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Unsophisticated investors may simply check the oil stock quote of the latest market darling or company gaining some buzz, and then act accordingly. I’ve also been in the position of not wanting to get left behind, and thus tempted to jump on board a company right before a big correction or episode of profit taking. I’ve also taken pause only to miss the next profit rocket when it was clearly one of the top stocks to buy.
The key is to understand that an oil stock quote is just a present representation of what the market knows and understands about a given company, and hardly enough to determine if it’s one of the top stocks to buy now. Market inefficiencies could mean a company is undervalued and represents a great buy. You could also be looking at a company that has moved too far too fast. So, grab the oil stock quote, but then read on to understand a few relevant factors that are affecting the oil markets today. Ascertaining how these issues do or do not affect the company you’re considering can put you ahead of the pack and position you for exceptional gains.
Oil Stock Quote Factors Such As “Peak Oil”
With all of the concern about oil, it can be tough to get a handle on the real story needed to guide proper fossil fuel investing and interpretation of your oil stock quote. We’ve heard about how production is slowing and “peak oil” is either here or right around the corner. We’ve witnessed a surge in new oil demand by developing nations like India and China. With no slowing of demand and consumption, and alternative energies slow to gain traction, understanding the reality of available supplies is important.
An honest look at South America reveals some statistics few are aware of, but can certainly impact your oil stock quote, if even in the future. Venezuela is thought to have approximately six hundred billion barrels of heavy crude oil in the Orinoco Basin. That level of oil is enough to sustain today’s level of consumption in the United States for nearly a century. The problem, of course, is that Chavez gave Exxon and Conoco-Phillips the boot half a decade ago. The players who got to stay had to make massive donations to the state oil company. The ace up the sleeve, of course, is the fact the refineries that can handle the heavy crude are in the United States.
Oil Stock Quote Vulnerable To Refinery Relocation
That sounds like quite the safety net. However, what few people realize is that refineries in Jamaica, the Dominican Republic, and places like Ecuador are shifting to the ability to process the heavy crude. As these refineries come online, Chavez can easily shift gears and funnel oil completely away from the United States at will.
The notion of peak oil stems from an accurate prediction that U.S. oil production would peak in the 1970’s. It was a Shell scientist who made the prediction. But others took the idea global and began to anticipate when things would slow down worldwide. The trigger event is when over fifty percent of all available oil is now gone. At that point, the oil crisis is said to begin as we slide down the slope to exhaustion.
Oil Stock Quote And The Quality Influence
An educated look at the situation reveals that the problem is not so much with the amount of oil, as much as it is with the quality of oil and its ease of extraction. See, oil is not necessarily oil. It’s not all created equally. Most people think of oil as being the Texas “sweet crude” that is high quality black gold that requires minimal processing. It flows easily, has low sulfur content, and is inexpensive to convert to the products we all know and use.
The reality is that the bulk of the world’s oil is not so good. There’s still plenty of it, but it is not of high quality. Sometimes the extraction of the oil is more involved, which can affect the price. But almost certainly, the oil requires additional processing. To make matters worse, oil from far away carries with it the heightened price tag of transport. Ironically, the higher the price of fuel, the higher the price of transporting fuel. It seems to be a bit of a vicious cycle, doesn’t it.
There are locales that still offer up the lower viscosity, low sulfur content sweet crude that we all prefer. Unfortunately, the goods are coming from places like Nigeria and Lybia. These places are not exactly the epitome of politically stable regions. As you can imagine, depending on these sources come with inherent risks.
Oil Stock Quote Explosions Based On Shale Exploits
There is always recourse to the new methods of tapping old oil. Lots of oil remains in wells that have been abandoned because the easy stuff is gone. Oil that flows readily is pumped and the rest, whether known to exist or not, gets left behind because it could not be extracted. Beyond that, there are sources of oil such as the oil sands and shale oil that depends on adequate technology to retrieve it.
There are a number of technologies that can be deployed. One of these is called Managed Pressure Drilling (MPD). This process involves the use of air injected alongside chemicals that can release the oil. It’s a process that can be used on top of other techniques, so you might see innovative drilling used, followed by MPD. MPD is not very expensive to implement, so it allows for trapped oil to be accessed profitably even at modestly high oil prices.
The use of hydraulic fracturing is perhaps at the forefront of technology that is allowing us to access mass quantities of shale-trapped oil and natural gas. A prime example is the Bakken Shale, which has been exploited with fracturing and enabled North Dakota to tack on jobs when the vast majority of other economies are running double-digit unemployment rates. The technology is allowing access to billions of barrels of goodies that will keep people busy in that state for decades to come.
The new Bakken is the Marcellus stretch on the East Coast, and you can count on this impacting the oil stock quote of more than one company. The Marcellus Shale formation is home to vast quantities of natural gas. It’s been reported that 100,000 wells could be drilled by the time all is said and done. Tens of thousands of jobs can be added in the process, and zeros will be added to the oil stock quote of the most successful companies that properly and successfully exploit it.
