- An emphasis on deep water drilling by Petrobras affected its stock price.
- The futures market for oil suggests that the Gulf event will not have a major effect on oil prices.
While financial markets are not always right, it is useful to see what they have to say. Chart A plots the stock price performance of the three companies that are most closely tied to the oil spill--BP, Transocean and Halliburton. As you can see, the stock prices of the three companies have been hammered, realizing loses in the neighborhood of $35 billion, which is substantially greater than most estimates of the various damages and cleanup costs. 
As a comparison, as I plot in Chart B, the stock prices of ConocoPhillips and ExxonMobil were not affected by the spill. However, Petrobras, which was in no way associated with the accident, has also suffered significant declines in their stock price. What is the connection with Petrobras? Petrobras is essentially betting the company on very deep water drilling, and the stock market, in light of the Gulf disaster, appears to be questioning that bet.
Finally, it is worthwhile looking at the long term futures market for oil, which is plotted in Chart C. Are the markets expecting a moratorium on deep water drilling that will lead to a future shortage of oil? Apparently, the markets response suggests that the Gulf event will not have a major effect on oil prices. The move in five year futures prices has not been material, and the spread between Brent and WTI has actually widened a bit, suggesting that--if anything--oil is likely to become scarcer in Europe than in the U.S.
