Milestone or Inflection Point?

I suspect that today is the last day I will ever pay less than $4 for a gallon of gasoline. I saved the receipt from the first time I paid more than $3 a gallon - it was just after Hurricane Katrina hit when there was wide concern that gasoline deliveries would be interrupted. Here is my prediction: the internal combustion engine is doomed. It's tombstone has already been carved and is just waiting for the DoD to be added by an alternative. My bet is electric or hybrid electric originating from nuclear plants. Corn ethanol is a complete folly. Actually, any agriculturally-based fuel input, be it switch grass or sugar or otherwise, is a bad idea as it will invariably compete for farm land with food products. The world wants to eat more than it wants to drive and the backlash will only continue if we don't wise up to basic realities.

However, for the time being, the oil companies are providing a safe harbor for investors weary of the fall-out from the housing/financial market crunch. Oh, yes, some decry the profits of ExxonMobil, et al. But their arguments mostly neglect the facts that Big Oil is losing money on refining operations, their overall margins are a mere 8%, and the largest shareholders of the energy companies are mutual funds and pension plans. So, retirees, teachers, policemen, and all sorts of individuals with retirement accounts are personally gaining from the profits. Probably no comfort to you, but remember that when politicians and other "activists" yap about "windfall profits" and new taxes, it will really mean less money in the pockets of senior citizens and public-sector employees.

Back to alternative fuels... the company that can provide a fuel with the energy equivalent of a gallon of gas at $1 per unit is going to make a lot of money. A lot. I call that opportunity.