Recently, the price of a barrel of crude oil as plummeted. It's around $70 a barrel as I write this. This is a huge drop from where we were in the summer, when prices peaked at around $147 a barrel.
Unfortunately, this drop in oil prices means:
1. Alternative energy is dead. People are creatures of habit, when oil is cheap, there is no need to switch to other forms of energy. In addition, alternative forms of energy become cost prohibitive when gas is affordable.
2. When gas prices are cheap, people will drive more. When oil was at $147 a barrel, the parking lot at HUFS was almost empty. Now, it's full again.
3. Oil consumption will continue to rise. Based on my last post about crude oil, in 5 years crude oil demand may reach 94 million barrels a day.
This is more than the world can produce.
4. OPEC will reduce production. (They will do it later this month.) It's nice when you can dictate world oil prices.
Therefore, I'm bullish on energy stocks. Most of these stocks pay a 3-4% dividend. Patience is a virtue, but getting paid while you wait is even better.
Let's see if people around the world start buying gas guzzling SUVs again. Finally, I still see plenty of cars on the road.
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