Wednesday, January 13, 2010

Pain at the pump?

It's been a long time since gasoline prices have averaged over $3 per gallon in the US, but that trend could be ending soon. This week gas is averaging about $2.74 per gallon which is about $1 per gallon higher than it was a year ago. Traditionally, gas prices are lowest in the winter months as demand is lower, but the price of oil has more than doubled since December of 2008. So with the spring and summer high demand months ahead of us, we may be looking at gas prices around $3.25 or more in the next 6 months. So what's an investor to do? You can't change the price you pay at the pumps, but you can participate in the price appreciation in your portfolio. Buy shares of major oil companies like Exxon-Mobil (XOM) or British Petroleum (BP). Not only do you have a good chance to make money on the stock, they both pay nice dividends as well, especially BP. For those who might like a more diversified approach, you can try a few of these ETF's: DBO, USO, and UGA. Like anything else, don't take my word for it, do your homework and decide if it makes sense in your portfolio. Talk to your financial advisor and come up with a strategy that works for your goals and objectives. Just remember, you can work the other side of the fence and soften the blow of higher gas prices!

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