Oil sands attractions
I like Don Coxe's strategy on commodity investments:
- Invest in companies with long lived reserves in political safe countries.
Now, the first point is certainly true, the second is debateable.
All oil investors have to understand thet oil = politics, therefore it is always political risks involved when investing in oil companies.
There are two other important issues I see with oil sands industry at the moment:
1. transport capacity to markets
2. development and production costs
(Many would add a third: environmental sustainability. For me, the industry has or are in the process of solving these issues)
Piplene capacity: Will be built within 3-4 years at the most. Yes, that may mean depressed share prices for a while.
Development and production costs.
This is most positive about the oil sands industry, it is working its way down the industry cost curve, and becomes more competitive every year. Despite oil shale, barring one or more Ghawars is found, and that is not very likely.