Many of you have probably noticed that gas prices have gone up in anticipation of April oil. I spent three dollars more than I normally do to fill up my tank. Of course, not everyone has a fuel efficient car. $100 oil is certainly not desirable. There are issues of airline costs rising, freight costs rising and just in general travel costs.
Keep in mind that oil prices are high for certain reasons.
Supply and demand come to mind. Right now there is speculation that there will be a disruption in supply, which is causing the prices to rise. This is fueled (pun intended) by the unrest and protests in the Gulf (and by Gulf, I mean Persian Gulf). Unrest has a way of working itself out. And eventually prices on oil will fall.
Prices on gas however, will stay higher for some time after oil prices come down. The funny thing about gas prices is that they anticipate high oil prices, but lag after the price of oil drops. My personal thought is from some analysis that oil and gas companies make their largest profits during these times during the anticipatory period and the period directly following the drop in oil prices.
One good thing is that people are becoming fed up with high oil and gas prices and the march towards energy independence continues. My opinion is that oil companies should not really worry so much about losing out on energy market share. Oil will be needed for quite some time. But really, we just need to get on our own resources.
I think that time is coming, just as I think that the spike in oil prices creates an opportunity to make money in the equities markets. The decline of 4-6% in the last two days only presents an opportunity to buy low. After all, everyone knows that this is when you should buy, so I wonder why we don’t.