canadian oil sands stocks
-
After Nexen's Buyout, How Should You Play Canadian Oil Sands Stocks?
The purchase of Calgary-based energy company Nexen Inc. (NYSE: NXY) for $15.1 billion by China's CNOOC Ltd. (NYSE ADR: CEO) is the largest overseas purchase ever by the world's second-biggest economic power.
But it will likely be the last time China, or any other country, takes a big chunk out of Canada's oil sands - the world's third-largest proven reserves of crude oil.
That's because after Canadian Prime Minister Stephen Harper approved the Nexen deal in December, he banned further foreign firms' investment in Canada's oil sands and will allow them only under "exceptional" circumstances.
"The government's concern and discomfort for some time has been that very quickly, a series of large-scale controlling transactions by foreign state-owned companies could rapidly transform this [oil sands] industry from one that is essentially a free market to one that is effectively under control of a foreign government," Harper said in December.
"Foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada," he added.
But foreign government control isn't the real problem facing Canadian oil sands companies.
-
The Keystone Delay Won't Stop These Canadian Oil Sands Stocks
I'm not a knee-jerk hater of the Obama administration.
But the President's decision to reject the Keystone pipeline was one of his worst.
Aside from creating jobs, the pipeline would have decisively swung U.S. energy supplies more toward domestic sources and those of our friendly neighbor Canada.
Granted, the pipeline wouldn't create energy independence but it would mean importing less oil from the Middle East.
It is the kind of switch that could help save the U.S. large amounts of blood and treasure in the future.
Because in practice, our dependence on Middle Eastern oil forces us to incur huge foreign costs - after all, we just finished paying $800 billion for the Iraq war. As you know, that is just a drop in a much larger bucket.
Add in the human losses and the costs are incalculable.
In this case, caring less about what goes on in the Middle East - other than ensuring the safety of our ally Israel - would save us all those costs, and get us that much closer to balancing the damn Federal budget.
So let's just say shelving the Keystone pipeline wasn't exactly the president's finest hour.
Bullish on Canadian Oil Sands Stocks
However, while the Keystone Pipeline continues to twist in the wind, investors shouldn't ignore the Canadian energy sector - especially the Athabasca tar sands.
Because with oil prices on the rise, these Canadian resource plays are likely to offer investors serious returns.
Here's why: oil prices are headed higher.
In fact, Fed chairman Ben Bernanke's recent promise that U.S. interest rates will remain near zero until the end of 2014 has given a huge boost to commodity and energy prices.
What's more, the $600 billion injection into EU banks and the promise of another $600 billion this month just adds more fuel to the inflationary flames.
Eventually, oil prices will get so high that they will cause a recession all by themselves, just like they did in 2008. But remember, that happened at $147 per barrel, so we've still got quite a way to go. This time oil could get closer to $200 per barrel.
That's bullish for places like the Athabasca tar sands.
To continue reading, please click here...
