Sunday, August 31, 2008

Shoulda, Woulda, Coulda, Gone Long Energy

In light of Gustav's increasing strength and imminent re-destruction of Louisiana coastline, I wish I would have gone long energy before the close on Friday.

I'd be absolutely shocked if oil and natural gas prices don't rocket upward by at least 5% during Asian trading tonight. Gustav has shut down the majority of energy production in the Gulf and a significant portion of refining capability on land.

Refining capability had been underutilized during the previous weeks leading up to the storm, so refineries not affected by the storm should be able to maximize production (if they want to) to compensate for shut-downs. The US Department of Energy plans to release oil from reserves if it is deemed necessary; so there should be no lines at the pumps next week.

My instincts say that futures will jump and oil company equity will drop Monday, so long both USO and DUG would have been a good trade. Higher prices don't help companies who are shutting down production and are enduring damage to their rigs, while the Saudis will reap higher prices for the oil they are pumping.

Thankfully I don't do much driving while here at school, but gas prices should surely be higher in the coming weeks and months, even if only due to the fear factor. The extent of Gustav's disruption and damage waits to be seen. I sympathize for lives and property in the path of the storm, and hope that the early evacuations minimize damage.

A Crucial Side Note: Multiple democratic pundits, from position-holders to the fat, shameless Michael Moore, have called Hurricane Gustav a "blessing from God." Below are two links. Please note that these are thoughts produced by the intellectual kin of Barack Obama when you don't vote for him this November. How heartless must a person be to claim that the destruction of homes and property and loss of life can be a positive event?

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