incident, but also to determine its cause.”

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It appears that Massey Energy (MEE), the company who owns the Upper Big Branch mine in West Virginia, has a troubled past that includes multiple safety violations.

The Upper Big Branch mine is the scene where 25 miners died after an explosion earlier this week.

It’s quite a tragedy and has obviously not bared well for Massey’s stock, which is down 10% this week.

According to Footnoted.org, Massey’s SEC filings paint a picture of how the company seems to be aware of the dangers associated with mining. For instance, an 8-K filed on March 24th, just a few weeks ago, takes an anti-regulatory stance saying increased mining regulation could hamper the company’s ability to perform:

“Numerous governmental permits and approvals are required for mining operations. … All requirements imposed by such authorities may be costly and time-consuming and may delay commencement or continuation of exploration or production operations. … Permits we need may involve requirements that may be changed or interpreted in a manner that restricts our ability to conduct our mining operations or to do so profitably. Future legislation and administrative regulations may increasingly emphasize the protection of the environment, health and safety and, as a consequence, our activities may be more closely regulated. “

Then there’s the graph above from ThinkProgress which shows that during 2009, the Upper Big Branch mine was an amalgamation of violations and fines. Here are some quick facts regarding that matter:

• The mine has been cited for over 3,000 violations by the Mine Safety and Health Administration (MSHA), 638 since 2009.
• Since 1995, Massey’s Upper Big Branch-South Mine has been cited for 3,007 safety violations. Massey is contesting 353 violations, and 127 are delinquent.
• Massey is contesting over a third (34.7%) of the 516 safety citations the Upper Big Branch-South Mine received in 2009, its greatest count in the last 15 years
• In March 2010, 53 new safety citations were issued for Massey’s Upper Big Branch-South Mine, including violations of its mine ventilation plan.
• Over $2.2 million in fines have been assessed against Massey’s Upper Big Branch-South Mine since 1995, with $791,327 paid. Massey is contesting $1,128,833 in fines. Massey’s delinquent fines total $246,320.

Interestingly, Massey doesn’t have business interruption insurance, which means if the mine doesn’t get up and running again soon and it can’t meet the demand for coal its customers commend, it will have to purchase coal from its competitors.

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By now, a lot of people have read of the savage massacres going on in Nigeria as tribal fighting returns to a gruesome caliber.

Dennis Gartman reminds us that Nigeria is the 3rd to 5th largest exporter of crude oil to the United States, depending on the month. In December of 2009, Nigeria beat the Saudis in total US exports of oil, coming in at 3rd behind Mexico and Canada.

So when there’s basically an all-out war going down in Nigeria, one must pay close attention to the price of oil with special regard to the United States. Says Gartman:

Tribal rivalries trump all other concerns when push comes to religious shove. It is now. The only good news is that the oil rich southeast is reasonably quiet, but with the north in turmoil it is reasonable to expect the southeastern separatists to ramp up their activities, exploiting the confusion that reigns in Abuja at the moment.

Today, oil is down 1.1% to $80.92 a barrel, but that could change overnight if this tribal fighting continues to escalate and makes its way to the oil-rich regions of the country.

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See Also:

• Here’s Something We Can Easily Do That Will Accomplish Way More Than Solving Healthcare
• Goldman: Our Screwy Rebound Will Send Oil To $95
• Lies, Damn Lies, And Government Oil Statistics

China doesn’t want our big, fat Hummers, apparently. GM had originally planned to sell the company and brand to China’s Sichuan Tengzhong Heavy Industrial Machinery Co.

Executives familiar with the matter say GM will now wind down the brand, according to Bloomberg.

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See Also:

• Saab Maybe Not Dead After All
• GM CEO Fritz Henderson Stepping Down
• Henderson Out Because Whitacre Was Sick Of Having To Backseat-Drive Him

Early this morning, oil service company Schlumberger Limited (SLB) announced it would be acquiring Smith International (SII), an oil and gas equipment maker, for $11 billion or $45.84 per share.

In a press release, Schlumberger says that Smith International’s drilling technologies will compliment Schlumberger’s and help the company advance its exploration technologies, with special regard to adverse drilling conditions.

Adverse drilling conditions: That means shale.

This is just the latest bullish shale bet, the mot notable being the Exxon/XTO merger;

Want to see why companies are so bullish on shale?

Read Exxon’s case for shale here >

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See Also:

• Exxon Hits Peak Oil… Reserves
• Exxon’s XTO Buy Is A Direct Affront To The Russians
• Iran Offers Up Huge Natural Gas Bribe To China To Stave Off Security Council Sanctions

Do you like rap?

Perhaps you’ve heard of Cash Money Records, an extremely popular record label founded by Birdman and Slim Williams. Master P is very closely associated with it.

Yes, well now the two have started an oil exploration company called Bronald Oil.

BallerStatus via The Danza Tap: Cash Money Records co-founders, Birdman and Ronald “Slim” Williams are trying their hands in another business venture outside the music world. They’re now expanding their portfolios into the oil business.

The New Orleans-bred brothers have launched an independent oil and gas company called Bronald Oil & Gas.

Via the company’s mission station on their website, BronaldOil.com, they say their initial focus is the “exploration, production and development of oil and gas reserves from conventional and unconventional formations.”

Bronald, a combination of the brother’s first names, say they have begun the process of acquiring leases “covering areas with historical production and the opportunity for re-entry drilling as well as new drilling opportunities.”

Amazing.

Don’t Miss: UBS Analyst Andrew Coleman – Top Stock Picks In The Oil Sector For 2010

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• Live Nation Executives Get $6.5 Million In Payouts, $34.7 Million Dumped Into CEO’s Trust After Ticketmaster Merger
• CBS’s Grammys Gets Highest TV Ratings In Six Years
• Grammy Award Winners Thank Everyone For The Album Sales Boost

When NYSE Euronext opened up for business January 4th, 2010, $84.86 was the going rate for a share of Toyota Motor Corp. (TM) stock.

Today? $72.11 and dropping by the minute.
Toyota’s massive screw up with its acceleration pedals and a new problem with the Toyota Prius‘ electrical system has prompted Transportation Secretary LaHood to state: Stop driving your Toyota NOW!

Taking a look at the chart below, you can see Toyota’s volume was low throughout the year so far. Then, on January 26th, when the accelerator problems really hit the news, the stock began its plunge. From the beginning of the year, the stock has fallen 13.28%.

Meanwhile, shares have dropped from a 10-year high of $135.50 to $72.75 (as of writing), a whopping 46% drop.

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See Also:

• Toyota’s Jugular Exposed As Congress Gangs Up With Ford And GM For The Take-Down
• Toyota Announcing Death-Pedal Fix, Scrambles To Staunch The Bleeding With Huge Marketing Blitz
• Toyota Accelerator Pedal Disaster Won’t Come Unstuck As Shares Keep Crashing

Toyota’s domestic car sales for January stunk. A lot.

Presumably it’s got something to do with the company’s shattered image, due to safety issue, which are said to be costing the company $155 million per week.

Sales fell 8.7% year over year, and if you remember how ugly last January was for the car industry, then the number should stock you.

The press release, below:

Toyota: TORRANCE, Calif. (February 2, 2010) – Toyota Motor Sales (TMS), U.S.A., Inc., today reported January sales of 98,796 vehicles, a decrease of 8.7 percent over last January, on a daily selling rate basis.
 
The Toyota Division posted January sales of 83,279 units, a decrease of 12 percent over the same period last year.  On January 26, Toyota suspended sales of the eight models involved in the accelerator pedal recall, impacting the Division’s January sales.  The eight models represented more than 60 percent of Toyota inventory.
 
The Lexus Division reported January sales of 15,517 units, an increase of 14.2 percent over the year-ago month.
 
Toyota Division
Toyota Division passenger cars recorded sales of 52,616 units, a decrease of 5 percent from last January.  Passenger car sales were led by Corolla with sales of 17,121 units for the month. Camry and Camry Hybrid posted combined January sales of 15,792 units.  The Prius mid-size gas-electric hybrid posted January sales of 8,484 units.  Venza reported sales of 3,564 units for the month.
 
Toyota Division light trucks posted sales of 30,663 units in January.  Light truck sales were led by the RAV4 compact SUV with January sales of 7,894 units, up 6.4 percent over the same period last year.  Highlander and Highlander Hybrid posted combined sales of 4,478 units for the month.  The all-new 4Runner reported January sales of 3,006 units, up 2.1 percent over the year-ago month. The Tundra full-size pickup recorded monthly sales of 3,904 units for the month.  The Tacoma mid-size pickup reported sales of 6,747 units for the month.
 
Scion posted January sales of 3,035 units.  The xB urban utility vehicle led the way with sales of 1,386 units.  The tC sports coupe posted January sales of 858 units. The xD reported sales of 791 units for the month.
 
Lexus Division
Lexus reported passenger car sales of 8,018 units, up 19.9 percent over the year-ago month.  Lexus passenger car sales were led by the recently revised ES 350 entry luxury sedan which posted sales of 2,923 units, up 6.6 percent over the same period last year.  The HS 250h luxury hybrid sedan recorded January sales of 1,247 units.
 
Lexus light trucks recorded sales of 7,449 units, up 8.7 percent over 2009.  Lexus sales were led by the RX, which posted combined January sales of 5,688 units.  The RX 450h posted sales of 1,016 units.  The all-new GX mid-size luxury utility vehicle reported sales of 1,529.
 
TMS Hybrids
TMS posted January sales of 12,190 hybrid vehicles, up 11.2 percent over the same period last year.  Toyota Division posted sales of 9,877 hybrids for the month.  Lexus Division reported sales 2,313 hybrids in January.
 
There were 24 selling days this month, compared to 26 selling days last January.

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See Also:

• Check Out January’s Domestic Motor Vehicle Sales Numbers Right Here
• Toyota’s Death Pedal Disaster Bleeding $155 Million A Week, Will Stretch For Years
• Toyota Announcing Death-Pedal Fix, Scrambles To Staunch The Bleeding With Huge Marketing Blitz

Earlier this year, GM had a lot of trouble trying to sell its Saab brand. Now the company is in a similar situation with its Hummer brand.

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AP: General Motors’ plan to sell the Hummer brand to a Chinese heavy equipment maker has been delayed by a month.

General Motors Co. and Sichuan Tengzhong Heavy Industrial Machinery Corp. said Monday they are extending the deadline to complete the transaction until Feb. 28 pending final approval by the Chinese government. The previous deadline was Jan. 31 for a definitive agreement to sell the brand once synonymous with America’s love for big off-road vehicles.

Hummer spokesman Nick Richards said the deal has cleared U.S. regulatory hurdles. He said both companies are ”optimistic the deal will be completed” by month’s end.

Sichuan Tengzhong says it’s cooperating with the approval process.

GM is selling Hummer to focus on core brands Chevrolet, Cadillac, Buick and GMC.

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See Also:

• Is Saab Dead?
• Saab Maybe Not Dead After All
• GM CEO Fritz Henderson Stepping Down

An SEC Form 4 filing shows a sale of Clean Energy Fuels Corp (CLNE) stock by financier T. Boone Pickens.

450,000 shares, which were acquired for $0, were ultimately sold off at $15.52 a share, or about $7 million.

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See Also:

• T. Boone Shrinks His Big Wind Plan
• DOE Chief Chu: The Pickens Plan Blows
• Oil’s Price Jumps Toward $50, Consensus Wrong Again

In this morning’s Gartman Letter, Dennis Gartman went off on a politcal tangent mostly.

But buried within was a beautiful nugget about energy expectations for 2010, with a strong emphasis on crude demand.

The Gartman Letter: As we have noted here in recent days, the contangos for both Brent and WTI continue to widen, seemingly inexorably, as crude bids for storage and as the long-only funds continue to do their buying in the deferred futures. This has given rise to a very interesting phenomenon where the nation’s crude oil refiners have become storers of crude rather than refiners of crude. Refinery margins are low but returns to storage are large… and are rising.

Hence the only buying taking place is by the refiners and others in the industry who are willing to secure storage facilities, including tankers off-shore, buying spot crude and hedge it in the same deferred futures that the funds are bidding for. This is the strangest of symbiotic relationships, but it is working for both.

What it breaks down to, says Gartman, is that agencies are predicting less global demand for crude oil this year. Why produce more than necessary and store your surplus?

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See Also:

• Gartman: Here’s How To Go Long Gold In Another Currency
• Gartman: Here’s How The Chinese Tightening Could Prick The Real Estate Bubble, But Help Inflate Stocks
• Gartman: Blame Democratic Mayors For Nationwide Poverty