The price at the cash register ticked higher in October, though it was driven by the cost at the pump and on the lot.

Energy prices and new car sales (the highest in 28 years) pushed consumer prices upward in October, they're still cheaper than they were a year earlier. The Labor Department reports that consumer prices edged up 0.3% last month, a tad higher than the 0.2% anticipated. Take food and energy out of the equation, and inflation rose 0.2%, again ahead of the 0.1% that analysts expected.

Continue reading Energy, auto sales push consumer prices higher in October

Energy, auto sales push consumer prices higher in October originally appeared on BloggingStocks on Thu, 19 Nov 2009 13:00:00 EST. Please see our terms for use of feeds.

The interest in using natural gas as an alternative to crude has helped natural gas-based companies appreciate in value. Chesapeake Energy (NYSE: CHK) has benefited from that interest, with a gain of more than 20% this year.

CHK is an interesting story in that during the craze in energy prices in 2008, the CEO of the company was forced to liquidate his entire position. That forced selling created an opportunity to buy the stock at an incredibly cheap price, even beyond the artificially low energy prices reached earlier this year.

Continue reading Oil stock #5: Chesapeake Energy (CHK)

Oil stock #5: Chesapeake Energy (CHK) originally appeared on BloggingStocks on Sun, 28 Jun 2009 13:00:00 EST. Please see our terms for use of feeds.

Continue reading ETF Funds: Hedge your home heating bills with UNG

ETF Funds: Hedge your home heating bills with UNG originally appeared on BloggingStocks on Thu, 29 Jan 2009 18:00:00 EST. Please see our terms for use of feeds.

This morning my wife asked me this question and I had no idea how to answer it. But it's true that oil is down -- it trades at $34.39 a barrel; while gasoline prices have been rising between 10 and 20 cents a gallon from the low. I paid $1.66 a gallon for mid-grade three weeks ago and $1.79 for mid-grade last week. So what's the answer? Less supply because refiners shut down for regular maintenance during this time of year.

While this may not be true throughout the country, it appears to be so in California. In late December, The MercuryNews predicted that gasoline prices would rise 10 to 20 cents a gallon. Why? California refiners including Exxon-Mobil (NYSE: XOM) and Chevron (NYSE: CVX) cut back on production for their usual maintenance needs in January. Moreover, a BP plc (NYSE: BP) plant in Carson, CA , had mechanical problems that affected production.

Overall this means lower supply with demand remaining relatively constant. California's Energy Commission reports that production of CA's gas blend fell 11% in January from the previous month. In the short run, prices should fall back as these refineries go back to normal production. But experts predict that gasoline prices nationwide could hit $2.50 a gallon nationally this summer.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. Portfolio recently published his eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned. He has no financial interest in the securities mentioned.

If oil is down, why is gasoline up? originally appeared on BloggingStocks on Tue, 20 Jan 2009 12:50:00 EST. Please see our terms for use of feeds.

One of the great things about a global financial collapse is that economic activity slows down so much that people use less oil. And one of the more interesting aspects of this collapse is that despite the terrible problems we face in the U.S., investors are flocking to the dollar as a symbol of permanence in a turbulent world. Since oil is traded in dollars, the combination of a stronger dollar and weaker demand leads to a lower price.

For example, today oil went as low as $86.36 -- which is 41% below its July peak of $147. Meanwhile, the dollar hit a 13-month high of $1.36 to the Euro -- that's 15% stronger than the $1.60 it traded at this summer. That may be because the U.S. passed its $810 billion bailout plan and Europe has not yet figured out what it will do to deal with its financial crisis. Not to worry, oil is still 260% higher than the $24 it traded at in January 2001 and the dollar has lost 48% of its value of $0.92 to the Euro at which it traded back then.

Where do we go from here? That depends on two variables: how much oil-producing nations cut back on production and how the dollar performs relative to other currencies as this global financial crisis unfolds. If oil-producing nations cut back on production, prices will rise as long as the supply contraction matches the decline in demand. And as long as the world perceives that the U.S. is the world's financial safe haven -- the dollar could strengthen. And that would push oil prices lower.

In a nutshell, oil prices will keep dropping unless oil producing nations drastically slash production and the dollar plunges.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Oil below $90 as dollar strengthens originally appeared on BloggingStocks on Mon, 06 Oct 2008 10:28:00 EST. Please see our terms for use of feeds.

Even with some modest recovery in airline stocks, it may be too early to celebrate. The worst may not be over for the industry.

The International Air Transport Association says that global losses for airlines could top $6.1 billion this year. The Wall Street Journal quotes ATA Chief Executive and Managing Director Giovanni Bisignani as saying, "We are bracing for more situations of airlines collapsing" amid higher fuel prices and lower revenue.

The slowdown is apparently moving to Asia, a major destination for many large US and EU airlines.

United (NASDAQ: UAUA) is a good example of a US airline that many thought would be on the rebound. New fear of rising oil prices has spoiled that a bit. After falling from a 52-week high of $51.60, shares crashed to $2.80. They have recently made a minor recovery to $12.40. But, in the last two days, UAUA shares have been off sharply.

Oil is still just below $120. Even at that level, down from $143, airlines face huge increases in fuel prices over last year. A modest disruption in oil supply could send prices back up again.

The market sees US airline stocks as having potential for big returns. But, with the price of oil making a potential bottom, the carriers are still in too much trouble to have a real recovery. Buying shares in the companies still offers more risk than reward. The industry may still have operators that have valuations heading toward zero.

Douglas A. McIntyre is an editor at 247wallst.com.

Will $6 billion in losses sink an airline or two? originally appeared on BloggingStocks on Thu, 21 Aug 2008 10:00:00 EST. Please see our terms for use of feeds.

Continue reading Europe's economy contracts -- bad news for the global economy

Europe's economy contracts -- bad news for the global economy originally appeared on BloggingStocks on Thu, 14 Aug 2008 10:55:00 EST. Please see our terms for use of feeds.

High gasoline prices are putting the squeeze on companies and their workers. People are leaving their jobs due to the high commuting costs. The New York Times reports that a resume service received "14 calls last week and 9 of those named high gas prices as their No. 1 reason for leaving their job."

And by my count, the Times presents seven ways that companies are changing to relieve the pressure:

• Encourage more telecommuting. The Times describes how "Citigate Cunningham, a public relations company, now encourages workers to stay home whenever possible, providing laptop computers and BlackBerrys to enable telecommuting, and reimbursing them $40 a month for high-speed Internet connections in their homes."
• Give employees money to pay for gas. Since June, OperationsInc., a human resource consulting firm, gave employees up to $100 a month on an American Express (NYSE: AXP) card "to offset rising gas prices."
• Rent offices closer to workers' homes. Microsoft Corp. (NASDAQ: MSFT) recently "leased three large office complexes far from its headquarters" to cut 7,000 employees' commutes.

Continue reading Seven ways that companies cope with high gas prices

Seven ways that companies cope with high gas prices originally appeared on BloggingStocks on Thu, 07 Aug 2008 10:40:00 EST. Please see our terms for use of feeds.

Continue reading Analysts say $4 per gallon may be a gasoline use game-changer

Analysts say $4 per gallon may be a gasoline use game-changer originally appeared on BloggingStocks on Thu, 26 Jun 2008 09:00:00 EST. Please see our terms for use of feeds.

Continue reading Producer prices rocket 1.4% higher in May on surging energy costs

Producer prices rocket 1.4% higher in May on surging energy costs originally appeared on BloggingStocks on Tue, 17 Jun 2008 09:09:00 EST. Please see our terms for use of feeds.

The average price of gas finally crossed $4 last week, perhaps on its way to $5.

According to The Wall Street Journal, "The record nationwide average for regular-gasoline prices, announced by auto club AAA, follows Friday's near-$11 surge in oil prices to a record $138.54 a barrel."

While it makes a good headline, it is really no more important than when gas went above $3.95 or if and when it moves above $.4.05. What is important is that, at the current level, gas on its own could break the back of the consumer, and of many businesses.

It is not unusual for drivers to use 20 gallons of gas a week. For that consumer, the difference between $2 gas and $4 gas is $2,100 a year. A family making $40,000 is probably keeping $30,000 after taxes. So, 7% or 8% of their net income now goes to gasoline. That does not leave much for the rising cost of food and a mortgage.

The news is obviously just as bad for industries like farming and the airlines.

If investors want to see where the economy and markets are going, watch gas prices. They are probably a better proxy for how bad things are for the consumer than any other single measure. Gas at $5 would be a catastrophe.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

As gas crosses $4, the economy sweats originally appeared on BloggingStocks on Mon, 09 Jun 2008 09:15:00 EST. Please see our terms for use of feeds.

Continue reading Consumer sentiment falls to 28-year low on economy, inflation concerns

Consumer sentiment falls to 28-year low on economy, inflation concerns originally appeared on BloggingStocks on Fri, 30 May 2008 12:03:00 EST. Please see our terms for use of feeds.

Crude at $130 a barrel is bad enough. Who needs more negative news about oil prices? It appears that additional data supporting further increases keeps coming, no matter what.

Recent research shows that oil supply out of countries which are net exporters of oil is not keeping up with demand from consuming nations. According to The Wall Street Journal, "Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world's top oil exporters fell 2.5% last year, despite a 57% increase in prices." If those nations could have shipped more crude, wouldn't they have done so to make more money?

There is a great deal of data which shows that oil-producing nations are keeping more of their product to build their own infrastructure and fuel their own cars and trucks.

But, the answer to lower shipments may be more sinister than that. Oil-producing countries might make more money releasing extra crude this year, but that could push prices down. If they are more liberal in sending oil abroad over the next several years, they might get more cash from volume but less from higher prices. Oil supplies may be being "managed" by OPEC and its friends to keep prices high for the next decade.

There is a conspiracy theory for everything else. Why not for oil supply?

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 newsletter.

The news on oil gets worse originally appeared on BloggingStocks on Thu, 29 May 2008 08:26:00 EST. Please see our terms for use of feeds.

Like, his paymasters, the oil companies -- who contributed $2.7 million to his 2004 campaign -- George W. Bush is feeling sorry for himself. Perhaps his record low poll ratings are hurting his feelings. He went to Saudi Arabia and asked it to increase production. He went to the Middle East and asked them to make peace -- it's a nice sentiment but will results follow? But that's not why Bush is whining.

BusinessWeek reports that Bush's complaint is that he thinks General Electric Company's (NYSE: GE) NBC News was unfair in the way it edited an interview. In the Israeli parliament, Bush gave a speech which none-too subtly implied that Barack Obama was like Nazi appeaser, Neville Chamberlain, because Obama has said he would meet with Iranian leaders. Bush thought he was being clever in his non-denial denial. Now he is complaining that NBC is being "deceitful."

That's rich coming from the person who got the U.S. into a war with Iraq based on false claims of Weapons of Mass Destruction (WMD) and ties to Al Qaeda. Is it the "Mission Accomplished" Bush or the "Heck-of-a-job-Brownie" Bush who's complaining about NBC News's "deceit?" Meanwhile -- as I posted here, here and here -- the oil companies have been whining because their earnings are down -- the price of oil has doubled and they have only been able to increase wholesale prices by 39%. Boo hoo!

So as you stand at the pump filling up your tank with $4 a gallon -- a surprise to Bush -- shed a tear for Bush and those poor, suffering oil companies.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns GE shares.

Let's shed a tear for Bush and the oil companies originally appeared on BloggingStocks on Tue, 20 May 2008 11:22:00 EST. Please see our terms for use of feeds.

Continue reading April U.S. producer prices rise just 0.2%, but core rate jumps

April U.S. producer prices rise just 0.2%, but core rate jumps originally appeared on BloggingStocks on Tue, 20 May 2008 09:18:00 EST. Please see our terms for use of feeds.

Continue reading April U.S. CPI rises 0.2%, lower than expected

April U.S. CPI rises 0.2%, lower than expected originally appeared on BloggingStocks on Wed, 14 May 2008 09:40:00 EST. Please see our terms for use of feeds.

One oft-repeated phrase from Washington is that there is "no magic wand" that can lower oil prices. This has proven to be comedic gold for some. But for people who find themselves paying nearly $4 a gallon to fill up their tanks, the joke is not so funny. After all, with an "oilman" in the White House, it should come as no shock that the price of a barrel of the gooey stuff has risen 5-fold since January 2001 -- hitting a record $126 today.

I noticed that every time the Fed cut interest rates, the dollar dropped in value and the price of oil rose. As I posted, this dynamic is as sure of a bet as you can get in the real world. That's why traders are shorting the dollar and going long oil. And they're betting enough on that trade to drive up the price of oil consistently. As I discussed last night on New England Cable News (NECN), the European Union decided yesterday to keep its interest rate at 4% to fight inflation. Ours is a mere 2% so investors are selling dollars and buying Euros.

This brings us to how Washington can cut gas prices fast. All it has to do is to raise interest rates. This little move requires no Congressional approval and the oval office occupant doesn't have to sign a bill. If our Fed got serious about fighting the rampant inflation it has unleashed, it would raise the Fed funds rate, the dollar would strengthen, the price of oil would drop, and you would pay less at the pump. It's as simple as that.

Continue reading How Washington can cut gas prices fast -- and why it won't

How Washington can cut gas prices fast -- and why it won't originally appeared on BloggingStocks on Fri, 09 May 2008 11:27:00 EST. Please see our terms for use of feeds.

Continue reading Consumer confidence falls to 5-year low on energy, food price concerns

Consumer confidence falls to 5-year low on energy, food price concerns originally appeared on BloggingStocks on Tue, 29 Apr 2008 12:15:00 EST. Please see our terms for use of feeds.

Last Friday, April 18, Precision Drilling Services TR (NYSE: PDS), the Canadian Trust, announced that the Board of Trustees has approved a cash distribution for the month of April 2008 of $0.13 per trust unit of Precision. The distribution will be payable on May 15, 2008 to unit holders of record on April 30, 2008.

The current dividend yield of 5.8% remains very generous and far above most other stocks in the sector. After some of my high dividend stock recommendations either under performed or simply cut their distribution, it is reassuring to see that PDS not only is maintaining its dividend, but in this particular case continues to pay out monthly, allowing for better compounding of the yield.

The stock closed today at $27.15, up 75.5% from $15.47 when I recommended the stock three months ago. If you got into the stock back then you would still be receiving over a 10% yield. Last year I had several high flyers but not all of them stayed up so I am watching Precision closely for signs of weakness or changes in the business.

Continue reading Chasing Value: PDS up 75% in Q1, announces distribution

Chasing Value: PDS up 75% in Q1, announces distribution originally appeared on BloggingStocks on Mon, 21 Apr 2008 17:01:00 EST. Please see our terms for use of feeds.

Imagine a large recession in which one of the key energy components almost doubles in price. The tab for natural gas is up by almost double since last summer. That is the same natural gas which most people use to heat their homes. Being cold is not a lot of fun.

According to The Wall Street Journal, "Prices in the U.S. have risen 93% since late August as power-hungry nations like South Korea and Japan compete in a global natural-gas market."

Who says inflation is not a major threat to the US economy? Add to the natural gas spike the rising cost of oil which has pushed gasoline to all-time highs. Add to that increasing food prices due to the bump up in the price of grains such as wheat and corn. Those commodities are being used to product the alternate energy source ethanol.

The picture complicates the job that the Fed and Treasury have to do. Lowering interest rates often increases the ability of businesses and consumers to spend. That, in turn, pushes inflation higher. Not lowering rates could exacerbate the credit crisis and lead to more home and credit card defaults.

There is one silver lining to the cloud. Banks are not passing lower rates on to customers. They are hording the cash that they get from the Fed. It is an ugly reality, but consumers and small businesses do not have access to the capital which they would need to start spending money again.

None of that solves the natural gas problem per se, but it could mean that people will cut back a bit on how warm they keep their homes. That, at least, would be a start.

Douglas A. McIntyre is an editor at 247wallst.com.

Natural gas prices take huge spike originally appeared on BloggingStocks on Fri, 18 Apr 2008 09:30:00 EST. Please see our terms for use of feeds.