Oil’s Down, but Not for Long
The International Energy Agency’s report of an oil supply crunch over the next 22 years seems out of line with reality of plummeting oil prices. Oil dropped below the psychologically important $60 a barrel earlier this week – it’s currently at $57.29. But that doesn’t make it wrong.
The IEA expects energy demands will rise by 1.6% a year until 2030. They predict the average price of oil from 2008 to 2015 will be $100 a barrel. As the world’s most convenient supplies are exhausted, oil will become more expensive to produce.
The question is whether the current economic slowdown will seriously impact the numerous green energy projects on the boards. A prolonged economic slowdown could slow or even stop work altogether.
Without the long-term capital stability, billion dollar projects like Delaware’s offshore wind farm being produced by Bluewater Wind, and T. Boone Pickens wind Corridor could be in jeopardy. Yesterday, Pickens said his wind farm plans would not go forward because power produced by wind wouldn’t be economical.
Opportunities for oil investments look tantalizing in light of its price and the fact that we still haven’t found a comprehensive replacement for it.
In addition to purchasing oil commodities futures and buying Proshares Ultra Long Oil ETF (Amex: DIG), investors should take another look at oil companies like: Exxon Mobil, Chevron, BP, Shell, PetroChina, and TOTAL. Just last month Exxon Mobil (NYSE: XOM) announced record quarterly earnings of $14.8 billion. It seems these lower prices hasn’t affected the bottom line, yet.
Companies mentioned in this article: DIG, XOM, CVX, PTR, RDS.A, BP and TOT
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