The Blue Collar Investor WeBlog

NOT US: This is the worst thing that can happen. Oil prices are through the roof. Gas is $4.50/gallon. The stock market is tanking and our economic future is looking bleak. I’m going to get into bed and curl up into a little ball ….help!!!!!!!!!!!!!!!

US: I live in NY and traffic isn’t nearly as bad as it used to be. People are finally becoming more energy conscious and efficient and the automobile industry is responding by making more energy efficient cars. I have a friend who is spending so much on gas that he has cut back on smoking cigarettes and another who works for mass transit and they are hiring workers left and right. Best of all, the oil crisis (aka opportunity for some Blue Collar Cash) is causing our politicians to re-think their positions on oil drilling and exploration in this country and beyond.

ME: Listening to one person (including me) makes no sense, but paying attention to the overall tone of many experts does. I have been hearing a recurring theme of late and it bodes well for the oil and gas drilling and exploration stocks. For decades our politicians have not allowed oil companies to explore our natural resources for energy related products. Environmental concerns were the reasons given. Well times have changed. Energy is extremely expensive and affecting our day to day living. Voters are angry and want their representatives to open the gates of exploration. Technology has progressed to the point where we can access these resources without negatively impacting the environment. In other words, these oil companies can make plenty of money while our costs of energy decreases and the environment is maintained.

Last week, I listened to two Oil/Energy experts speak on this subject. Here is a summary of their comments:

John Hofmeister, former Shell Oil U.S. Operations CEO and current Founder and CEO of Citizens for Affordable Energy:

1- To solve our energy crisis, we need 4 “mores”.

     - More energy of all sorts (hydrocarbons, alternatives, biofuels, and nuclear).

     - More efficiency to reduce demand (technology, not lifestyle change).

     - More environmental stewardship (manage CO2 issues and other pollutants).

     - More infrastructure to deliver the energy to the people.

Mr. Hofmeister goes on to say that there is plenty of crude for the next 30 years and that the oil industry should be allowed to run seismic tests on the continental shelf to evaluate oil supplies there. He feels that there are abundant quantities in Anwar, off the Alaska Coast and the Chuckchi shelf off the Chukchi Sea (a marginal sea of the Arctic Ocean). The latter is believed to have oil and gas reserves as high as 30 BILLION barrels!

Although demand destruction is occuring with gas, it is not with diesel, aviation and heating fuel and this is what is causing the rise in crude oil prices. Short term, the only answer is less demand, but 3-5 years out, we need to do the following:

1- Seismic testing

2- Expedite the leasing process so oil exploration can increase supply

3- Enhance the ongoing projects in the western Gulf of Mexico.

In summary, Mr. Hofmeister feels that the plan to put in place should accomplish the following:

1- 2-3 million barrels/day of increased domestic production.

2-2-3 million barrels/day of increased biofuel production.

3- 2-3 million barrels/day of demand destruction.

4- We can then deal with the rest of the world at a later date, no rogue, terrorist nations to depend on.

Jeff Kupfer of the Department of Energy was also interviewed last week. His comments are bent in favor of the republican administration he works for, but the essence is what is significant. Here are some of his remarks:

1- The republicans have proposed promising bills to lift legislative bans on oil exploration.

2- We need to tap into the extraordinary potential of oil shale.

3- Congress should allow new oil refineries to be built on military bases (it has been 30 years since our nation has built a new refinery).

4- Upgrades in our refining capacity are urgently needed.

5- Refineries are the critical link between crude oil and gas in the tank.

6- Permitting procedures need to be expedited.

Both of these interviews (heard on CNBC) are typical of the recurring theme I alluded to earlier in this article. It appears imminent that our government will be opening the doors to encourage oil and gas exploration. This bodes well for stocks in the oil and gas operations industry as well as the oil and gas services and equipment industry.

Now, as opposed to that guy curled up in bed in a little ball, we Blue Collar Investors are about to turn this negative into a positive….into cash! Although there are never any guarantees, doesn’t it make sense to have a presence in our portfolios of  great performing stocks in great performing industries? Especially when those industries have the potential to flourish even more over many years to come! I, of course, keep all my system criteria in place and will not invest more than 20% of my portfolio in any one industry.

Since we all have incredibly solid watch lists and since these industries have been outperformers for a while, there should be several equities that would be candidates for our portfolios and option selling. Here are several that I found on my watch list; see if these securities meet with your approval and let me know if you found others:

HK
CLR
TTES
WHQ
NOV
HAL
ATW
SII
WFT
FTI
CAM

If you have any stocks in these or any other industry that you like, please let us ALL know by using the “comments” link at the beginning or end of this article.

Hope you all had a great holiday weekend.

Alan

alan@thebluecollarinvestor.com