Oil spill could darken economy
A boat makes its way through crude oil that has leaked from the Deepwater Horizon wellhead in the Gulf of Mexico near New Orleans, La.
TEXT OF INTERVIEW
Steve Chiotakis: Homeland Security Secretary Janet Napolitano and Interior Secretary Ken Salazar will meet with company executives to determine how the company will pay for its oil spill in the Gulf of Mexico. Some damage estimates top $10 billion. David Kotak is chief investment officer with Cumberland Advisors, he's with us now from Tampla, Fla. to talk about the real economic costs associated with this disaster. Hi, David.
David Kotok: Hi, Steve.
Chiotakis: Besides the reputation, what kind of economic damage could this cause to BP?
Kotok: This is potentially huge for BP, and the estimates are rising in terms of cost and liability every day. We have no idea. This is much bigger than, say, the Valdez event with Exxon, and that cost Exxon billions. This could cost BP tens of billions, maybe more.
Chiotakis: I keep thinking about all the other rigs and the outfits, not only in the Gulf but along the California coast and elsewhere. I mean why aren't these things fitted with this safety valve, if you will?
Kotok: I have no idea why they're not fitted with the safety valve. I suspect there is now going to be a huge examination of the entire industry and the outlook for that to be an ongoing, in-depth investigation is 100 percent at this point.
Chiotakis: How are U.S. consumers going to feel the residuals of this oil, massive spill?
Kotok: Well of course the obvious is we're going to see the price of seafood and shrimp and things go up. And the shrimp farms in South America, I understand, are already gearing up for that. But the other thing we have is we've got five states who are getting an economic shock, and they are piling on top of what has been a three-year financial crisis, housing crisis. So I expect the economy to start to show signs as early as the May and June statistics.
Chiotakis: David Kotok of Cumberland Advisors with us from Tampa this morning. David, thanks.
Kotok: Thank you.