Got Oil Stocks? Get Out of the Gulf! (Fool TV)

The oil that's creeping toward the Gulf of Mexico shoreline might also be threatening your portfolio. If you own shares of an oil company, beware: The contamination goes way beyond BP (NYSE: BP  ) . James Early, lead advisor of Motley Fool Income Investor, believes that any oil and gas company drilling in the Gulf of Mexico should be girding for a sea change in its operations, and investors should take heed.

Part of the reason for this is the expense of the massive spill -- legal and environmental costs that will be on the books long after the oil itself has dissipated. But another reason is regulation. Remember The Wall Street Journal's 2008 expose on Mineral Management Service, the government agency that was partying while it was supposed to be monitoring the safety of oil company activities in the Gulf? Well, the MMS was also on duty when BP sprung a leak last month. As sure as oil and water don't mix, the agency will be forced to step up its oversight, which means that oil derricks in the Gulf will be put through the bureaucratic paces -- and slowly.

James Early says investors would do well to avoid oil producers with significant exposure in the Gulf of Mexico -- not just BP, but also Apache (NYSE: APA  ) and Anadarko Petroleum (NYSE: APC  ) -- and consider foreign firms such as Brazil's Petrobras (NYSE: PBR  ) or France's Total (NYSE: TOT  ) , which are better diversified around the globe. Watch the video here:

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James Early does not own shares of any company mentioned. Petrobras and Total are Income Investor selections. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (7)

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  • Report this Comment On May 10, 2010, at 9:54 AM, Houstonian2010 wrote:

    Great - more alarmist reporting at its best.

  • Report this Comment On May 10, 2010, at 1:12 PM, mikecart1 wrote:

    Hmmm... seems like I heard similar things when all the banks were supposedly goinig to be nationalized in early 2009... hmmm... I ignored those people and bought up BAC and C and made mad money..... hmmmm... I think I will do the same thing here and keep buying BP. Yeah that's what I'll do.

  • Report this Comment On May 11, 2010, at 6:16 AM, Pr0metheus wrote:

    Yes, France's Total (TOT) is indeed diversified around the world. They do a lot of business with military rulers in Burma, as well as African dictators.

    http://www.independent.co.uk/news/world/asia/burmese-general...

    As an investor, I think TOT runs its business very well and very profitably. But know that if you invest in TOT, you are helping fund oppression.

    Your article would do well to include this disclaimer, Mr. Early.

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