I decided and invested in BAZAN, the Israeli Refineries in Haifa. Why?
(1) The company had a very nice dividend and follows the Ofer Bro.'s policy of being generous towards shareholders.
(2) The refining margins quoted are confusing and unreliable. BAZAN had over 5 dollars per barrel, American refiners are also profitable. Refining does not seem to be a dead business at all.
(3) The price of the oil is rising and with it the refining margins.
(4) People has been convinced that internal combustion engines are a thing of the past. Cars will move with sails and batteries. Not yet.
(5) Shell has declared its intention to sell its refineries in Europe. Shell is a honorable enterprise, but I dont believe a world. Why should anybody announce its intention to sell something? I believe they are trying to lower the prices of refineries because they want to BUY.
(6) I cant see anything better.
The ill. shows Azerbaijan's former shield. They supply the oil to BAZAN.
7 comments:
Plus, only ~ half of the petroleum is used for transportation. The rest is used in textiles, cosmetics, plastics and other chemicals. We'll need it for a long, long time.
Thanks for the encouragement. Successful investing is so difficult.
I'm sure if the greens had their way, all these uses could (theoretically and on a pilot basis, provided that generous grants are given to academics to prove the concepts) be replaced by hemp, corn starch, dried sewage, etc.
K
Theoretically.
Re #3: Not necessarily. If oil rises faster than gas and diesel, refiners' margins will get squeezed. If memory serves, this happened a couple of years ago (I owned shares of an American refiner then). Also, I am not too bullish on oil in the near-term, due to the continuing weakness of many developed economies, including that of the U.S., and OPEC's stated claim that they would prefer oil in the $80 range for now. At that price, it's high enough for them to make money, but not so high as to knock the world back into a recession.
Must we conclude that the price of oil actually represents preferences, rather than market forces?
Anon.
The world oil market is not completely free: there is a cartel called OPEC and also the buyers are organized. Everybody is trying to manipulate the price.
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