Before you are overjoyed with the oil price hike, you should be aware that our nation is suffering. President Obama will remind you and the other voters by kindly imposing a special patriotic oil tax.
Oil price will likely go higher because of the increasing demand and the limited supply. But oil stock may not be the best vehicle to take advantage of increasing oil price, because the governments will levy heavy tax on the profit of oil companies. Someone have to pay for the wars, the entitlements, and the rescue of the Wall Street. Not to mention Obama dislikes carbon emission.
Companies of fuel efficient operations or products may take better advantages of the rising oil price. One such companies is AerCap, one of the world's leading aircraft leasing and trading companies. It owns about 200 large, new or young, fuel effecient civilian aircrafts. When oil price increases, AerCap's Boeing/Airbus planes will have higher leasing rate or selling price because of their fuel efficiency.
AerCap leases or sells its assets to the highest bidders globally, and its customers are mostly from the economies that have recovered from the global recession and are now expanding. Anyone who have flown lately, particularly in oversea/international routes, are amazed how packed the airplanes are and how pricy the tickets have become. Airlines are entering an era of expansion, and they can only do so by buying Boeing or Airbus.
New, fuel efficient commercial aircrafts are so desirable, anyone now wanting to buy a new aircraft from Boeing/Airbus directly would have to wait four years because of the long order backlogs. The perpetual delay of the Boeing 787 dreamliner has made the supply of new aircrafts even tighter. The only feasible option is to lease/buy from aircraft leasing companies.
AerCap makes money in quite a few ways. It receive deep volume discount becuase it is a loyal and big customer of Boeing/Airbus; it gets favorable loans from the banks becuase of its excellent balance sheet; it gets good rates from the aircraft leases because it can give the customers flexible financing, also because it is one of the few sources of new, fuel efficient aircrafts thanks to the orders AerCap placed during the financial crisis.
With forward p/e of 6.22, peg of 0.42, price/book of 0.83, AER(AerCap) is a far better stock than CVX, with or without the patriotic Obama oil tax.
Washington should stop catering itself to Big Autos, Big Oils, and Big Banks. This fuel efficiency incentive program is not meant to put more tax payers' money in the hands of auto makers, but put money in the hands of patriotic Americans who help the country reduce the dependency on foreign oil.
I have already said that "Trucks are work vehicles, fuel efficiency of a truck should only be compared to fuel efficiency of the other similar trucks, not that of family sedans."
Washing needs not to force people to drive fuel efficient cars, it just needs to incentivise.
Those people who still want to drive outsize SUVs still can, after paying surcharge of a couple of thousand dollars. They are also patriotic Americans if they think the surcharges they pay are for the good of the country.
There are a small army of lobbyists in Washington, who are paid by Big Oils and Big Autos to keep us from saving the country from the addition to foreign oil. Shame on them!
You kidding. High oil price is not only good for OPEC and Russians, but also good for Big Oils and their share holders.
Obama needs to understand that kowtowing to Big Oils and republicans is not going to win the coming election, nor is solving our economic problems. He needs to take more significant measures to reduce American's addiction to foreign oil.
For example, the government can impose surcharges on vehicles of poor fuel efficiency. Taxing willful polluters who buy LARGE SUVs like Dodge Durango, will help Obama win the coming election.
Obama has finally figured out it is useless to speak softly to the House republicans. He is going to use his big stick to fight the obstructionists and win the coming election:
People are sick of those obstructionist republicans, and they will vote out tea party radicals and let the Dems retake the House.
On Jan. 25, I was elated when Obama called for ending oil subsidies:
Can the tea baggers resist his proposal? I don't think so.
Even though I'm long CVX, I'm also very sympathetic to the basic idea of gas taxes and weaning the US from oil -- both foreign and domestic. But two problems with your prediction.
First, the president does not set taxes. Congress does that. We have a fresh wave of conservative congress members arriving this year. If the deficit-reduction hawks couldn't even manage to return the wealthiest Americans to their pre-Bush tax levels (those making over 1M/year), there is zero chance that congressional will pass a gas tax bill.
Second, oil is used for more than gas.
Third, although the US is a huge consumer of oil, it is not the fastest growing market nor the fastest growing economy.
Fourth, all major oil producers, including CVX, have been positioning themselves for over a decade to benefit from alternative energy profits -- if and when alternative energy ever becomes a major factor in the global economy.
It is of vital strategic importance for the U.S. to be less dependent of foreign oil. While the world wide demand of oil will continue to rise fast, the supply will remain limited at best. If the U.S. doesn't make timely change to reduce the oil dependence, it surely will enter a fast decline when the next oil crisis hits.
I will argue that the US oil consumers have been subsidized by the tax. It is our enormous military spending that keeps the oil supply relatively stable. Had not been the US navy, not only we would have had less stable supply of oil, but also oil companies would have had to spend much more on security and insurance. Considering how expense the military is and how expensive are the wars (price tag for Iraq war: 2 trillion dollars), the government should levy cruel oil, amounted 7 billion barrels a year, at $10 per barrel.
It is our patriotic duty to pay for our military or be less dependent on oil. Even farmers can use technologies that use less petroleum based fertilizers.
Nonsense...we in california will lead the way to bankruptcy!
as it should be since nothing in our lives or in the history of countries changes unless there is a crisis!
and by god, this will wake all americans to the fantasy economy of obama and bernanke and then we will become great again>>>>>in about 10 years!!!!
That may be what he would like so he can continue his massive social spending agenda...
With reublicans in charge of teh house I really doubt he would have nay sucesss with such a proposal.
The argumnet persist that taxing profits of big oil or any large coropration reduces funds needed for research exploration and continued expansion, this making the companies less competitive and giving foreign comapnies a competitive advantage. The results would be job losses, GDP contraction etc... A secondary effect is the loss to investors including municipal and pension funds...
So i know the piggy bank looks attractive for Odumbo but I just dont see it happening... Lets talk about the fed raiding 401K's............
"Odumbo", as you say, is always looking for a source of income for reparations and other giveaways to blacks. The goal is to keep 'em on the couch and in the Democratic party. Oil companies make a good target for those reparation dollars.