[Graeme]

Peak oil: Who wins, who loses?

$this->bbcode_second_pass_quote('', 'L')ast month, I explained in an article how and why the world is approaching a worldwide peak in oil production sometime in the next decade. Although there are large implications throughout the economy, I want to say upfront that I do not think this will bring on Armageddon. Oil prices that are significantly higher than earlier in our lifetimes will bring about great change, yet I firmly believe that our economy has the ability to successfully adapt. Despite the strong headwind oil scarcity will create, I am still an optimist.

I have structured this article by segmenting the "winners" and the "losers." These monikers may be a bit strong, and it is worth noting that even a company that might have a slower growth rate than before because of peak oil can still be a good investment. In other words, I'm not running out to buy the peak-oil benefactors, nor am I dumping the peak-oil losers. Rather, increased oil scarcity is but one of many factors Morningstar's analysts and I consider when projecting future cash flows and business positions. With that, let's jump right to it.

[rangerone314]

Toecutter and Aunty Entity will be the winners, and most everyone else will the the losers.

[Ludi]

$this->bbcode_second_pass_quote('rangerone314', 'T')oecutter and Aunty Entity will be the winners

[GoghGoner]

$this->bbcode_second_pass_quote('', 'B')ut if transport costs rise as a result of higher energy prices, this frictional cost will reduce the opportunities for companies to take advantage of this labour arbitrage. As I mentioned in my previous article, it all boils down to high oil prices taxing transport and causing us to act more locally. This means goods being produced much closer to where they are actually consumed, which would benefit local labourers.

[Ludi]

$this->bbcode_second_pass_quote('GoghGoner', '')$this->bbcode_second_pass_quote('', 'B')ut if transport costs rise as a result of higher energy prices, this frictional cost will reduce the opportunities for companies to take advantage of this labour arbitrage. As I mentioned in my previous article, it all boils down to high oil prices taxing transport and causing us to act more locally. This means goods being produced much closer to where they are actually consumed, which would benefit local labourers.