Oil and Gas ETFs: Prices Pause- Now What?

Oil and gas companies are fighting off new taxes on drilling and trying to keep the world off of renewable energy, in an effort to keep demand high for their products. The performance of related ETFs could ultimately be affected by both of these factors.

The oil and gas industry is just behind the drug companies in a fight against Federal agencies and their new taxes. The industry spent $44.5 million lobbying Congress and federal agencies in the first three months of this year, explains John Porretto for the Associated Press.

From the late 1990s through the first half of this decade, the oil industry spent roughly $50 million to $60 million a year on lobbying and efforts will continues as the Obama administration takes position. Profit margins in the billions have made the industry a target for taxation on exploration and drilling.

Tighter restrictions and higher taxes on drilling and exploration could put a damper on the energy industry sooner than the renewable energy resources are available.

Meanwhile, waning economic optimism is putting the brakes on rising oil prices, which are now trading below $68 a barrel yesterday. A strengthening U.S. dollar coupled with a still-struggling global economy is reducing investor demand for commodities. In good news for consumers, gas prices were snapping their 54-day winning streak yesterday, falling three tenths of a cent. Analysts don’t think the recent rally can sustain itself for much longer.

• iShares Dow Jones U.S. Oil & Gas Exploration Index (IEO): up 12.8% year-to-date; Occidental Petroleum Company 10.6%; Apache Corp. 7.1%; Devon Energy Corp. 6.9%

• SPDR S&P Oil & Gas Exploration & Production (XOP): up 12.8% year-to-date; Cimarex Energy Company 4.3%; Whiting Petroleum Company 4.3%; Pioneer Natural Resources 4.2%

Comments

[User 435440:]

Tom, Although I understand your point, that was rather poorly written. Have someone check your spelling and grammer.

Jun 23 06:43 AM