The Mitchell Group is a portfolio management firm that invests specifically on the energy sector. When we spoke with the company’s President and CIO Rodney Mitchell, he told us about some of the problems that might be coming up down the road for this space:

Mr. Mitchell: The immediate challenge is natural gas supply in the US. I’ve already talked about that. Longer term, we are facing a worldwide problem where companies will not be able to maintain their production of crude oil. For a while, that will be covered up by natural gas liquids, but that only lasts a reasonably short period of time. After that it’s going to be a major problem for the world. The world is using a higher percentage of each barrel of oil each year for transportation fuels. That is the highest and best use of crude. Back in the late 1970s or early 1980s, the US and Western Europe dramatically reduced stationary use of crude oil, that is using crude oil for boiler fuel. The rest of the world will do that as we move along here, and more and more percentage will go toward transportation. Once we do that migration, where you cannibalize your stationary uses to put it into the transportation field, once we complete that, then we’re going to see much higher oil prices. Maybe Matt Simmons is going to be right then.

For the latest edition of our Investing Strategies report, including a full interview with Mr. Mitchell, and a variety of other portfolio managers, click here.  

This entry was posted on Monday, March 30th, 2009 at 4:49 pm and is filed under General Investing, Natural Resources Stocks. You can follow any responses to this entry through the RSS 2.0 feed.