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As energy prices soar, U.S. demand for oil is declining, but rising global demand means prices are likely to remain high. Check out my latest rant to learn more about this global energy imbalance and where you can invest in the United States to make big money. And don't miss the latest installment of Ask Toby, where I discuss the future of the Chindia Wave. Any Econ 101 student can tell you there's a delicate balance between supply and demand, but follow my advice and I'll tell you the best way to profit from it! Toby | |||
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How to Avoid Coming Up Short in Retirement They say that retirement can be the best time of your life. And it can be if you have enough money to enjoy it. If you have a $500,000 portfolio, you should download "The 15-Minute Retirement Plan." It's loaded with useful information that can help you plan for a comfortable, secure retirement. Click here to download your report! | |||
Watch a video of today's rant. We're due for a pullback in energy prices, but that doesn't mean it's time to sell oil and natural gas exploration investments. My advice is to be patient, let prices come back to support levels and then be a buyer. Energy stocks, especially the unconventional resource plays such as North American shale, are headed higher because oil and natural gas prices are headed higher. This parabolic rise in world crude prices needs a breather, but the underlying supply/demand imbalance is not going away. Skeptics may point to the most-recent monthly Energy Department report that showed finished petroleum products dropped 8.5% in February from January, and demand for gasoline fell 6.2%. Some of the decline can be attributed to February being a short month; however, it does suggest that high fuel prices are curbing American's appetites. But the operative word is "American." Emerging-market demand is now higher than American demand on a daily, weekly and monthly basis. Oil is a world commodity, and high prices are not slowing the growing demand abroad, which is where the vast majority of new oil demand is coming from. A Crude Awakening According to economic theory, rising oil prices have two effects: 1. Reducing demand We are seeing reduced demand in the United States, but the oil we would have bought is just being sold to emerging markets, such as China and India, or being kept in the Middle East. Furthermore, most oil-producing regions are running out of reserves. New oil production is not offsetting real reserve declines, and it hasn't done so for the past 20 years. * Norway's production in the North Sea is down 25% since its peak in 2001. * In Britain, oil production has fallen 43% in eight years. * Mexico's giant Cantarell oil field is producing about 20% less oil now than it did just two years ago, and Mexico is the second-largest exporter to the United States. * Alaska's oil production in the giant field at Prudhoe Bay has declined 65% since the late '80s. * Iran and Iraq are producing significantly less oil than in previous years. * Venezuela's production is also declining. The bottom line: We're seeing no growth in reserves. Yes, Russia's production is up from 6 million barrels of oil per day in 1996 to 10 million per day now, but that growth has flattened, and its domestic demand is rising. Plus, with its anti-West government, major oil companies don't want to work with Russia. That leaves OPEC and Canada to pick up the slack. We're dependent on OPEC countries -- who account for about 75% of world oil reserves and 40% of total output -- to throw an additional 5 million barrels per day into the market to bring prices down to $80 per barrel. How likely does that scenario sound? A stronger U.S. dollar will help bring oil prices back to earth, but the question remains: At what price do we see real demand destruction like we saw in the early '80s? At that time, we had a 13% to 14% drop in demand, which was what really brought oil prices down. I'd say the answer is somewhere around $145 per barrel. Spending on oil as a share of global output peaked in 1980, at 5.9%. Today, it's about 3.5%. Until we hit $150 oil, we won't feel the same pain in the pocket that drove people to shed their muscle cars for Pintos. We could break the back of oil consumption with a federal gasoline tax that would go toward building roads and bridges, and funding alternative energy infrastructure, but we won't -- as a country, we don't have the will or the votes to make that happen. Slick Profits So, how do we profit from this? The smart money will buy unconventional oil and gas producers on dips, and then watch those investments explode higher as oil and gas prices see higher highs and higher lows. Technological advances coupled with high oil prices mean boom times for the best-positioned alternative energy companies and unconventional oil and gas producers. Which ones should you buy on pullbacks? Join ChangeWave Investing to find out. We have a way to go before we get to $150 oil, which is when we may want to sell some of our energy companies, but now is the time to be a buyer.
Toby P.S. High energy prices are here to stay. Despite what some may believe, oil and natural gas prices are not going to come down significantly from these levels. But smart investors will use temporary pullbacks to get into energy plays that will benefit from this trend. Join ChangeWave Investing to get a list of the best alternative and unconventional energy stocks. | |||
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The Secret is Out! Options give you BIG, FAST profits over and over again. Sign up today for OptionsZone Insider -- the FREE weekly e-letter where options pros discuss their unique strategies and ideas. Don't miss this chance to put their expertise and experience to work for you. | |||
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ChangeWave Investing Editor Toby Smith covers the strength left in the emerging markets of China and India, as well as takeover candidates that might be good investments now. | |||
Be sure to tune in to Fox News Channel this weekend and join Toby and the crew on "Bulls & Bears" for their weekly market roundtable as they kick off the Fox News Channel business block on Saturday, May 3, at 10 a.m. Eastern. ("Bulls & Bears" replays at 4 p.m. Eastern, Sunday, May 4, and 4 a.m. Eastern, Monday, May 5.) Or you can catch the show Saturday evenings at 6 p.m. Eastern on the new Fox Business Network. Check your local cable listings or satellite guide to find the Fox News Channel location and times for your area. NOTE: These shows are NOT on your local Fox network station. They are on Fox News Channel on your cable or satellite system (Channel 360 on DirecTV, Channel 205 on Dish Network). Keep in mind that these schedules are subject to change, and the Fox News Channel business block and other programming may be pre-empted for breaking news events. And if you missed out on the previous "Bulls & Bears," you can read the "Bulls & Bears" Weekly Wrap Up by going here. | |||
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Earnings Season: How to Profit Big Now Flowserve's (FLS) latest earnings stunned Wall Street, rising a whopping 159.3% year over year. Renowned growth investor Louis Navellier recommended this powerful growth stock to investors just four months ago and the stock is up more than 30% and rising. Learn how strong earnings growth can help you identify high-quality growth stocks like FLS. | |||
 Wine Find: Savory Sirah Wine finder James H. couldn't resist dropping me a note about Guenoc Petite Sirah 2005. He bought an entire case, and his friends and family agree that it's amazing. He describes the flavor as "soft dark cherry and slightly smokey," with "a hint of oak and vanilla." Sounds delicious to me. For about $10 per bottle, you can pick up a whole case without breaking the bank. Don't forget about my next Wine, Dine and Stocks Seminar in gorgeous Bilbao, Spain, Oct. 19-24. It's going to be spectacular, and I'd love you to come along. But you have to act quickly, because there are only a few spaces left! Go to www.changewaveseminars.com to get the trip details and sign up. To share your favorite wine or food experience, e-mail me through the form at: www.changewave.com. | |||
| Get Your Free Tickets to the Vegas Money Show and Los Angeles Traders Expo Would you like to be a better investor and trader? Increase your profits? Become financially independent? Then you need to attend the Las Vegas Money Show, May 12-15, 2008, at the Mandalay Bay Resort. And you won't want to miss the Los Angeles Traders Expo, June 18-21, 2008, at the Ontario Convention Center. Learn how to become a successful trader and keep your wealth growing in this turbulent market. | |||
