Many articles on this site have touted the long term benefits of investing in oil and natural gas companies.
With the recent nuclear weapons deal in Iran, the price of oil has fallen. With that, so have the prices for many publicly traded oil and natural gas companies. Investors should look upon that as an opportunity to load up on energy stocks, ranging from Big Oil like Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) to small caps like Octagon 88 (OTC: OCTX) and Americas Petrogas (OTCMKTS: APEOF).
The future for oil and natural gas companies is very bullish.
Despite all the resources dedicated to the alternative energy sector, there is nothing close to supplanting fossil fuels. In the fossil fuel sector, coal is being less appealing to countries with more advanced infrastructures. Natural gas is cleaner and cheaper; and, as a result, replacing coal as the power source at many utilities in the United States.
That is why the main exchange traded fund for coal, Market Vectors Coal (NYSE: KOL), is trading for about one-third it was in 2008 (chart below).
As detailed in a previous article on this site, it will only get worse for coal. The Obama Administration has a “War on Coal” that is bruising the industry. There are options to coal that make it more and more undesirable as energy source.
By contrast, Octagon 88, Exxon Mobil, Chevron, and Americas Petrogas have good positions operating in North America. That is the most desirable area for energy and natural gas production. The political stability and security of Canada and the United States is very appealing in an unstable world.
The price of oil has fallen due to the Iran accord as there should be more crude hitting the market. That should take the price down based on the basic fundamentals of supply and demand. But there should be more than enough demand coming to lift the price higher. That will take the share prices of oil and natural gas firms higher, again.