Oil and Gas Invest

Finally some legislation is being introduced to help the natural gas industry. T. Boone Pickens has really helped to get this legislation and worked hard to do so. It certainly seems well past due on the part of congress. Among the natural gas vehicle-related provisions, the proposed legislation would establish new tax credit caps for fleet vehicles. Currently, there are incentives for the purchase of natural gas vehicles put in place by the Energy Policy Act of 2005.

Goldman forecasts natural gas prices to be rangebound between $4.50-$7.00/MMBtu in 2010/2011.  See the report at the link below.

http://www.scribd.com/doc/24786030/Goldman-Sachs-Research-Energy-Oil-Gas

Regulators mull putting limits on commodity speculators.  At oil's peak, I heard one petro-economist say that at least $30 per barrel was caused by positions taken by speculators.  Wonder what impact this could have on prices and whether regulations would be effective or if speculation wouldn't just move offshore. Article link below.

Oil prices have been on the rise, but the fundamentals would suggest a drop in oil prices as oil inventories are up, while consumption has been down due to recession.  The only potential factor putting upward pressure on oil prices has been the weakening dollar.  Another factor could be speculation returning to the market.

So are we in for a correction in the price of oil ?  The fundamentals would suggest so, but last year's run to record oil prices was quite unexpected.

So where are we heading ? 

Great link below to an interesting article regarding natural gas prices.  I fully support the Pickens Plan which makes all the sense in the world to help us get off of foreign oil.   Our dependence on foreign oil is helping fund groups out to harm the USA.

As article the points out natural gas is at a low.  I just haven't noticed how low, but have noticed my checks from a few wells I have invested in have dropped signficantly with a few breaking even - I am certainly not running to mail box each month to see what my check is.

Flip flops = $5.00.  Electric Grill = $29.00.  Above ground pool = $99.  Grilling burgers in your pool while drinking beer = priceless.

In times of inflation, its best to own hard assets including commodities and not stocks.  Inflation erodes earnings from stocks in real terms therefore the stock market generally underperforms .  As a result, commodities are a better asset class than stocks. 

With the huge amount of money supply pouring into the economy, sooner or later we can expect inflation and lots of it.   When that times comes, oil just might be the place you want to put some money, particularly considering the rising demand and shrinking supply.

Is the drop in oil over done?  Where will we go in 2009?