Oil Prices Should Start Declining Due to Increased Competition: Bill Smead

Oil price has been climbing and so far over the last year, it gained around 14% to over $104. In a recent intervention on CNBC, Bill Smead of Smead Capital Management has provided his opinion on the valuation of oil, stating that the prices should decline because the competition and supply of oil keep raising.

“The Wall Street is the only place in the world where as the competitors come in and become your enemy that people bid up the price of the industry,” he said.

Mr. Smead also said that the competition in the oil industry is getting stronger, because “every Tom, Dick and Harry in the world is poking holes in the ground.” He also mentioned the oil fracking in Northern England in late January, also stating that if someone started fracking in England, it should mean that there is no other place in the world for “poking holes.” We should mention that the process of fracking is dangerous as it involves polluting ground waters near the wells by toxic chemicals used for fracking and methane gas.

However, Mr. Smead pointed out that the largest user of oil in the world, the United States, is reducing its consumption of oil, and the Mileage per Gallon of the U.S. cars is improving, with the MPG standards planned to increase significantly over the next ten years.

“There’s way more competition and, therefore, way less competence which means ultimately prices should fall quite a bit,” Mr. Smead concluded, earlier quoting Charlie Munger of Berkshire Hathaway who stated that “competition is the enemy of competence.”

Watch the full video below:

Disclosure: none

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!