Friday, August 04, 2006
Jim Cramer of Real Money, Real Money, and Mad Money, who claims to have made some pretty good money in his day by correctly betting on rising energy prices, thinks the price of oil isn't getting any cheaper. He gave a number of reasons for this.
- The US has been reluctant to build liquified natural gas receiving facilities, restricting the import of NG, and increasing demand for oil for energy generation.
- Nigeria, which ranks with Kuwait as an oil exporter, has enormous internal strife, which is beginning to drive out the foreign oil companies.
- Venezuela and Iran, the number five and four oil exporters, are posturing to make the US feel insecure about its oil supply.
- Ethanol could help moderate gas prices, but the US has a $0.54/gallon tariff, which prevents importing otherwise plentiful and cheap supplies.
- With gas prices above $3/gallon, demand is not slackening. Folks are cutting other budget items, rather than driving less.