Oil share investment vs. gas prices



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Thread: Oil share investment vs. gas prices

  1. #1

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    Oil share investment vs. gas prices

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    Has anyone calculated how much one would have to invest in the oil market to offset the rise in gas prices?

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    Re: Oil share investment vs. gas prices

    Ask everyone who invested in the oil & gas market in 2007 how they made out.

    The price of oil isn’t in the insane bubble territory it was back then, however if gas prices just keep climbing into the stratosphere demand destruction is going to become a thing again soon which will negatively affect oil prices.

    In other words, volatility will rule, and anybody thinking of investing in such a market best only use money they can afford to potentially lose.
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  3. #3

    Re: Oil share investment vs. gas prices

    First we have to look at some context in the "high" prices.

    The pump prices today in Canada have a lot (not all!) to do with the current price of the dollar. The last time we saw these pump prices oil was north of $100 a barrel (well north) BUT our dollar was at par (or higher). Now oil is in the $60s and the dollar is in the 0.70s. Barrel price is USD, pump price is CDN. Now if the barrel price rises, so will our dollar, yadda yadda yadda....

    That does not come close to explaining the entire difference. The Canadian supply chain has a "capacity" problem = gouging. Some companies are profiting but for big oil (international) I am sure the Canadian pump price is not factor on bottom line. US pump prices are pretty low right now (grand scheme of things).

    OPEC is motivated to keep barrel prices near where they are (I would actually say in the 50s if they could keep it there), they make a good profit at these prices and it discourages development of more expensive options by other entities like off shore/fracking/oil sands. If it gets back to peak range then the competition really opens up. The relationship with Iran plays big in this one... So I don't see a big win here unless Trump blows up on Iran to keep certain friends happy and to drive up the price.

    Any future "carbon" taxes don't end up in the pocket of the oil companies, but will end up at the pump.

    As for stock prices, are they still rebounding from 2007/2008 or are rising, that is a question...

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    Re: Oil share investment vs. gas prices

    Pump price yesterday at costco 120.9 , at Shell beside Costco, 133.9 , my share prices in oil producers haven't moved that much in 48 hrs.

    I'm not market savvy enough to get it.

  5. #5

    Re: Oil share investment vs. gas prices

    Quote Originally Posted by nobbie48 View Post
    Has anyone calculated how much one would have to invest in the oil market to offset the rise in gas prices?
    As someone who has held onto mining rig and oil investments for 5 years and then sold them....

    .........don't.

    As someone else has said here: the cost of gas in Ontario has NOTHING to do with the actual market.

    ....oh, I also work in the energy sector if that makes my statement any more credible lol
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  6. #6

    Re: Oil share investment vs. gas prices

    Quote Originally Posted by crankcall View Post
    Pump price yesterday at costco 120.9 , at Shell beside Costco, 133.9 , my share prices in oil producers haven't moved that much in 48 hrs.

    I'm not market savvy enough to get it.
    I went to Costco for fuel this morning.

    $1.189 for regular at Costco, $1.349 at the Shell 500m away.

    People are crazy. Truck, Van and SUV sales are through the roof. OEMs are abandoning car manufacturing because people aren't buying them. People are crazy.

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    Re: Oil share investment vs. gas prices

    In my original post I was thinking how much stock would one have to own so the dividends / stock value increases paid for your gas.

    People complain about price increases but if those increases boost their portfolios they may be ahead.

  8. #8
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    Re: Oil share investment vs. gas prices

    Quote Originally Posted by nobbie48 View Post
    In my original post I was thinking how much stock would one have to own so the dividends / stock value increases paid for your gas.
    "Oil stocks" is too vague.

    Energy sector is so diverse. You can invest in producers, exploration companies, oil rig service providers, refiners, pipelines, etc. Some sectors are doing well, some not. Some pay dividends, others don't. Even tracking the price of crude is complex, you've got WTI, Brent, and then there's WCS in Canada which is doing kak.

    And then if you're looking for pure monetary gain, there are funds that track crude, but then there are derivatives that multiply any price gains, 2X, 3X, etc.

    There are tons of ways of making money in any sector. And losing it as well.

  9. #9
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    Re: Oil share investment vs. gas prices

    Quote Originally Posted by caboose56 View Post
    I went to Costco for fuel this morning.

    $1.189 for regular at Costco, $1.349 at the Shell 500m away.

    People are crazy. Truck, Van and SUV sales are through the roof. OEMs are abandoning car manufacturing because people aren't buying them. People are crazy.
    I timed my purchase last month of an F150 4 dr, 4wd with an awesome price jump in fuel costs. Call me crazy. But I need to pull a boat in the summer months and got tired of paying for three cars, I'll just year round in the truck.

    At least with a 120L tank I can drive 1256kms till I find cheap gas, it becomes a game.

  10. #10
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    Re: Oil share investment vs. gas prices

    As for the OP's question, if you could come close to figuring that equation out, your driving to work in a Bentley and could care less about gas prices.

    You buy most of your fuel off a marina dock at $1.88L for a Donzi that gets 6L /kms , you just dont care.

  11. #11

    Re: Oil share investment vs. gas prices

    Quote Originally Posted by nobbie48 View Post
    In my original post I was thinking how much stock would one have to own so the dividends / stock value increases paid for your gas.

    People complain about price increases but if those increases boost their portfolios they may be ahead.
    If you drive 15,000 km a year and your vehicle gets 10l/100km average and the stock is Chevron (CVX)....

    Total fuel used in a year is 1500l (=(15000km/100km)*10l). At a price of $1.30 CDN a litre that is $1950 CDN in fuel.

    Chevron's current stock price is ~$126 USD and the dividend is $4.48 USD (~3.58%) per share, which is about $5.82 CDN.

    Based on dividend you will need $1950/$5.82 = 335 shares, which will cost you $42,210 USD (335*$126) or about $55K CDN.

    So in this example if you invest $55K in CVX the dividend will cover your fuel costs. Substitute distance/year average mileage your vehicle gets and the oil company (stock price and dividend) of your choice.

    This all ignores taxes.... but there are ways around that like TFSA...


    For the record I do not drive a Bentley!
    Last edited by backmarkerducati; 05-04-2018 at 03:11 PM.

  12. #12

    Re: Oil share investment vs. gas prices

    If BTW you bought your gas in Buffalo at $3/gallon....

    1500l = 397 US gallons.

    Total cost is $1191 USD or $1527 CDN

    You save $423 CDN per year (based on the totals in my previous post).

    You will only need 262 shares or about 43K CDN in CVX stock....

  13. #13

    Re: Oil share investment vs. gas prices

    If you want a more Canadian direct solution, buying gas at PetroCanada....

    Suncor Energy (SU.TO), share price is $49.25 CDN and the Dividend is $1.44 CDN.

    $1950/$1.44 = 1354 shares. ($1950 fuel costs per year is from previous post)

    1354 shares will cost you $66,684 CDN


    NEXT is share price sensitivity +/-10% (all CDN):

    If the share price goes up 10% in the year it becomes $54.18 which is a per share increase of $4.93.

    If you purchased 306 shares the share price increase is $1508, 306 shares gives you a dividend of $440 and total is $1948 (oops $2 short of the fuel costs due to rounding...). 306 shares will only cost you $15,169. So if you were convinced it was going up 10% you only need 306 shares.

    If you purchased the original 1354 shares as above you make an extra profit of $6675.22 on top of having your fuel paid for by dividend.

    If the share price goes down 10% in the year it becomes $44.32 which is a share decrease of $4.93... There is NO scenario (number of shares) where you are even at the end of the year!

    If you purchased the 1354 shares as above you LOSE $6675.22! More than three times what you would have paid out of pocket in fuel if you did no "fuel price offset" investing!



    Now about that Bentley.....
    Last edited by backmarkerducati; 05-04-2018 at 04:58 PM.

  14. #14
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    Re: Oil share investment vs. gas prices

    Enbridge has been beaten down enough to be compelling.

    ~7% divvie at the current price. A couple of noteworthy events in the next 30 days to juice the SP as well: earnings on May 9th, decision on the Line 3 pipeline in MN in June.

  15. #15

    Re: Oil share investment vs. gas prices

    Quote Originally Posted by Lightcycle View Post
    Enbridge has been beaten down enough to be compelling.

    ~7% divvie at the current price. A couple of noteworthy events in the next 30 days to juice the SP as well: earnings on May 9th, decision on the Line 3 pipeline in MN in June.
    If I knew what this meant I might have more cash.

  16. #16

    Re: Oil share investment vs. gas prices

    Quote Originally Posted by Lightcycle View Post
    Enbridge has been beaten down enough to be compelling.

    ~7% divvie at the current price. A couple of noteworthy events in the next 30 days to juice the SP as well: earnings on May 9th, decision on the Line 3 pipeline in MN in June.
    I need to buy $29K of Enbridge stock to offset my NG consumption in a year (in dividends).....

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