How to profit from rising petrol prices
The biggest expenses for many families today are the fuel bills for family cars. Fuel prices double roughly every five years in the UK.
And at a time when food costs are also rising, inflation is beginning to creep up, wage rises are hard to come by, and people are generally fearful about their economic future, then families are really beginning to feel the pinch.
But there may be a good way of fighting back against rising fuel, diesel and petrol costs if you have any savings. The answer is simpler than you might think.
Let me explain; as a general rule, higher oil prices mean higher petrol and diesel prices – and whilst these things aren’t good for consumers, they are good news for the UK’s oil exploration and production companies.
If you look at a chart of the price of oil over the years and compare against that the share prices of oil giants like BP or Shell you’ll find that they roughly run in tandem.
Of course, there are major blips such as BP’s Gulf of Mexico disaster in the summer of 2010, but on the whole, these companies’ share prices track oil prices.
And as the world’s demand for oil shows no signs of slowing up jus yet, then at least buying shares in some of the UK’s biggest oil companies is an effective hedge if you buy enough.
For those of us with thirsty 4×4 cars it’s something of a no-brainer, particularly if you have cash to invest which is earning only a little interest and you have high petrol bills. This is because you can enjoy a better than 5% return in the companies’ dividends, which should also help fill up your tank a few times.
Just remember the usual advice of not investing more than you can afford to lose, taking expert advice and being aware that share prices can go down as well as up – as the Deepwater Horizon spill exemplified.