The heart-stopper du jour for the stock market has been the merciless, unexpected collapse in oil prices. It was so severe and so sudden that the industry was totally unprepared. But, maybe it has fallen more than is justified. Take a look at this graph:
The dramatic drop in the price of oil matches that of the Global Financial Crisis, which we are NOT experiencing right now. Either there is a fundamental restructuring that has been forced on the huge oil industry -- that nobody foresaw -- or oil is oversold and will rebound at least to the $65/bbl range.
I think it is time to buy some oil companies with exposure to the Eagle Ford and Permian Basin, which are lower-cost fields, especially those companies with enough cash to buy those competitors that are certain to fail shortly.
