International Forecaster Weekly

First 100

We just passed Biden’s first 100 days. How are things going? Well his first move was to cancel the keystone pipeline and ruin the lives of thousands of people who made their living working it.  Within weeks, energy costs spiked.

Bob Rinear | May 11, 2021

Evening all, welcome to “as the world turns” in May 2021.

First off, something of a public service announcement. As you know, the price of lumber has gone moonshot. Estimates now are that the cost to build the “average” American home, is costing $38,000 more dollars to build because of lumber’s inflation.

So here’s something to seriously ponder. Is your homeowners insurance good enough? Seriously. Look at your policy and see what you have for rebuilding your home in the event of a devastating fire. Can you rebuild your home for the amount of coverage you have? Probably NOT.

It may very well be worth it to call your agent and discuss the idea of increasing your coverage amounts, to take into consideration of all this inflation. Nothing could suck worse than having a major disaster happen to your home, only to find that your insurance coverage will only cover 2/3 of the cost. Do you have the other 1/3 just sitting around to cover?

I’m quite serious about this folks. When I looked at our policy and saw how much we’re covered for in the event of a rebuild, it falls far short of the mark. As much as I hate paying for insurance, I’d rather pay a few hundred more per year, than to find out I’m 50K shy on a rebuild. Look into it.

Okay, lets move on….

We just passed Biden’s first 100 days. How are things going? Well his first move was to cancel the keystone pipeline and ruin the lives of thousands of people who made their living working it.  Within weeks, energy costs spiked.

In January, gasoline at my local market was 1.96. I filled up Monday at 2.89. Isn’t that something like 47%?  And yet his mantra is that the middle class will do better under his watch. I guess having my fuel costs go up 47% is helping me, somehow.

Now we have the supposed Colonial pipeline “hack” which is shutting down gas stations all over North Carolina, Virginia, Florida, etc.  North Carolina has declared a state of emergency. Gas will go considerably higher over this. 

Am I to believe this isn’t a false flag? Did any of you know that Colonial had the single biggest gasoline spill in US history, in Huntersville, NC and not ONE media outlet carried the story. Literally a MILLION gallons of gasoline leaked from their pipe and it was only discovered by 2 kids riding ATV’s. Now supposedly they get hacked? Really? Or is there an agenda here?

In January our Southern Border was the most secure it’s ever been. Since then, tens of thousands of illegals, some with Covid, have been shipped around the Country to various states. I don’t know about you, but I don’t feel safer now.

In January, schools and businesses weren’t pushing this insane “critical race theory” baloney, which is as flat out racist as you could possibly create. But Joe’s all aboard it.

In January, the middle east was quiet, and Trump had actually gotten several nations to recognize Israel as a sovereign nation. As I’m typing this 400 rockets have landed in Israel, killing at least 26. Several days ago, a ship was photo’d carrying tens of thousands of weapons to Yemen.

In January, Iran was fairly quiet. Since then, they’ve shown TV propaganda of the US Capitol building on fire, suggesting an attack. Their nuclear push is once again full speed ahead.

Since January, Biden has sent billions to the WHO. Since January, Biden has sent billions to the Climate accord.

I guess I could go on and on, but the fact is that I’m not seeing a single thing that has made America better or stronger than it was before Joe. I have  however, seen things that weaken her and negatively affect me directly.

But let’s go back to oil for a minute. As much as I would love to have the world run on renewables, it is NOT possible. Sure, we get some assistance from it, but we are DECADES away from doing away with coal, oil and natgas. Period.

Oil is the life blood of the military. Oil is the life blood of the economy. Petroleum is used in thousands of products from cosmetics to plastics. When oil rises, so do the prices for every day goods. So do the prices for FOOD.

Other than water, oxygen and sunlight, oil is the most important natural resource in the world. Without it we have nothing. No light, no food, no working hospitals, no heat, no air conditioning, and no way to make a living.  And when the price of oil and gas increases, it affects the price of everything else, because oil is necessary to manufacture and transport everything.

Now it’s no secret that Biden’s side of the aisle hates fossil fuel. In democratic utopia, somehow we do away with oil, coal and natgas, and yet “something” generates all the power to charge all these electric vehicles. However, I’m never presented with what that something will be.

But there’s something else about oil, that many people that don’t follow economics miss. A huge part of the financial system is tied to oil. Banks have hundreds of billions invested in loans to oil service companies and drillers. Derivatives adding in the trillions are tied to oil.

For a lot of the financial system, higher oil isn’t just a want, it’s a need. When Covid hit and the world’s economies ground to a halt, oil took it on the chin. Some companies didn’t survive. Diamond Offshore comes to mind. They had to voluntarily go bankrupt and are in the process of a court operated restructure. Same with Noble Corp. The one-two punch of Covid and the Saudi-Russia price war killed them.

But now we’re in a different situation. Significant portions of the economy are reopening, travel is rebounding tremendously, and oil demand is up YoY. Yet we’ve got NO Keystone pipeline. We’ve got NO colonial pipeline supplying the east coast.

Just like lumber, copper and everything else, we’ve got supply issues, delivery issues and rising demand. So, the oil space still looks attractive to me.  We’ve been in HAL and SLB. Both are doing nicely for us. But there’s many others that look attractive.

Instead of trying to find the exact company that might be a big winner in this space, maybe try utilizing the oil services ETF which is the OIH. For oil and gas exploration and production, the XOP is a good choice.

If you want to try and game the price changes in oil, the USO moves pretty well for an EFP, you might try your luck there.

Frankly I hate rising oil or gasoline prices. They make everything more expensive, but unfortunately, I think its heading higher. Good luck out there.