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Politics : High Tolerance Plasticity
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To: cnyndwllr who wrote (236)2/24/2001 3:34:39 PM
From: jim_p  Read Replies (2) of 23153
 
Ed,

There is very little doubt that we will have a comprehensive energy policy for the first time in many years that will most likely encourage domestic production and open up new areas for exploration.

That along with the NG situation are the two strongest reasons to be long energy. In addition, oil will soon (1-2 years) be in short supply along with NG.

My concern for energy stocks is more for the short term shoulder period this spring (1-2 months).

Oil prices in the short term are more driven by commodity traders than true supply/demand factors. If inventories get above 300MM this spring we could see oil prices fall below $20.00 for a period of time, even with NG prices in the 3.50-5.00 price range. OSX stocks could be a bad place to have money in the short term if that we to happen.

I feel good about energy over the next 2-3 years, but not so sure about the next two or three months.

The recovery thus far has been more exploitation than true exploration. During the next phase up in energy activity, we should begin to see more exploration activity. Companies like PGO should benefit during that period. One of the reasons PGO has done so poorly is the fact the market expected more activity in exploration than we've had over the last 12-18 months, and thus the disappointment.

Jim
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