This makes me very uneasy....

[headhawg]

Don't know if this will happen, but I am very concerned. I'm building a Flintstones-mobile. Yabba-dabba-doo.

http://money.cnn.com/2005/03/31/news/international/goldman_oil.reut/index.htm

[Bobby]

no everyone needs a SEGWAY :D

It's really not funny though. A range of $50 to $105 for a barrell of oil way too much. So if $55 for oil and gas cost $2.00, then at $105 for oil $4.00 a gallon. Just a little math.

Might have to trade off my 4runner. Just ridiculous

[Kreed]

Like I said yesterday to NDJ, yes this Economy could unravel badly if OIL
SHORTAGES (or PRICES) tanked. So you read it here 1 day early --- In fact,
there are 4 factors that could do havoc & OIL is one.

[trying2win]

There's an old cliche I'm sure you all know..."If you can't beat 'em, join 'em".

Now I'm no expert on the stock market. Especially when it comes to buying individual equity stocks or equity funds. My track record is poor in the equity-type securities over the years. I generally avoid buying those kind of securities anymore. I prefer buying income trust funds and/or funds such as bond funds or mortgage funds.

However, it's not all bad news. A few years ago after doing some research, I took a chance on buying some income trust funds on the TSE. The ones I bought were funds in the oil and gas industry and the power industry (there are income trust funds in other sectors as well). As we've all seen over the past few years, many kinds of energy prices have soared. The ones I bought were:

1. PENGROWTH ENERGY TRUST

2. ARC ENERGY TRUST

3. ALGONQUIN POWER INCOME FUND

In each of the above funds, I bought some at various prices...some high...some moderate...some low (the old cost-averaging effect). I didn't originally buy them for making money on the price you pay for them on the stock exchange, but rather as a source of extra income for my retirement. As you have found out or will find out, the meagre annual cost-of-living increases companies and/or governments add to your pension, quite often don't keep up with inflation. Unless you're independently wealthy, this added income helps.

I've requested for my broker to send the monthy income from these income trust funds directly to my bank account. Investors here in Canada, get a preferred income tax rate on their income trust income, as compared to income from let's say GIC'S.

Is there risk involved? Sure. Income trust funds are tied into the stock market price. For instance, if the price of oil should drop rapidly in a short time, more than likely your income trust fund price on the stock market will drop rapidly too. That's happened to me. I didn't panic though. I just bought some more oil and gas funds at a lower price. Another risk about income trust funds...income dividends are not guaranteed. Another risk I've read about on websites, considers individual investors liability on certain issues such as if a company defaults on some items,or goes bankrupt, can an individual investor be liable for collections by creditors etc? (sorry, I don't know the answer to that). Check with your broker and/or lawyer re risks of investing in income trusts and possibility of liability issues.

I could sell some of my ARC ENERGY INCOME TRUST FUNDS at a good profit at current prices, but I'd rather have the regular monthy income to keep coming in. Maybe I'm being dumb in not selling this fund right now...hmmm....

As for bond funds or mortgage funds...they too have risks, especially tied into interest rates. I know they're not 'NO RISK' funds, but rather they seem to be 'LOW RISK' funds.

Do they sell income trust funds in the U.S.A. on the stock exchanges as well?


T2W

[Equineer]

Goldman Sachs anticipates $4/gallon gas because of escalating worldwide demand.

This past week, in the Malibu area, self-service regular unleaded was selling above $3/gallon on the Pacific Coast Highway.

Since a larger proportion of the world is now heavily dependent on oil, analysts worry that oil may trigger a worldwide recession much broader and deeper than the worldwide recession sparked by Arab embargos about thirty years ago.

In May 2004, Heritage Foundation senior analyst Charli Coon warned, "As consumers fill up their vehicles with gasoline, they may want to think twice before they yearn to return to 1981, when the price of gasoline averaged $1.38 cents per gallon. Adjusted for inflation this represents $2.84 per gallon - significantly more than today's already high prices."

Less than a year later, industry experts are already conceding $4/gallon gas, after taking into account anticipated exports from a stabilized Iraq and surging oil exports by Russia, which is now the world's top exporter.

[Tom]

I wonder how everyone in the industry forgot what happened in the 70's - the oil crisis. Here were are, 30 years latter, less prepared than we were back then.

[highnote]

I know almost nothing about the oil or auto industries, so I'm just thinking out loud here, but would welcome any thoughts.

One of the last bills, if not the last bill, Jimmy Carter passed before he left office was the automobile fuel efficiency act (don't remember exact name). It was legislation aimed at making sure certain classes of automobiles met certain minimum fuel efficiency standards. Problem is, he didn't anticipate the popularity of the SUV.

Last time oil went so high didn't the Japanese start introducing small, well built, fuel-efficient cars in the US?

It will be interesting to see what the demand for SUVs will be if/when gas hits $4 per gallon.

I remember reading Lee Iococca's book and he said one of the heads of Ford Motor Company had a saying, "Big cars equal big profits". So if the demand for big cars drops because of high fuel prices does that mean less profits for the auto industry?

The European automakers make smaller luxury cars. Luxury cars must have a higher profit margin than Ford Escorts -- right? So will US automakers focus on making higher quality, more expensive, smaller cars if gas hits $4/gal?

Ford has a huge pension fund problems. What will smaller profits mean for them?

John

[Tom]

GM is already hurting. They are closing plants fro a week at a time to reduce inventory, which is at all time highs for many models - some well over 100 days.

The GM Oshawa plant in Ontario, Canada is going down every other week for the rest of the model year - on one, off one, starting Monday. Others doing the same. They already extneded their one week Christmas shut down to four weeks this year. They make the Impala there, one the best selling cars GM has.

[Kreed]

Some Economists focus on "important" behaviors, like buying cars, driving
behavior & what factors affect those things. GS thinks that "when gas at
the pumps reach $4/gal then American driving habits WILL change." I suppose
like all deep thoughts this one is right yet seems so childish when i think about
it. Of course, at $4/Gal something will change, like many poor people will be
poorer yet.

[highnote]

And even more airlines will be declaring bankruptcy.

[Lefty]

SUV sales already dropping. The marketplace decides and that's who shouyld make the decision and not the Govt. Meanwhile let's start getting our own oil again from the rich untapped fields that heretofore the Dems keep blocking.

[linrom1]

I hate to bust your chops, but if the price of oil ever gets to $105 in today's dollars, the cost at the pump would hardly be $4/gal. Somewhere in the price/cost dynamics the incremental cost to the consumer would be 1:1. You would probably be looking at price >$10/gal.

[highnote]

SUV sales already dropping. The marketplace decides and that's who shouyld make the decision and not the Govt. Meanwhile let's start getting our own oil again from the rich untapped fields that heretofore the Dems keep blocking.

We should drill all over Alaska and any other place that is currently protected. The sooner we drill that oil the sooner we can return the land to its natural state. Its not doing any good in the ground. When it's gone, it's gone. We should use before someone else does. We should definately drill in the Artic and Antartic -- at least I think there's oil there. We should also get it before anyone else does -- even if we have to fight to get it. I can't wait to get a Hummer. Like someone else said -- the only people who are going to be affected by high oil prices are poor people. And who cares about them?