lance sjogren

Why I'm Not Buying Oil's Recent 'Correction'

Who needs Jack F. Kenney, we already have energy crackpots serving in congress.

Why I'm Not Buying Oil's Recent 'Correction'

"Now if it IS possible to use biomass, like fields of algae (?) to create oil somehow, that'd set the fuel industry on its ass. Or get the inventor killed by big oil."

So far biofuels are not a viable replacement for fossil fuels, however they probably can serve niche applications such as providing jet fuel for air travel for the rich (the only ones who will still be able to fly) plastics, military aircraft etc.

If plants can be engineered to convert solar energy a lot more efficiently, then biofuels may have a future as a large-scale energy supply. I am not aware of any even very preliminary achievements in that area so far, in fact I'm not sure there's even much research going on in it.

Otherwise, biofuels are way too inefficient, or, another way to put it, they take up too much land to be able to provide large-scale energy supplies.

Why I'm Not Buying Oil's Recent 'Correction'

"Anyway we are extrapolating into the future on a linear basis without taking into account the inevitable but unforeseen technological breakthroughs that change the world."

There are a lot of things to worry about as an investor, but I would say that is down at the bottom of the list.

If we're lucky we will be able to switch over to electric vehicles within 5-10 years. Add another 5-10 years for fleet switchover to account for the fact that people can't afford to throw away their $30,000 or whatever investment in an internal combustion car until they have used up its useful life.

But what about the unexpected tech breakthroughs that Dr. Bagel suggests? Yes I would say if you are investing on a 50 year time horizon that is something you want to concern yourself with. I am confident that oil & gas will be much in demand over the next 5-10 years.

In fact, I believe alternative energy will be GREAT for the oil & gas business because at most they will help hold down oil & gas prices to tolerable levels where the oil & gas companies will make good profits but will not be vulnerable to demagogic politicians calling for nationalization.

Why I'm Not Buying Oil's Recent 'Correction'

So demand may decline slightly? (very iffy considering China, etc., but let's humor him and assume this premise is valid)

What about supply? Supply is declining.

What about valuation? So what if energy stocks were wildly undervalued for many years. The question is are they good values now.

I would say when we are looking at PE's of 6-10, that yes we are.

In general those are based on conservative prices on oil & gas, not the recent high ones.

Stocks to Buy Before the Oil Bubble Bursts

By the way, if you guys think the oils are down just take a look at the junior gold stocks, they were already at firesale prices and they have gotten a further clobbering the last couple of weeks.

Stocks to Buy Before the Oil Bubble Bursts

I bought 2000 shares of VLO today. Just figured it is so low at this point it is liable to be a good buy.

Funny- oil is way down today but the refiners are down nevertheless.