Why Brazil’s economy is prospering

The Beauty of Industry - Chevron offshore drilling rig at sunset

Chevron is drilling in Brazil’s ocean waters. Recently, oil was detected in the area. After much study, Brazilian and Chevron officials determined that just a small amount – around 3000 barrels – had leaked out from the ocean floor where the company was drilling.

After short discussion and no public drama, Brazil fined the company a reasonable $28 million, according to today’s Houston Chronicle.

“Chevron has taken full responsibility for the incident and says the residual oil is moving away from Brazil’s coast. Unlike BP’s spill in 2010, which released an estimated 4.9 million barrels and led to a moratorium on some drilling in the Gulf of Mexico,” says the article by reporter Simone Sebastian.

Contrast that with the BP leak – drama! accusations! fears of disaster all along the Gulf Coast!

Why is that?

“Morningstar analyst Allen Good said the environmental impact was comparatively small and, for Brazilians, the economic stakes are seen as too big. “I don’t think you are going to see any slowdown” in Brazil’s offshore drilling, Good said. “They’re banking on that industry really exploding there.””

More: “Brazil has maintained a friendly relationship with the oil and gas industry, which has been a major revenue generator for the country, Good said. With an estimated 50 billion to 100 billion barrels of oil in the pre-salt areas, national sentiment has been supportive of the economic boon that offshore oil production can bring.”

and

“Chevron has said that its quick response to plug the leak limited the spill’s effect and that it has followed government-approved processes to clean up the slick, including containment booms and skimming.”

Investment lesson: Management matters! Government policies matter!

One question: when with news people stop calling these events “spills?” It was a leak from the ocean floor, not a spill from an oil tanker. Please get the terminology right, people.

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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