No one is stopping you from refusing to pay more than $40...
So, go ahead and refuse... quit driving... quit heating your home... until they see reason ?
Otherwise, what you think oil is worth... means a whole lot less than what the sellers of oil require from you before they are willing to part with a barrel ?
The world isn't really locked down any more. Ignore what they say... and focus on the things they can't lie to you about... like how much oil is being produced, sold, and consumed... somehow ? Odd, of course, that they say the world is still locked down... but also tout the most amazing V shaped economic recovery ever ?
Assume they're lying about everything... and look at what they can't lie about. Oil companies are pumping oil again and making money at $60... or they're not ?
Oil is neither particularly cheap nor particularly expensive at $60... but the history of the prior prices doesn't control future prices... which are controlled instead by the future balance achieved between demand and supply at some point in the future...
That trend, now, has supply shrinking and demand growing... so prices will continue to rise... but might not sustain the recent pace in price rising, as the Saudi's are targeting $60 a barrel for now... and can very easily make that price stick.
There is no "glut" of oil in the world, now... as there quite clearly was at the point when demand crashed last year... with the imposition of economic sanctions on... everyone... because of a virus. When there is a glut in oil... you will see prices crashing like you saw last year... with no one able to do anything about it...
There is no shortage of oil available in the market currently either... but, oil prices have been held so low for so long now... that the lower prices since last year are a guarantee that there WILL BE a shortage of oil SOON... as demand continues to grow as virus risks abate... and supply fails to grow as fast demand will grow in the future... as it MUST... because supply additions take YEARS of planning and investment to enable.
Throw in the obvious stupidity of Biden now actively insisting that U.S. oil prices must be made to soar... ? Not quite clear if its the Russians who paying him off to do that... or the OPEC guys... but, he's doing it...
Killing the oil boom in the U.S. ensures that global oil prices will double within a year... and then move higher still...
Really, there's only two options in the extremes... the global economy implodes to stop oil prices rising beyond $60... or oil trades up to $180 per barrel by 2023 because the politicians are requiring it...
Betting on the middle ground... that $60 is a sustainable price... is a very reasonable position... Or, at worst, a trading range between $50ish and $90... which is what Goldman Sachs is calling for in 2021 ? Either way, barring only the economic implosion scenario, oil shares are about as close as you get to a no brainer investment pick for the next two years. I've not been buying any lately... only because I bought them last summer when oil prices were negative ?
That prices are going much higher is an inevitability... resulting from the pairing of reduced drilling for oil... imposed by lower prices last year, and stupid politicians this year. Higher prices... above $60... will begin to enable more drilling activity again at some point... leading to more supply, in time... But, just as there was an unfortunate lag in the ability to shut in production last year, or stop drilling new wells that were already paid for... that inability to stop production that wasn't needed being what was causing prices to crash last year... there will be an even LONGER lag in the time now required to enable new drilling to provide a greater future supply.
Find those oil producers with the lowest finding cost, and lowest cost of production... and buy them when prices are low... and you will make money as long as you don't overpay for the shares...
The best time to do that... was last year when prices were bottoming ? But, at $60 oil, you still have a lot of time to find the solid producers who can't make money at $60... who will make lots of money again when prices rise over $60... if and when they do ? |
