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Profit from Oil Prices: Invest in China

Posted May 2, 2008

“Here in China, they’re using fuel at an accelerating rate. Part of that is the increasing reliance on fuel oil, but an even bigger catalyst is simply because companies like Chery Automobile, Geely Automobile (0175: Hong Kong), and Chongqing Changan Automobile Co. Ltd., are producing inexpensive, gas-powered cars for the masses.” — Keith Fitz-Gerald

Blogger’s note: Keith Fitz-Gerald has been leading an Oxford Club investment tour through China. And he’s sending back dispatches from his travels. This is the second article in his series. You can start from the beginning with his first entry on the road or read on to learn more.

by Keith Fitz-Gerald

Baltimore and Xi’an, China – (TFN): For years, I’ve been telling hushed, incredulous audiences around the world that oil prices were headed higher - much higher.

I consistently list three causes: Supply, demand, and interruption.

The first is obvious - even though most folks still don’t want to believe it. Data suggests we’re burning through the world’s petroleum reserves four times faster than we’re finding new ones. We haven’t had a major new discovery of significance in 30 years. And, adding insult to injury, we still don’t have workable substitutes in place (alternative energy technologies such as fuel cells, for instance), even though we’ve had decades of warning to get our act together.

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The second, demand, is tougher to call. On one hand, higher prices are reducing demand in so-called first-tier countries. But when it comes to the rest of the planet, all bets are off.

Here in China, they’re using fuel at an accelerating rate. Part of that is the increasing reliance on fuel oil, but an even bigger catalyst is simply because companies like Chery Automobile, Geely Automobile (0175: Hong Kong), and Chongqing Changan Automobile Co. Ltd., are producing inexpensive, gas-powered cars for the masses.

The same is true in India where Tata Motors (TTM: NYSE) $2,500 car is opening up driving and vehicle ownership to millions of consumers who otherwise would never have also become motorists.

And they’re gearing up for more. Read on to learn how to profit from China and India’s gas guzzling.

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Posted by Keith Fitz-Gerald · Filed Under International Investing 

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