MattB

Energy Stocks Are Too Cheap to Ignore - Barron's

Totally agree with the article ... most US-based energy stocks are trading at less than half their NAV, calculated at $90 oil/$9 nat gas (to answer jimmy's point).

Don't get distracted by the home heating issue (with due respect to folks in the NE). Over 70% of a barrel of crude goes into transportation fuel (~45% motor gas & ~25% diesel/jet fuel). Until the US significantly reduces its dependency on the car to get from home to work (years), switches the motor fleet to alternative fuels or engines (technology arriving but many years to switch), and finds an alternative way to move food and consumer goods from source to centers of population (railway resurgence?), the demand for oil is staying high.

Nat gas is a great alternative, especially for power generation. The floor for nat gas price is generally set by coal, which has also been coming down but is probably near bottom (not my area of expertise - anyone care to comment on where coal prices are headed?) The floor for oil is, in my opinion, set by international supply vs. demand (e.g. China, India) rather than US demand. Provided the global economy doesn't get too adversely affected by US woes, overall supply/demand stays tight and oil price stays $90+ (long term, today's dollar value on foreign exchange)

I'm sitting tight on my US oil and gas exploration and production stocks; painful to watch them tank the past few weeks, but hopeful they will rebound (at a more sensible pace, perhaps) over next 6-12 months ... and deliver 30-40% gains (my estimate, by mid next year).