Not all oil leaks are equal

When the blow out of the BP Macondo well in the Gulf of Mexico occurred, the world’s media became aware of it and reported it around the globe pretty much instantaneously.

Compare that with the explosion of two crude oil pipelines in the Chinese Port of Dalian late last Friday. Fortunately the loss of life and the amount of crude oil that has leaked into the Yellow Sea is not comparable with the Gulf but it still remains China’s largest ever oil spill and a major clean-up operation is ongoing.

Mainstream financial media have really only started reporting on it today, although some western news sites picked up the story in the early hours of last Sunday morning. Even so the reporting of this second significant oil catastrophe has been limited and considered in its tone.

The financial impact on BP of the Macondo well explosion was immediate. As soon as the LSE opened after the tragedy BP shares felt the effects of the situation and are still doing so even now.

However, if you take a look at the shares of Petro China, the company that co-owns the pipelines and is listed on the Hong Kong Stock Exchange, the share price has been relatively stable. In fact it has closed today at its highest level all week and with no distinguishable effects of the disaster being seen on its share price.

What we have to consider is why a very unfortunate situation that has de-stabilised BP, and pushed it into divesting assets, is repeating itself in a different part of the world and the markets seem to be showing complete indifference.

Does this come down to the fact that the situation in China involves a Chinese company and Beijing is supporting that business in its efforts to put right the situation?

We also have to consider the state of the Chinese economy compared with that of the US. The disappointing performance of the US economy is such that the US government is feeling the pressure, thus directing media attention on to “British Petroleum” certainly distracts from economic issues closer to home. No such media distractions are needed in China.

Who says that controlled media coverage is not good for business?

Filed under: China, Gulf, Mexico, Oil, BP