Random Stock Market Thoughts

Monday, October 03, 2005

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A Quick Thought on Oil Stocks

I expect oil and related stocks to continue their rise in the short term; however, it just came to me what will be the downfall of oil and the related stocks. The problem in essence is that there is not enough refining capacity to shoulder the load of the demand for gas. So the companies located in the US want to build more refining capacity. Hearken back to the days of Economics 101 for a moment and think about it. When the supply rises what will happen to the quantity demanded of oil, and more importantly the PRICE! It may be a ways off, and I don't know if the right time to sell these stocks is when they announce they are building the capacity or when it actually comes online, all I know is this is the red flag of all red flags. I would be willing to bet, that once this occurs (it may be a few years out) you will NEVER want to own another oil stock as long as you live! But hey that's just the random thought of the day...

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