Long Term View On Oil

Barron's this weekend had a thought-provoking article on the price of oil down the road (Here Comes $75 Oil).  The article made a lot of sense, talking about recent discoveries and shifts to alternatives such as Natural Gas.  It also discussed how it would hurt Russia, who gets 50% of Govt income from oil. And Russia's oil is in Siberia and is expensive to extract.

Now oil prices are a difficult thing to project, just a few years ago everyone was talking about "peak oil" and perhaps a cost of $200 a barrel. Whoops.  Thinking about my portfolio, I have one predominant Oil & Gas play, BBEP.  Their expertise has been scraping the bottom of the barrel (so to speak). They take sites that have already been used and get additional oil and gas from them.  I expect they can buy that land cheaply, but I am unsure if it costs them more to get the oil out than "normal". It seems likely it is more expensive.  That needs to be on my "think about it list".

I love my BBEP holding. It is my 6th largest position, pays a 9.7% dividend and my initial purchase from last July is up 41%.  I think that before the end of the year, I will need to decide whether to let it keep flowing, er dripping, er gushing....

I guess the corollary is whether I should be thinking harder about stocks that are benefited by cheap gas. Airlines are the auto (ahem) pilot answer.  I have hemmed and hawed about airlines for many months (I thought a bit about Hawaiian Air (HA) at the start of the year, and now it is up 37%)!