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Energy Spending Going Up, Up, Up

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December 29, 2010 – Comments (2)

This is pretty big for the oil and natty gas industry:

http://online.wsj.com/article/SB1000142405297020446720457604...

Sorry if you need a subscription to read, but the gist is that they plan to spend a lot. Here's a snippet (bold emphasis mine):

"From giants Saudi Aramco and Exxon Mobil Corp. to five-person wildcat outfits, the industry plans to spend nearly a half-trillion dollars next year to find and extract oil and natural gas, according to a new survey by investment bank Barclays Capital."

So what does this have to do with my portfolio? I don't own any energy stocks...yet.

Foolishly,

Jason

2 Comments – Post Your Own

#1) On December 29, 2010 at 11:53 AM, Option1307 (30.17) wrote:

That is interesting!

I like oil long term but I'm not a buyer here at these levels. With oil hoovering around ~$90/barrel, that is the upper end of what I deem a reasonable price for oil, especially in a slowly recovery (if that) economy.

Oil prices and gasoline prices are now the highest since summer/fall of 2008 yet the economy is in now where near the same state. I'm not calling for oil to pullback significantly, but I just am not buying it here. Commodities in general are too heated for my liking currently.

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#2) On December 30, 2010 at 12:33 AM, TMFBabo (100.00) wrote:

The sweet spot for me is a gas-focused company (at least 80%) that has liquids rich assets.  It can develop its oil acreage for the time being as it waits for gas prices to recover. 

Because of the current price of gas, I've seen many companies have been switching to oil because gas makes no economic sense for many since they have to operate above break-even. 

 

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