LOOK FOR THE UNSEEN

We like it when we see quotes like the this one in today's Financial Times from Saudi oil minster  Ali al Naimi "the world may never see oil at $100 a barrel again."

In what the Times called "an usually frank interview," Naimi claimed Opec was pursuing a new tact.

It's not in the interest of Opec producers to cut their production, whatever the price is. Whether it goes down to $20, $40, $50, $60 it is irrelevant.

Some observers say that the market should expect more volatility as it enters "scary times" for the next several years, as oil casts a wide net in the making of so many products. Either way, it's a clear shot at the world's high cost producers in places like the shale industry in the U.S. and Canada's oil sands.

That group also includes deep water produces like Brazil and projects in the Arctic.

The low prices are also showing up in some unusual places. British Petroleum, the UK giant, is seeking lower penalties owing to its 2010 Gulf of Mexico spill, citing declining oil prices since mid-summer and the future impact they could have on exploration and production.

One might argue that BP is joining the ranks of Argentina, though in our view BP is on much higher ground owing to the size of the penalty the government is asking. Greedy governments are greedy governments. And the U.S. is one of the greediest.

BP has already ponied up $1.3 billion under the Clean Water Act and $846 million for research into the Gulf and to promote tourism to the region. According to reports, the government is estimating that 4.2 million barrels spilled into the Gulf and they are asking for the maximum penalty under the Act of $4,300 a barrel.  

That brings the total to somewhere between $16 and $18 billion depending on who's left in charge of the calculator, since the U.S. government is saying no less than $16 billion.

Now that, my thirsty friends, is pure greed. 

Whatever the outcome, the newly predicted volatility, should it happen, will produce opportunities to make some money for those savvy enough and brave enough to follow French economist Frederic Bastiat's dictum, "What is seen and what is not seen."

So look for the unseen.