To blog with a purpose is not an easy thing to do. There are a number of things that are on my mind that will need to be discussed. For instance, there are subjects that I don’t into much and that would be politics. I was aware that a debate took place yesterday and the issues are all close to everyones hearts these days.
The others are how quietly the price at the pump continues to rise. As you will probably notice from my Ballin’ on Wall Street articles…I keep my ear to the streets. I have not been afraid to go on record in the past and I will continue to do so in the future. The dynamics of what we pay at the pump is center to what is happening in the world. Most people don’t realize or often try to forget. Often, someone may respond with who cares or its not going to impact ME…and that’s farthest from the truth.
Gas Ain't Cheap
Now with the price of gasoline at roughly around the $3.00 mark we are right back to where we were over a year ago when the entire country was in uproar. People cried this is price gouging and the oil companies can lower the prices if they want too. There may be some truth to this statement, but the overall “Urbanomics” of the situation reads like this:
Demand for oil with continue to be high – With the addition of China as a world power, oil consumption will continue to rise. And a thought others may not contemplate is demand will continue to come from developing nations that often use petrol or “oil” to power gas driven generators needed to provide power due to their country’s infrastructure that cannot provide reliable electricity.
Supply – The supply of oil has been debated but that not the importance. We do know that overall oil reserves will continue to deplete over time and that it takes a lot of resources to extract it. From companies in the Gulf region, to Canada and it’s oil sands, South America, Middle East and Africa. This allows those countries to charge a premium prices for their product. Through a cartel like OPEC the supply will continue to be controlled to effectively regulate price. The last the effects the prices of oil is the global affairs.
Global affairs help move the price of stock because in our highly modern world the investors must also factor in their two cents. With oil rich nations like Saudi Arabia, Iran, Iraq, Nigeria, and Venezuela constantly in the news, investors have helped to sustain the price of oil by factoring in their own risk premium. For instance, situations like the war in Iraq, or the nuclear capabilities of Iran, elections in Nigeria, and leadership in Venezuela can alter the price of a commodity. Oil fluctuates as these circumstances change. Our interpretation of these events helps to determine if oil in the future will be more expensive than it is today.
So I generally no longer say, I don’t care when it comes to global events because they do affect me. I drive a SUV and pumping gas into that thirsty vehicle ain’t easy. Just makes you wonder where our politicians were when alternatives to oil or infrastructure changes such as modernizing our country’s rail systems could have been evaluated. Until then I urge you to take action and not just to get slapped in the face by the oil tycoons. Arm yourself with some money and buy oil stocks. Now I have sold a number in my portfolio after impressive returns of over 100% but with the resurgence of oil take a solid look at buying on any dips that happen in the oil sector. I know, I know…the oil sector is very generic so I am leanin’ wit it, rockin’ wit it towards: Oil Services, Refineries, and International Oil & Gas Drillers. Let me guess, you want names…well guess what we all want names and picks. Here is my watch list including ownership disclosures:
Oil Services – Weatherford WFT (Currently Own)
Refineries – Valero VLO
International – PetroChina PTR, PetroCanada PCA, ChinaPetro&Chemical SNP
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