Governmental intervention in oil and gas markets

oil rig offshore.jpgThis NY Times article reports on the successful lobbying effort by the oil and gas industry in the mid-1990’s during a time of low energy prices to persuade Congress to create incentives for energy companies to explore for oil and gas in the Gulf of Mexico.
Congress passes legislation to create the incentives, but the legislators don’t bother to read the legislation carefully.
During the current period of relatively high energy prices, the oil and gas companies take advantage of the legislation to make a lot more money through paying reduced royalties to the government than they would otherwise have made without the legislation.
Journalists point this out to legislators.
Hilarity ensues.

More on criminalizing those unpopular shorts and hedgies

short selling6.jpgThis earlier post noted the dust-up over the SEC’s dubious issuance of subpoenas to financial journalists over Overstock.com’s accusation that a hedge fund and a stock-research firm manipulated the media and the market to drive down the price of Overstock.com’s stock for the purpose of profiting through shorting the stock.
Now, this NY Times article reports that the SEC is seeking documents about communications that the stock research firm — Gradient Analytics Inc. — had with journalists and several hedge-fund advisers. The new subpoenas appear to be intended to gather information about Gradient’s contacts with journalists without seeking the information directly from the journalists themselves. If you can’t get the information one way, try another.
The NY Times story reports allegations that SAC, a big hedge fund, persuaded Gradient to generate a misleading and negative report on Biovail, a generic drug firm. Then, the allegation goes, SAC persuaded (bribed?) Gradient to delay publication of the negative report on Biovail so that SAC could profit by shorting Biovail stock. If true, then SAC and Gradient’s scheme is sanctionable under existing securities laws.
Although Biovail stock hasn’t been doing all that well anyway and it’s unclear whether the negative reports had any effect on the company’s stock price, the NY Times article rachets up the “more business regulation” demagogery, anyway:

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“Keep Up”

Sabbatini Mrs.jpgStephen Ames — you know, Tiger Woods’ buddywon the Players Championship in a walkabout on Sunday, so the final round wasn’t particularly interesting. Nevertheless, the golf tournament generated some highly entertaining moments, anyway.
During the first two rounds of the tournament, the PGA Tour paired Rory Sabbatini — who is one of the hottest players on Tour this season — and NBC golf color commentator and part-time Tour player, Nick Faldo.
As you may recall, Faldo and Sabbatini had a dust-up with each other last year. During the 2005 Booz Allen, Sabbatini was harshly criticized by television commentators Paul Azinger and Faldo on the air for leaving playing partner Ben Crane behind to finish the 17th hole. Sabbatini, who is one of the fastest players on Tour, was fed up with Craneís pace of play, which is one of the slowest on Tour. Sabbatini reportedly was not pleased with Faldo and Azinger slamming him on the air, although he reportedly talked with Azinger about the incident later and made up with him. But not Faldo.
To make matters, Faldo is also a slow player himself. So, during the first round of the Players Championship, tournament officials put the Sabbatini-Faldo-Camilo Villegas group on the clock (i.e., gave them a warning before assessing a penalty to each of the players) for — you guessed it — slow play. The group sped up and no penalties were assessed.
Nonetheless, that incident prompted Sabbatiniís wife — no shrinking violet herself — to show up the next day for the second round sporting a tee shirt emblazoned with the words ìKeep Upî as she followed the group around the course. Asked about Mrs. Sabbatini’s t-shirt after the round, Faldo observed the following:

“I think itís very embarrassing for them to bring their sexual problems to the golf course. Poor fellow. I thought he had enough problems as it is without her announcing them to the world.”

Your serve, Mr. Sabbatini.