Riding the oil bull

In the summer of 2004 when oil prices were under $40 for barrel I remember some lunatics were forecasting a 80$/barrel oil. It was a hard thing to believe for most since there wasn’t anything to justify such a huge rise. Fast forward two years and see the public opinion do a 60 degree turn (not a huge fan of overstatements) on one of the most important issues humanity has to face. Today oil price is at 73 dollars per barrel and everyone is talking about it. Or at least gas prices at the pump.

You hear people toting that there’s no real reason for the price to be this high except for speculation and I suspect quite a lot of people buy this horsecrap. By the same logic, every asset out there is overpriced. Stocks aren’t at their “real price”, neither is real estate. Of course future price hikes are reflected in todays price.

Now, whether or not energy is overpriced is up for discussion. The point I’m trying to drive across here is simply that using the $40 or any other such figures as comparison is not going to fly. That was before the peak oil hype when prices were more in line with present day supply and demand.

The availability of cheap oil might very well be the biggest issue we are going to face in our lifetime both as a society and as independent investors. Overlooking the oil angle just because you’re not interested in energy stocks or commodities is financial suicide.

A lot of people might be vary of betting for rising oil prices because it’s basically betting against your own team. Also, if crude oil prices are already at record heights, people assume there’s not much room to go upwards anymore. Since you’re already on this site, it’s fair to assume that you’re interested in investment opportunities related to rising energy prices. If that, however, is not the case, I still wouldn’t recommend investing any money into anything unless you first figure out what their correlation to oil prices are.

Oil prices rising 5%, 10% or 100% is very well possible and if that airline stock you’re thinking about buying is going to get hurt even if prices stay at these levels for a long time, then do yourself a favour and be aware of the risk.

Hello everyone.
This blog was started to keep track of news in oil investing related matters. It is based on the assumption that the price of oil and energy in general will rise heavily in the near future. Keeping this in mind we try to focus on stocks and other assets that will boom along with oil prices. Feel free to comment on posts. Also don’t hesitate to contact us if you want to contribute.