ClusterGains

POB 339
6301 Highway 58
Harrison, TN 37341
ph: 423-344-3855
jso10130@yahoo.com

Oil

Oil is something we will always need, and the demand will only get greater as people in China and India start driving cars in great masses. The world will be far too slow in adopting electric cars. Therefore, investors can make a fortune in buying small oil companies that are growing. Some good stock picks are listed on the right with links. We have a lot of oil in North Dakota, Montana, and Canada. As long as the price of oil is over $65 a barrel, these companies can be very profitable.

In spite of the great prospects for growing oil companies, there will be scary pullbacks along the way. A person needs to hold fast when there is a downturn. Since the stock market has a tendency for most stocks to move up and down together, it is useful to pay attention to how the major indexes are doing in charts. Some index chart links are on the right. If the big cap Dow index is going up while the small cap Russell 2000 is going down, we may be near a market top since the weakest stocks will start to fall first. You may want to take some profits, and then buy the good companies again when the market is finished with its correction.

Another point to mention about oil is the April 20, 2010 explosion of BP's Deepwater Horizon oil rig in the Gulf of Mexico. The oil leak took place in 5,000 feet of water and it showed the great dangers and challenges of drilling for oil in the oceans. It also demonstrated that the oil is there in great quantities and under great pressure since thousands of barrels of oil were still leaking out even a month after the accident.

Several lessons can be drawn from this incident. First, we can tap the ocean for a lot of new oil if we can learn how to be safe about doing it.

Secondly, until the safe drilling issues are resolved, we will have to depend on land drilling and the Canadian tar sands as well as Middle Eastern oil. This bodes well for owning stocks of companies that are pumping oil from the Bakken area of North Dakota and the Canadian oil sands companies.

Thirdly, the BP oil rig accident could set ocean drilling back for years while the safety problems are being worked out. This will put a big crimp on the supply of oil for months or years, especially with ever increasing oil demand from India and China. It also means that the price of oil will be going a lot higher over time, and the best oil stocks will be making double and triple digit gains!

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POB 339
6301 Highway 58
Harrison, TN 37341
ph: 423-344-3855
jso10130@yahoo.com