Media Ignores Russia's Influence on Oil Prices
08/11/08 - 12:06 PM EDT
Marek Fuchs
OK, so it wasn't quite that bad. But on a major point, it was worse.
Reuters, for one, had a headline about how "Cheaper oil may lift stocks" this week, with a lead that echoed the sentiment -- but guess what? Read the market summary article backwards and forwards and tell me if you see even the slightest mention of Russia's violent contretemps with Georgia. The area is close to prominent oil pipelines and can potentially have a big (at the very least short-term) impact on oil prices. But Reuters, so taken by the trend in recent price movement, is blind to the new factor. Typical. At one point, it mentions "reasons to tread lightly," but then it starts talking about stimulus from the tax rebates fading. Not war. Not the nearby pipelines. The Associated Press, in a market summary story that also ran on Sunday, was no better. It ran the headline "Investors eye oil, dollar, retail sales this week." Don't you think that investors eyeing oil would also be eyeing the front page of every newspaper in the nation this weekend, which carried news of the carnage in Georgia? Nope, no mention. Maybe let the fighting drag on for another week of so and the bulk of the business media will catch on, connecting fighting near prominent oil pipelines to fear and higher prices. You won't see it weighed in as a factor in many market reports, but if you want a quick primer on the geopolitical situation as it relates the oil markets, read "Russia's Geopolitical Aims Trump Investors' Concerns" in this morning's Wall Street Journal. Here's an important sampling:"The conflict has the potential to affect markets around the world, in part because of its proximity to pipelines carrying oil from the Caspian Sea. A rise in oil prices on worries about those pipelines could actually strengthen the hand of Russia, which depends on the commodity for much of its export revenue. Georgian officials said Sunday that Russian warplanes had bombed areas close to a pipeline that stretches through Georgia from the Azerbaijani port of Baku to Ceyhan in Turkey. BP PLC(BP Quote - Cramer on BP - Stock Picks) , which has a 30% stake in the pipeline, said it was taking measures to protect the flow of oil. On Friday, oil prices tumbled despite the conflict."The Business Press Maven has no sense of how this conflict will play out. All I know is that only the short-sighted, trend-following-and-accentuating business media would not even deign to include it as a big potential factor in the markets this week.
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