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So let us use some facts and commonsense to decide if it makes sense to invest in oil.
We want to buy low and sell high. Do we know if oil is at a low? Do we understand the supply and demand on a global scale? Do we understand the impact of low cost natural gas in the US? Are we aware that there is a lot of research on alternate fuels including gasoline substitutes? Do we think the recent election results will make it likely that the Keystone project will be approved and if so what effect that might have on supplies or investor behavior?
I do not know about you, but I am pretty sure my understanding will not help me in bidding against the professional investors.
The Keystone pipeline would have more of an effect on railroads, specifically Burlington Northern R.R. which happens to be owned by Warren Buffet, since much of the Canadian oil is transported by train.
Personally, this is a great time to get into oil or enhance a position. I hope it even goes lower between now and the end of the year. It'll be back up to $90 by the first half of next year.
BTW, how many of you heat with natural gas? May I offer up the thought of MLP's that transport natural gas and also utilities. I was thinking of starting a thread on utilities. My utility portfolio YTD is 2x the S&P not to mention attractive dividends.
The Saudis recently CUT the price they charge for oil to US and Japanese customers. It is an effort to shut down the shale fields in the US and Canada. If they can make oil extraction unprofitable then they will shut down.
Personally, this is a great time to get into oil or enhance a position. I hope it even goes lower between now and the end of the year. It'll be back up to $90 by the first half of next year.
BTW, how many of you heat with natural gas? May I offer up the thought of MLP's that transport natural gas and also utilities. I was thinking of starting a thread on utilities. My utility portfolio YTD is 2x the S&P not to mention attractive dividends.
Do you invest directly with the MLPs or through funds/ETFs? I like their income and moat but I'm concerned about the tax implications (filing returns in the states they're hq'ed). Do you pay/file taxes only for the portion of the income you've derived from the MLPs?
Saudi Arabia has been a loyal ally and trading partner of the west for many years. Consideration may be given to what the lowering of the price of oil is having on the Russian economy rather than it having to do with the shutting down of our domestic oil fields.
Do you invest directly with the MLPs or through funds/ETFs? I like their income and moat but I'm concerned about the tax implications (filing returns in the states they're hq'ed). Do you pay/file taxes only for the portion of the income you've derived from the MLPs?
I invest directly in the MLP's. Each year at tax time I receive a K-1 that the accountant handles.
May I suggest that timing the oil price is at least as futile as timing the stock market? Thinking of oil prices as high or low has more to do with anchoring than reality. Never ever base investing on that.
From a strategic perspective, isn't it better for the US to enjoy the lower oil prices & put off the extraction for some more time?
We're kinda doing that now. There isn't any horizontal drilling on any government land. I'm not sure if there is ANY drilling for O&G on ANY government land.
CA might have the largest deposits of all and there isn't going to be any drilling there. There are all sorts of continental shelf deposits that are off limits as is just about anything in AK.
Yup, it's theoretically better to just pay them with depreciating paper that we can just create to "pay back." However, it might be better to have low fuel prices for the next 30-40 years and recapture a lot of manufacturing that likes low fuel prices. The effect on the trade deficit and employment is also a positive.
There is no telling what new technology(s) will be developed in the mean time to keep the US relatively energy independent after the shale oil starts to peter out.
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