I think shortage of credit is likely to have a fairly big impact on oil and gas operations.

The way companies are run now, independent contractors do almost everything. I observed this when I visited the BP operation in Wamsutter; TOD posters have confirmed the same thing. Also, the supply chain for gasoline is getting more and more broken up, as oil majors spin off gas stations and parts of the chain that aren't making enough money. It is the small, but necessary, pieces of the supply chain that are going to have credit problems.

When I talked to Red Cavaney, President and CEO of the American Petroleum Institute, last Friday, he was quite concerned about the impact of current credit problems on oil and gas companies. (See 57:54). In his words, "Our economy runs on credit." He was quite concerned that there would be a "big impact" on the oil and gas industry if the credit problem continued for a "couple more weeks".

Actually, large corporations are more likely to have established lines of credit negotiated with some well entrenched financial company(ies), with multiple lines of credit being the norm. For example, Matt Simmons's bank likely has numerous lines of credit servicing a universe of petroleum companies engaged in different facets of that industry.

What just happened with Big Auto is their inability to continue accessing their established lines of credit, which caused them to go begging to Uncle Sam, who gave them $25 Billion. Such lines of credit can be risky as they expose the debtor company to potential margin calls and/or repo action.