The Curious Investor

Oil Stocks: Where Can You Find Black Gold?

I believe that working with OPEC can actually risk membership in certain trade groups. For example, Russia has had its membership to the G8 threatened as a result of its potential decisions to act with the cartel.

On Jan 10 03:20 PM Ed O in PA wrote:

> Stabilization of crude? Why not then your salary? Or the size of
> your car, house etc etc. Let free markets decide. Of course since
> OPEC is a cartel, our crude markets are not free. Perhaps we should
> figure out a way to break up the cartel. Why do you never hear talk
> about that?
>
>
>
> On Jan 09 10:23 AM Whippet wrote:

Oil Stocks: Where Can You Find Black Gold?

I haven't responded mostly because the discussion in this comment section doesn't really relate to my post here. My argument in this article as well as a prior article on adding oil exposure to your portfolio - thecuriousinvestor.com.../ - is not that oil prices must rise, but exposure to correlation to oil prices has a healthy diversifying effect on your portfolio.

You'll notice that I do not advocate buying an Oil ETF/ETN or an oil major straight up. I believe that refiners, exploration and production MLPs, and solars provide better risk/reward when trying to capitalize on any upward movement in oil prices. As to whether or not the long term trend in oil prices is up, down, or sideways, I'll leave that guesswork to people who know better than me. From the little I do know about oil and its use as an energy source, a fuel, and a feedstock (I was a chemical engineer by education), my guess is that there will be an upwards bias in oil prices for quite some time going forward. I don't have any reliable evidence to refute Michael66's claims, but my gut feeling is that he's a bit optimistic about how soon methyl hydrate, bio diesel, nuclear, and other technologies will displace oil. Furthermore, he neglects that none of these addresses the use of oil as a feedstock for polymers.