So oil is still at a relative 10 year low thanks to the fracking supply glut.
And it just made me think... there's some good opportunities to be had in the current market.
According to Joseph Schumpeter, businesses go in these sorts of cycles. A market grows and booms, and in that boom, many competitors arise. But then as the market declines, the players begin to cannibalize each other. Unlike the typical tech/business cycle, however, this isn't the end of oil, just a bog standard supply glut. Russia, Europe and China may have declining demographics, but India, Brazil and the developing world have a growing hunger for oil. Not to mention China still has 2 waves of 25 and 45 year olds in their demographic pyramid so they aren't down and out just yet.
In short, I think demand is only going to grow stronger. I fact peak oil may still be a problem in the future. This is just a nice temporary reprieve where expensive oil stocks can be bought on the cheap. Of course the trick is to pick which ones aren't going to go bust before supply and demand are reconciled.
I'm thinking the ones will survive are ones with more variable than fixed costs, and low variable costs at that. Companies that are lean and mean and hence won't need to rack up debt.
What do you think? A sound strategy? Or the foolish plan of a novice?
And it just made me think... there's some good opportunities to be had in the current market.
According to Joseph Schumpeter, businesses go in these sorts of cycles. A market grows and booms, and in that boom, many competitors arise. But then as the market declines, the players begin to cannibalize each other. Unlike the typical tech/business cycle, however, this isn't the end of oil, just a bog standard supply glut. Russia, Europe and China may have declining demographics, but India, Brazil and the developing world have a growing hunger for oil. Not to mention China still has 2 waves of 25 and 45 year olds in their demographic pyramid so they aren't down and out just yet.
In short, I think demand is only going to grow stronger. I fact peak oil may still be a problem in the future. This is just a nice temporary reprieve where expensive oil stocks can be bought on the cheap. Of course the trick is to pick which ones aren't going to go bust before supply and demand are reconciled.
I'm thinking the ones will survive are ones with more variable than fixed costs, and low variable costs at that. Companies that are lean and mean and hence won't need to rack up debt.
What do you think? A sound strategy? Or the foolish plan of a novice?
