Oil & Gas Stocks Are Here To Stay

During his State of the Union address, President Joe Biden noted that the U.S. will still need oil and gas for at least another decade. This comes as the President has pushed for a significant transition in our country to renewable energy.

President Biden has fought against the oil and gas companies since the beginning of his tenure. He has told Americans that we need to reduce our reliance on oil and gas and move towards renewable energy as soon as possible.

The President has pushed for legislation to make renewable energy more affordable. All this while telling oil and gas companies that they need to invest more to grow supply but not offer them the same concessions.

More so, the Biden administration has tried to reduce the number of oil and gas leases the federal government can sell. Thus making it more difficult to increase supply. Some government policies are also making the industry smaller since new and smaller companies are getting squeezed out due to regulations.

I think most people would agree that burning oil and gas is not ideal for the environment and more so that we need to reduce our reliance on foreign oil and gas producers such as Russia (which we primarily have done since the start of the war with Ukraine) and those countries in the middle east that are not so friendly to the U.S.

However, it will be more than even the decade President Biden admitted to in the State of the Union address until we are indeed off the oil and gas addiction our country currently has.

For example, even the most aggressive state legislation coming out of California and New York doesn't ban the sale of internal combustion engines until 2035, more than a decade from now. While electric vehicle sales rapidly increase in the U.S., they are growing from a super low starting point.

The reality is that the government is making it more difficult for oil and gas companies to expand supply either with laws, not selling leases, or banning gasoline vehicles in the future, making long-term investments less appealing. This inadvertently pushes oil and gas prices higher and makes these companies more profitable.

And remember, this is all during a time when the President, a Democrat, is not 'pro' oil and gas. Take a moment to imagine how well the industry could be doing if the President and Congress were both 'pro' or even indifferent about the oil and gas industry.

So with that being said, let's look at a few exchange-traded funds that you can buy today to possibly play the boom the oil and gas industry may be setting up for over the next few decades. Continue reading "Oil & Gas Stocks Are Here To Stay"

Oil ETFs For When and If The Industry Turns A Corner

The word 'wild' doesn't even start to describe the oil markets over the last few weeks. We saw a price war between Russia and Saudi Arabia after world economies shut down to slow the spread of Covdi-19. Then an agreement between Russia, Saudi Arabia, and the other OPEC+ countries. That was followed by negative prices on futures contracts in the US. Majors changes to how large oil industry ETFs operate and several funds closing altogether. And then oil began to recover as inventory levels weren't as bad as many expected them to be.

So, your guess is as good as mine in terms of what happens next. However, most would agree that when world economies begin to open back up and operate in some form of 'new normal,' we will likely see demand for oil increase, which will probably send the prices higher, if not at least stabilize them. With that sort of thinking, there are a few ETFs you may want to put on your watch list and consider buying when you feel the mayhem, we experienced over the last few weeks is over.

The first is the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). The XOP has 57 holdings with an average weighted market cap of $21 billion. The fund also has a distribution yield of 3.05% and an expense ratio of just 0.35%. XOP has over $2.12 billion in assets under management, making it one of the largest oil and gas-focused ETFs you can buy. Furthermore, the fund offers an equal-weighted approach, so it is not weighed down by just a few big names in the industry. However, give the fund a little more risk during a time like now because if some of the smaller firms struggle, they do matter more to the fund than if the ETF was weighted differently. Continue reading "Oil ETFs For When and If The Industry Turns A Corner"

Trump Tweets Create Opportunity for Investors

Matt Thalman - INO.com Contributor - ETFs

When Donald Trump goes to Twitter Inc. (TWTR) to voice his negative opinions, investors should begin trying to find opportunities. Over just the past few weeks we have seen two separate occasions in particular in which the President of the United States has directed negative tweets at specific industries or companies. In both cases, first with Amazon.com Inc. (AMZN) and more recently with The Organization of Petroleum Exporting Countries (OPEC), his tweets have sent asset prices lower for a short period, before they have recovered, opening up big opportunities for investors.


The end of March, beginning of April, Donald Trump assaulted Amazon with some tweets. First, it was that the company paid little to no state and local government taxes and then it was that the e-commerce company was a ‘scam’ which costs the US Post Office and therefore the American people, billions of dollars a year. Another string of tweets pointed the finger at Amazon claiming it was the reason thousands of retailers were going out of business, and millions of US workers had been laid off.

The tweets from Trump sent Amazon shares lower each day he would reignite his attack on the e-commerce giant. A 1-month chart of Amazon shows how the stock fell during the Presidents attacks and has since recovered.

Trump Tweets
From Yahoo Finance

Despite the fact that the President attacked Amazon and no real solution has come from the issues he pointed out, Amazon’s recovery appears to be nearly complete. This is not to say that the problems with Amazon not paying taxes or its contract with the Post Office couldn’t be reignited again in the future. But as most analysts have noted, the Presidents threats and claims against Amazon have no real teeth. Continue reading "Trump Tweets Create Opportunity for Investors"

3 ETF's To Buy If You Believe Oil Is Heading Higher

Matt Thalman - INO.com Contributor - ETFs

In August of 2014 West Texas Intermediate Crude was trading around the $98 range. That was lower than the $105 range it traded in during June of 2014. Today it is trading below $40 a barrel and as oil continues to fall to new multi-year lows, some investors are wondering when the commodity will stop declining and begin once again moving higher. I recently published a piece pointing out a few ways investors can profit from oil continuing to decline. But, if you are like me, believing that the price of oil will eventually move higher from today's levels there are a few different ETF's you can buy to play a move higher in oil.

But first, let's discuss why I believe oil will move higher, sooner rather than later. Currently, West Texas Intermediate crude is trading below $40 a barrel and at that price most, of the oil producers are losing money. The average cost per barrel in the Canadian Oil Sands is somewhere in-between $50-$100 a barrel. In the North Dakota Bakken Shale, the average is around $40-$70 while in Texas it is somewhere around $40-$80 a barrel. In all of North America, only Alaska has a cost per barrel below $40. Continue reading "3 ETF's To Buy If You Believe Oil Is Heading Higher"