Where To Invest

Recently there is rarely a news cast broadcast without some reference to rising gas prices. As recession in the US starts to bite and the fallout of the mortgage crisis still hurts more and more people are noticing that the amount of money each month that disappears into you vehicles fuel tank is increasing dramatically. Not only does this reduce the amount of money you have left each month but it also reduces the amount of money you may need to be putting toward you mortgage or other loans.

Why is gas so expensive?

Gasoline is a form of processed and refined oil. The bare facts show that oil prices have more than doubled in the last 12 months. Due to these higher oil prices, the gasoline we use in our cars every day has also risen in price significantly.

Rises in oil (and other commodities) prices are notoriously volatile. There are so many factors that can affect their prices and cause them to rise. Below are a few examples that have had an effect over the last year or so:

* War in Iraq (a major oil producer)
* General political tensions in the MIddle East
* A fire in a major refinery or pipeline
* Strikes by oil company workers
* Oil fields turning out to be smaller than expected

The other factor that make all of the above worse is that global demand for oil is rising rapidly. The Indian and Chinese economies are growing at a fast rate and as a result need more and more oil to do so. Neither show signs of slowing down.

How to profit from these rising oil prices

The way to offset your higher gas prices is to try to invest in the oil sector. It is not as straightforward as going out and buying a barrel of oil and waiting until the price goes up before selling it. That is not practical. Instead the best and most profitable way is to invest in either oil related stock or oil tracking investment funds.

Author: James McKerr
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