These are stories Report on Business is following today. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Gulf disaster could lead to more limited supply of oil
The oil disaster in the Gulf of Mexico could prove to be a "supply-side game changer" by restricting deep-sea drilling, delaying projects and boosting costs, in turn curtailing supplies, the International Energy Agency warned in a new report today. The adviser to almost 30 countries said in its Oil Market Report that projects representing between 100,000 and 300,000 barrels a day could be delayed over five years if there is a lengthy moratorium on new projects. "Costs are going to go up, projects are going to be delayed and some sort of regulatory overhaul is likely in the United States in the aftermath of this terrible accident," David Fyfe, the chief of the agency's oil industry and markets division, told Reuters television.
BP bloodied but unbowed
The empire that once was is striking back. BP PLC , one of the giants of the energy industry and a company steeped in more than a century of history, suffered another rout on overseas markets today, though it saw a sharp rebound in New York. Pressure continues to build on BP by the day over the disaster in the Gulf of Mexico from the explosion on the Deepwater Horizon drilling rig in April. The company is being held to account by the U.S. government and markets don't like what they see, wiping billions from its market value. There is also pressure on the company to suspend its dividend as it faces mounting costs, which now stand at $1.43-billion (U.S.).
BP responded to market pressure in a statement this morning: "BP faces this situation as a strong company. In March, we indicated that the company's cash inflows and outflows were balanced at an oil price of around $60/barrel. This was before the costs of the incident." The company added that it has "significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims."
And in a memo to employees, The Globe and Mail's European correspondent Eric Reguly reports, chief executive officer Tony Hayward noted the "undeniably difficult times" but said that "we are in this for the long run - we will do the right thing in our response, and we will emerge a stronger and safer company when we come through the other side."
Soros sees Act II
Renowned investor George Soros says Europe's financial troubles means the world has "just entered Act II" of the financial crisis. "The collapse of the financial system as we know it is real, and the crisis is far from over," Mr. Soros told a conference in Vienna, according to Bloomberg News. "... When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken centre stage, but the effects are liable to be felt worldwide."
Markets, dollar rally
The markets didn't necessarily agree with Mr. Soros today, though investors have certainly had bouts of fear related to Europe's debt crisis. Today, global markets rallied on fresh signs that the economic recovery continues apace. Numbers from the United States, Japan, China and Australia all pointed to a rebounding economy. In the U.S., new claims for jobless benefits dipped, though still showing a labour market in crisis, while Chinese trade numbers showed the world's economic engine is not showing signs of slowing. Japan's freshest reading of economic growth, meanwhile, showed GDP expanded at a 5-per-cent annualized pace in the first quarter.
As expected, the Bank of England and the European Central Bank held interest rates steady.
The Canadian dollar also surged, jumping more than 1.3 cents to pop above 97 cents U.S., though it later dipped below that mark. And strategists at BNP Paribas advised investors to buy into the loonie given the country's better prospects. "The divergence between the recovering Canadian economy and [European monetary union]" which needs a weaker currency to ensure fiscal sustainability, will only increase going forward," they wrote.Report Typo/Error