Thursday, November 6, 2014

How Long Will We Have Cheap Gasoline?

Gas prices are below $3/US gal in our area (below $0.75/l for Canadians).  This is caused by over-supply due to fracking, improvements in US automobile fuel mileage, and slow economies in Europe and parts of Asia.

Is this going to last longer than a few months to a few years?  Nope.

  1. They are not making more oil, and it is essential to modern economies.
  2. Eventually, the world economy will recover and demand will rise.
  3. The low price will reduce investment in new sources, reducing new supply.
So enjoy it while we can, get out that old gas guzzler, and it is probably a good time to buy oil producer stocks for the long term.

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