Share Trading Accounts Australia
My thoughts on oil:
- Oil is a form of monetary policy. it has a huge impact on economic growth.
- When the oil price is low, substitute green alternatives become more expensive.
- Green policies have a real economic cost before critical mass in these technologies are achieved.
- Governments get voted out when the economy is bad and stay in power if things are stable.
- Governments will and have gone to war to keep control over oil to prevent unwanted pressure on prices.
- Oil is not really running out. reserves have remained at consistent levels for 30-40 years.
- Opec countries are dependent on oil prices and simply move output levels to get the price they want.
- Opec countries will become even more dangerous without oil.
- The majority of people in bad times will become isolationist and less global.
It is because of these economic, environmental, social and political beliefs that i think oil will still be in high demand for many years to come. If you believe that we are in for a very long worldwide recession, then oil prices will be moderate for a while, governments will not need to go to war to curb prices. green technologies will be slowed by anxious governments wanting to cut costs and grow their economies. The successful governments around the world will remain voted in by people looking at their own personal wealth. If this was court, green alternatives vs oil, the judge would say right now that the heat has gone out of the matter. The next 5-10 years will be all about rebuilding the global economy and less about alternative energy. hence, like the Republic debate, it will be some time before the environment wins over the economy.
In terms of specifics over WPL, I haven't looked at Woodside as i am overweight in BHP (large oil revenues) which covers off my investment in Mining + Energy (wrongly or rightly). it's simply swings too widely for me as a long term investor to invest directly in oil through a WPL. if i had to make a call, though, i wouldn't be shy of buying oil stocks as soon as the economy recovers as i think it will have another major cycle or two or three...
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