Who wins the war between States and Corporations? Ian Bremmer asks the question in his new book, "The End of the Free Market". It feels like we are in the process of finding out. Across the industrialised world, the State is in the ascendant. President Obama in a shameful attempt to curry favour with a disillusioned electorate has his press secretary pledging to keep his administration's boot on BP's throat; in Europe, Chancellor Merkel promises to "win the battle" on behalf of politicians with the free market as the enemy; in Australia, the government has suddenly unveiled a Resource Super Profits Tax on the mining sector which may raise $11 billion in its first two years.

In the UK, the population nervously awaits an emergency budget which will shed some light on just how much private wealth the government intends to seize to try and balance its books. It is as if governments are unaware that we live in a globalised world where people can and ultimately will relocate if squeezed too hard by near-bankrupt state authorities. On the topic of BP alone, Lew Rockwell recently asked on the consistently excellent Mises website "Feel Sorry for BP? ..It should be obvious that BP is by far the leading victim, but I've yet to see a single expression of sadness for the company and its losses.. It is not as if BP profits by oil leaks, or that anyone revelled in the chance to dump its precious oil all over the ocean. BP gains nothing from this.." Rockwell concludes that other than environmentalists, the only party likely to be happy about the disaster is government, "which treats every capitalist producer as a bird to be plucked." And the US government has also, with breathtaking irony, pledged to overhaul the regulators of the industry. Physician, heal thyself.

David Fuller's view Politicians are seldom elected for their pledges of masterful inactivity. However in democracies most of them know that there is no credible alternative to a free market economy. Therefore politicians become the nation's elected tax collectors and allocators of this revenue, happy for business to get on with its business, including generous rewards to itself, provided the revenue stream to the exchequer is increasing.

The problems start when something goes wrong, for whatever reason, and the revenue stream diminishes. When this compromises spending pledges, free market intervention commences, in proportion to the slowdown. This may or may not be fair but we can be certain that business will not like it.

BP was bravely and commendably engaged in cutting-edge technology with its deepwater drilling. This was never going to be an accident-free path. I will leave it to industry experts to determine whether or not BP and its partners cut corners in terms of safety to save costs. Instead, I am more concerned about the broader consequences of this accident which has become a major environmental disaster.

I assume that there will be a lengthy moratorium on deepwater drilling for oil in the USA and some other countries. This can only reduce the supply of oil available, pushing the elusive goal of energy self-sufficiency for the USA even further into the future. The moratorium will strengthen the hand of OPEC, Russia and other oil exporters and lift the floor beneath today's price for crude oil. Combined, the prospect of somewhat scarcer domestic supplies and higher oil prices will boost demand for natural gas and non fossil fuel forms of energy.

What about BP (weekly & daily)? For those who have attended The Chart Seminar, the charts show a Type-2 ending to the uptrend as the disaster occurred and this week's action looks like a Type-1 accelerated ending. Obviously the circumstances are unusual and the final outcome uncertain. All sorts of rumours are in the markets from a takeover to a bankruptcy for BP's USA division.

I have no idea. However I expect BP to survive, although possibly not as an independent company. It looks to me like an interesting speculation with the timing depending on how long it takes to cap the well. However the moment that genuinely appears likely, the shares are likely to surge higher. The worst case scenario is probably a dividend cut or suspension and a lengthy base formation development, in which case we could see another downside move. This latter development would increase the possibility of an eventual takeover.

If buying, I would do so incrementally on weakness and probably lighten on rallies.