deuxsous

Canadian Oil Sands Releases Bittersweet 1Q Earnings

Since I am retired, I live on my investment base. Most of what I hold must produce a decent income stream, not just fervent hope for capital gains. The energy area is however one place, apart from "go-anywhere bond funds", where one can get income as well as inflation protection. There are oil majors which are yielding 4-5% right now. I expect as the upper echelons of the majors begin to grasp the realities of an inability to reliably replace reserves, we are going to see some huge new royalty trusts yielding much higher rates as "wasting assets" that they do for "going concern" operations. Sabine Trust and Mesa Royalty have been giving high yields for 25 years and haven't extinguished yet.

In particular I would urge people to look at buying Canadian Oil Sands Trust--on big pull backs--not as a feel-good, "peak oil" play but as a good yielder with a long lived reserve base. I own it and also own four of the US gas/oil trusts with conservative reserve estimates longer than ten years.

Even in the absence of "peak oil" considerations, the simple fact of demand having oustripped supply capability in nearly all world commodities after two decades of neglect, from 1980 to 2001, provides a solid underpinning for energy as well as metals and foods for **at least** another decade. Naturally there are long periods of consolidation at new higher levels after rapid price gains, but the long term is golden for many commodities including oil.