Siegel: US Stocks Looking Very Attractive
July 07, 2011
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Ludwig: Are you talking about electric cars, or what? Siegel: Or natural gas. Natural gas is disconnected from oil prices for the first time in decades, because of the fact that there’s so much of it. I’ve read a lot more about the electrical car, and people who have tried the GM Volt say it’s pretty amazing. Ludwig: So you think the recalcitrance of Detroit to pursue new technology is a thing of the past? Siegel: I think so. Why can’t GM make as much on a Volt as it does on an Impala? I don’t understand. There are subsidies, but the Volt is more expensive at the present time. But oil doesn’t have to go so high before it makes a difference. Plus, the technology is improving. Natural gas is feasible right now for buses and trucks. It’s not feasible quite yet for automobiles because it needs a big storage container—you have to use your trunk. The technology could come from anywhere in the world. I don’t think any manufacturer could say “No, we don’t want to do this.” There are too many companies around the world that are going to be selling millions of automobiles, and anyone who finds a breakthrough is going to be very rich. Ludwig: So in the best of all possible worlds, Peak Oil may be a fact, but it may also become irrelevant quite soon? Siegel: That’s correct. Peak Oil contains the seeds of its own destruction, because once oil prices get high enough, you know there’s going to be a switch. Ludwig: I’m glad you mentioned that, because every time the economy gets traction, the whole thing comes crashing down because oil hits $100 a barrel and people start getting anxious again. Siegel: There is a bit of that. Oil is like an automatic stabilizer. When everybody gets bullish again, oil goes up and slightly squelches it. But these are long trends. Right now, oil does move with the world economy. And the emerging markets are now huge in terms of the need for oil because they’re increasing their automobile production much more than in the developed markets. But if Brent oil can stay around $100 for the rest of this year, and gasoline goes down to around $3.10-$3.20 a gallon, I would not be surprised—and I know this is really way off the charts—we could have 4 to 5 percent growth in the third and fourth quarters. That’s not at all impossible. Oil is the main thing that shaved a couple points off our growth in the first two quarters, but if oil stays down, the growth could be higher. |
