The Democrats and Oil Prices

Each political party is strong in one direction or the other, but Democrats are certainly better known for their environmental "programs". They have consistently bashed the Republicans and big oil for the recent highs in oil prices and subsequent record profits. In a political year, I can't say I blame them, but the storm clouds are gathering and I believe oil prices will be higher under a Democratic Congress and potential future president than under the current administration. My conclusion stems from the son of a blacksmith in Iran.

The current president of Iran, Mahmoud Ahmadinejad, is leading a chorus of supporters in the Middle East that would like nothing more than to banish the "infidels" from Iraq and Israel. The Shia majority that was suppressed under Saddam is know getting their payback, and full fledged civil war is on the horizon. Saudi Arabia, a majority Sunni country and the largest petroleum source in the world, is now flanked by Shia on both sides. There is no love lose between Shia and Sunnis. Iran, in concert with Syria, and Hezbollah will seek to consolidate power and thus control of oil in the Middle East.

Our enemies know how oil can have a grip on our economy and have no incentive to keep prices low. High oil prices fuel terrorism and their world view, which does not include Israel surviving as a country. Without commenting on whether we should have gone in to begin with, that is water under the bridge, the question now is do we leave or stay.

The Democrat bias seems to be less aggressive than the Republican stay the course mantra. The country has registered frustration over Iraq with the recent Democrat takeover in the House and Senate. If the forces of the left that favor a quick exit from Iraq prevail, the region will be in turmoil and oil prices will move significantly higher.

Imagine a world in which a fundamentalist theocracy controls the most productive oil assets on the planet. Oh, and we haven't begun to talk about Al Qaeda, Nigerian rebels, Hugo Chavez, China/India Growth, and a multitude of other negative influences on oil supply/demand.

I believe the next twenty years will be a great time to be positioned in oil/gas investments. Markets move in cycles and the past twenty years have not been friendly to oil investors. Most domestic oil in the USA is produced by small independents. They suffered for years to keep their leases productive and those that have survived deserve to be rewarded. Accredited Investors can position a portion of their investable assets into oil/gas direct participation deals and enjoy substantial tax benefits, as well as cash flow.