Why Crude Oil Is Good Value
Jul 2nd, 2008 | By Mike Burnick | Category: Oil Investment & Alternative EnergyEditor’s Note: Crude oil prices are still above $140 a barrel, and King Abdullah of Saudi Arabia has told us all to get used to high prices. But Mike Burnick — senior analyst at The Sovereign Society — says the black goo is ‘pretty cheap.’ When you compare it to other products consumed heavily by Americans, oil actually seems pretty good value.
Why $143 Oil Looks Dirt-Cheap Compared to Other ‘Necessities’
By Mike Burnick
Investors are fretting over US$143 oil. Consumers are concerned about US$4 gas. But a recent story on CNBC.com really put this all in perspective. The story revealed how the high price of crude really stacks up against several other “necessities.”
The conclusion…oil’s actually pretty cheap at these levels.
In fact, a trip to your favorite neighborhood sports bar will really give you sticker-shock. A barrel of Budweiser (NYSE: BUD) beer will set you back US$447.25.
Would you like some Tabasco hot sauce for your chicken wings? That’ll cost you US$6,155.52 a barrel! Hmm…I’ll take mine mild.
Switching to water to quench your thirst instead of beer won’t save you much either.
A barrel of Perrier will set you back US$300.61 per barrel.
How about a trip to your local neighbor Starbucks (NASDAQ: SBUX) instead? Cost: US$954.24 a barrel. That’s only IF you take your coffee black. Adding milk will cost you another US$163.38 a barrel.
Of course you can always just stay home, and drown your inflation sorrows in a pint of Ben & Jerry’s New York Super Fudge Chunk instead. Cost: US$1,609.44 a barrel.
Clearly, it’s belt-tightening time for the average American amid these soaring prices for everyday “necessities.” Just cut back on the luxury items and you’ll be OK. After all, who can afford Chanel No. 5 at a cost of US$1,666,560 a barrel? My wife will just have to do without!
MIKE BURNICK, Senior Editor & Global Markets Analyst
Source: Why $143 Oil Looks Dirt-Cheap Compared to Other ‘Necessities’
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