Oil Stocks for 2008

CNN is recommending oil stocks for 2008:

Oil stocks: Best picks for 2008

They cover the integrated oil companies, the independents, the refiners, natural gas, and oil services. Here is what they said about the majors:

Experts generally expect nearly all oil stock sectors to do well in 2008 – although not as well as in 2007.

If you think the price of crude is going to go down, investors like Mark Gilman, an oil and gas analyst with the Benchmark Company, say go with the big boys.

With their diversification, high dividends and low stock prices compared to revenue, big oil companies that produce, refine and market oil and natural gas like Exxon Mobil (XOM, Fortune 500), BP (BP), ConocoPhillips (COP, Fortune 500), Chevron (CVX, Fortune 500) and Royal Dutch Shell (RDSA) make good defensive plays.

I especially liked this next bit:

In the integrated space, Gheit likes BP, simply because he thinks the company’s fortunes must change. Over the last few years, the British company has suffered a major pipeline spill in Alaska, a tipped-over rig in the Gulf of Mexico, a natural gas trading scandal, and a lethal refinery explosion.

“They’ve been in the penalty box for the last five years,” said Gheit. “Everything that could go wrong went wrong.”

As a result, BP’s stock has suffered, at least relative to other “Big Oil” companies. It gained 15 percent in the last 12 months and 84 percent over the last five years, compared with Conoco’s 26 percent gain over the last 12 months and 248 percent gain since 2002. It could be catch-up time for BP.

Disclaimer: I own COP stock (and have since 2002), and Gheit owns BP stock. Gheit has also been wrong on the direction of oil prices for the past 5 years.

6 thoughts on “Oil Stocks for 2008”

  1. BP Texas City refinery had another fatality yesterday afternoon. Worker ides at BP Refinery

    My condolences to the family and coworkers.

    This is just unacceptable and indicates to me deeper problems with the management of BP. This is now the 3rd straight year with fatalities at this plant. It shouldn’t happen.

  2. RR, I also have investments in these companies (and others) via index funds. I have, however, been concerned for years that with more of the world’s reserves in the hands of thug regimes, and a drilling ban here in the USA, these companies are going to have trouble replacing their reserves. From an investment perspective, what do you say to that?

  3. Doug – the short answer is that Wall Street will need to find a better way to evaluate energy company stocks than reserves base.

    Energy companies will be branching out into biofuels, sycrudes, coal, solar, nuclear, and other forms of energy as their opportunities for conventional oil and gas dwindle from state control. I think oil companies will lead in carbon capture and sequestration technology. They have the core skills and expertise to commercialize CCS.

  4. Gheit may finally be right. I think 2008 is his year. I don’t see how oil prices can stand up as demand falls. What will happen to speculators? Is it possible we have an oil price collpase?

    KingofKaty: Was anybody rich or famous killed? So, what is the problem?

    Big Q to Anybody: If oil prices fall, does that hurt or help large integrated oil companies?

    Oil well off of its one-trade wonder of $100 a barrel. Where is the bottom?

    I think this is the break year. People realize oil ain;lt going up anymore. I thought that last year too.

  5. I don’t see how oil prices can stand up as demand falls.
    Any evidence of global demand falling, yet, Benny?

    People realize oil ain;lt going up anymore. I thought that last year too.
    And you were wrong last year(, too).

    January is just a low demand month, if the weather is not too severe. We’ll see. I still believe that the only way we’ll see $50/bbl is if the global economy slips into recession – something that looks increasingly likely.

  6. optimist:

    Yes, there are shreds of evidence out there, such as four-week periods for motor gasoline demand in the USA turning negative year-over-year….demand has been falling in Europe for years, so that is not going to change…Thailand recently said it would use less, not more, oil in 2008 over 2007 (a good Third World indicator)….
    The developed world will use les in 2008 than 2007…will rising demand from China offset that? I think no.
    Yeah, yeah, I was way wrong last year on oil prices. Too early. Thug states too played a big role. Venezuela is taking a lot off the market.
    Maybe I will be wong again this year. So far, oil down to nearly $90 from “peak” of $100. Not a bad start.
    $50 a barrel in a recession? That’s a bit of a tank.

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