I completely panickedThursday night. Right after leaving work at Fox Business in the heart of NYC, I headed straight for my Exxon Mobil (XOM)gas station on Rt. 1/9 in Fort Lee, N.J. I thought, "Omg, I have GOT to fill up the tank before Gustav gets to it and it costs me so much more!" So I put the pedal to the medal and zoomed there, pulling in with such speed that the attendant looked a little alarmed. I had Kid Rock blasting on the XM satellite radio (XMSR) but immediately turned it down and said, "Fill it up with Plus, please!" (You can't pump your own gas in New Jersey...they won't let you. Whatev.)
My panic was goosed by the fear that Tropical Storm Gustav (now, as of this afternoon, upgraded to Hurricane status) would head toward the Gulf of Mexico and jack up prices. I smugly cooled my jets, thinking I had somehow beaten the clock to the punch as I paid $3.56 cents per gallon. (Cheap, right?)
What an idiot. Oil DROPPED today. It wasessentially flat on the session, and the fell further in the after-market hours by about 13 cents.
JUST WHEN YOU THINK YOU KNOW WHERE OIL IS GOING, IT DOES A HEAD FAKE.
However,yesterday (Friday) afternoonon Countdown to the Closing Bell, Jeff Rubin of CIBC World Markets, where he's thechief economist and strategist, breezed down from Canada like a frigid Alberta Clipper and rained on my pathetic little "I-gassed-up-on-the-cheap" parade.
Jeff's an awfully smart guy. He says Gustav will destroy U.S. attempts at energy self-suffiency and will eventually push gasoline prices up to $5 a gallon, where they will stay for a very long time. He says oil production in the rig-dotted Gulf will be increasingly threatened by severe storms that continue to grow in frequency and strength in the region. (So far he's right: what were the chances that we'd see yet another major hurricane heading right to Louisiana justthree years after Katrina?)
He also said even if drilling in Alaska were green-lit pronto, we'd see the first drops of crude in 2018...long after we will have finally invented cars that don't even NEED to run on the stuff. Oh, and YES, I asked him about the oilsands up in Alberta and whether that will eventually supplant the crude we're begging hostile countries for now.
The short answer? Nah. You ready for why? Rubin says it takes 1,200 cubic feet of natural gas to create one single barrel of synthetic oil from the Canadian sands.
Peter Schiff of EuroPacific Capitaltold me that's like saying, "Hey, I found a way to manufacture gold by using platinum!" It just doesn't make financial sense.
Have a GREAT holiday weekend. Oh, and did I tell you how much I appreciate that you're watching me and the gang on Fox Business?