As I write this, the quadrennial election is history and the commodities slide appears to have resumed with a renewed fervor. Crude oil prices are down nearly $5 a barrel. So maybe we can forget about last summer's $145-per-barrel levy and look forward to a return to oil at $50-$60 a barrel for about as far as the eye can see.
Wrong! As The Wall Street Journal has pointed out, "... a year or more from now, big supply challenges look unavoidable." Here's the logic: Today, the world uses about 85.5 million barrels of crude oil each and every day. That's pretty much the case despite a decline of about 1.9% in consumption from the industrialized countries in the past year. China, India, and their developing peers continue to expand their usage.
The difficulty -- and it'll be a bigger problem down the road -- is that what economists refer to as "the marginal cost of production" in many areas of the world is now above the crude price. And with the commodities price slide certain to cause capital spending pullbacks in those areas, we may, as the Journal indicated, be in the energy-price soup in a year or more. For instance, Marathon Oil
And Suncor Energy
But seriously, here's where you energy investors may be: You own ExxonMobil
My strong advice is to hang in there. This is not the time to sell your energy names. In a year or so, it's very likely that you'll be watching your share prices be pulled decidedly higher by a return to triple-digit crude.
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