It's A Good Time To Invest In Oil

August 1st, 2016 | J. Hodgson
invest in oil

Hardly a day goes by in which the media doesn’t showcase leftists celebrating the demise of the natural resource sector. Specifically oil and gas. Despite much evidence to the contrary, green-tech is heralded as the next great leap forward. The ideology of green energy is complicated and theistic and, frankly, not worth debating. If the tech is viable, it’ll succeed and if it’s not, it’ll eventually fail when the subsidies run dry. Rather than argue with eco-thumpers, why not just profit from reality?

Here are five reasons why NOW is a great time to invest in oil and gas.

#1. The shortages are coming

Many big oil and gas projects have time horizons that extend years into the future
decades even. When the crash of 2014 took place, energy companies responded by stamping on the brakes of future development. Since then, they’ve simply been treading water. As old wells dry up, new oil and gas must be recovered to meet demand. Supply has been getting soaked up for a couple of years now and the lag time for price increases is getting nearer.

What does this mean?

It means the price of oil and gas is going to begin moving up. Not drastically and not immediately, but on a ten-year time frame, buying stocks now, at the bottom, will look like a smart decision.

#2. But what if green energy permanently destroys demand?

It won’t.

Green energy harvests taxpayer subsidies, not technological innovation. As energy prices increase, people will grow tired of politicians and their eco-agendas. The climate obsessed left-wing governments will get kicked to the curb and common-sense will resume. We’re already seeing this in Germany with the abandonment of these schemes. New British Prime Minister Theresa May also closed down a climate change department as one of her first acts as leader.

We’ll see similar situations in other countries soon, but not before the price of oil and gas starts climbing higher and higher.

#3. Oil companies that have survived so far will come back stronger

Consolidation means the weak get gobbled up by the strong. Fiscal discipline is entrenched. Efficiencies and innovation abound. When the market eventually comes back, the companies you buy today will be even better and more valuable tomorrow.

#4. Demand is going to increase

The world’s population is increasing by 75 million people a year. That’s like adding another two Californias to the world annually. By 2025, we’ll hit 8 billion people! These people will mostly be born in and of developing countries. These countries have already been making great strides towards improved standards of living and it wasn’t due to windmills.

More people means more demand. Oil and gas is crucial to civilization and civilization needs to be fuelled.

Perhaps in some far-flung future people around the world will have a U.S. standard of living using only green energy, but that’s not going to happen soon. So if your investment time horizon is less than 50 years, you’ll do well to buy some realistic energy stocks today.

#5. Value is as good as it’s going to get

Oil and gas companies have taken a beating over the past two years...and stock prices have reflected this. At this point it is likely that we’re at the bottom of the beating. Good companies with lot’s of talent and history and assets are out there for the plucking. I’ll give you five examples worth buying and holding today…

ConocoPhillips - COP

At the time of this writing it’s $41.09 a share and has a 2.44% yield.

Exxon Mobil - XOM

At the time of this writing it’s $93.85 a share and has a 3.20% yield.

Shell - RDS.A

At the time of this writing it’s $55.04 a share and has an amazing 6.83% yield.

Chevron - CVX

At the time of this writing it’s $105.39 a share and has a 4.06% yield.

British Petroleum - BP

At the time of this writing it’s $35.80 a share and has a fantastic 6.70% yield.

All of these stocks have inflation beating yields alone. Imagine where the price itself will soar when there’s another couple of billion people on the planet!

Don’t believe the green hype. Tesla cars, windmills, solar’s all garbage. The real world will move forward with oil and gas for at least the next 50 years. Get into the game today and make some money for tomorrow. Betting against climate-thumpers isn’t only fun, it’s profitable!