This Bad News Is Good News

Five Shocking Facts About an Amazing New "Super Substance" 5: It's totally transparent, yet stronger than steel... 4: It conducts heat better than any substance known to man... 3: It can bend light waves, resulting in "invisibility cloaks..." 2: It can even improve your tennis game with ultra-lightweight racquets. Yet here's perhaps the most shocking fact of all... 1: One tiny company holds the key patents for lucrative new developments. To find out its identity, simply click here. Friday, October 31, 2014 | Issue #2408 Oil and Gas: When Bad News Is Good News Alexander Green, Chief Investment Strategist, The Oxford Club Some analysts manage to see the cloud in every silver lining. The recent move in energy prices is a prime example. An unseasonably warm fall and a flood of output from shale pushed natural gas prices to their lowest level since last November. Oil has dropped $20 a barrel since mid-June for much the same reason. On Wednesday, Abdalla Salem el-Badri, OPEC's secretary general, predicted that if current prices remain constant, half of U.S. oil that is fracked from shale formations will be uneconomic. Not so. This is a man talking his own book. Yet plenty of pundits are buying it, arguing that cheaper energy will stifle the U.S. energy renaissance, hurt companies that invested heavily in property leases and new drilling technologies, and eliminate high-paying jobs in one of the few areas of the economy growing strongly. This is way overdone. Is it possible for human beings to live centuries at a time? It's not only possible, but technology is already available to make it happen. Geneticists at Cambridge University and MIT all are predicting we will live far longer than most people believe possible. And one tiny company in Massachusetts holds the key to radically increasing our lifespans... while radically expanding our investment returns. Click here to see what this is all about. A Victim of Success Let's start with oil supposedly becoming "uneconomic" at current prices. Industry veterans disagree. The problem isn't that the world economy is suddenly growing much slower. If anything, the U.S. oil industry has become a victim of its own success. Fracking and horizontal drilling have boosted oil output to 8.97 million barrels a day, according to the Department of Energy. Recall Economics 101. There isn't enough additional demand to match the additional supply. That puts pressure on prices. Yet Occidental Petroleum's CEO Stephen Chazen said last week that he saw plenty of drilling opportunities in the Permian Basin in West Texas at current prices, adding that "there's a lot of economic oil at $75." In fact, in most of the Permian, where U.S. drilling is heaviest, it will be profitable to drill at prices as low as $57 a barrel. Marianne Kah, chief economist with ConocoPhillips, agrees... and then some. She says oil prices would have to fall to $50 a barrel to really harm oil production in U.S. shale basins. And added that 80% of the American shale sector - where Conoco is a major operator - is profitable at prices as low as $40. Yes, lower prices will hurt small, overleveraged companies that borrowed big on the belief that oil would stay near $100. But most of the industry will survive and prosper. Some have hedged prices through 2015 and beyond. Others are cutting costs and finding ways to produce oil more efficiently. (In other words, say goodbye to the $100,000 welder.) Who Will Benefit? More importantly, let's look at the other side of this equation, not producers but consumers. A $0.50 drop in gasoline prices will save motorists $50 billion a year. It's also a plus for utilities, transportation companies and manufacturers. (And a bane to the oil-dependent economies of "friends" like Russia, Iran and Venezuela.) Natural gas is down roughly 10% since September 29. But this is the fuel used to heat half of American homes. Between what consumers save here and at the pump, they are going to have plenty more discretionary income. Sure, utilities will sell the more expensive fuel they bought in the spring and summer first. But, ultimately, consumers will pay considerably less, leaving them more money for cars, computers, smartphones, travel and restaurants. Only in the Alice-in-Wonderland world of perpetually bearish analysts are lower energy price a net negative. Stay long stocks. Good investing, Alex P.S. Lower energy prices is one reason I'd argue we're on the cusp of a new Golden Age for investors. March 11-14 at the beautiful Renaissance Vinoy Hotel in St. Petersburg, Florida, dozens of other analysts and I will discuss how to profit from it. It's all part of the 17th Annual Investment U Conference, our most important event of the year. To learn more, click here. Click here to post a comment on InvestmentU.com We're About to Share Some of Our Editors' Best Picks With a Select Group of Readers As an Investment U subscriber, you already have access to innovative market analysis you can't find anywhere else and timely views on the markets. But did you know that you can also receive specific stock recommendations from our experts' premium research services? It's all thanks to a special upgrade we've created. To find out how it works, click here. Reader Favorites From Investment U The Fizz Falls Flat on SodaStream Stock by Tom Sandford Thursday, October 30, 2014 Scarlett Johansson may have helped save the world in The Avengers, but saving SodaStream International Ltd. (Nasdaq: SODA) may prove to be a true hero's task. Read On... What if the Next Big Thing Is Already Here? by Andrew Gordon Thursday, October 30, 2014 Here are some really easy questions... Are driverless cars the "next best thing"? Is the new iWatch, expected to come out early next year, the "next best thing"? How about SpaceX's private spacecrafts? Or drones? Read On... Investment U Plus by Bob Keaveney Friday, October 31, 2014 What's the best way to play America's energy renaissance, despite lower oil and gas prices? By investing in companies that move the stuff - but don't drill it. One of David Fessler's favorites has charged 61%. To find out who it is, sign up for the premium version of Investment U by clicking here. You are receiving this email because you subscribed to Investment U. To unsubscribe from Investment U or to manage your account, click here To cancel by mail or for any other subscription issues, write us at: Investment U Attn: Member Services 105 West Monument Street Baltimore, MD 21201 Keep the emails you value from falling into your spam folder. Whitelist Investment U. Question? Comment? Need help? Contact us here. 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