Sometimes investing isn’t hard intellectually, the hard part is sticking to your guns.

I am getting that kind of conviction now on oil stocks.

People are already starting to pile into them, but their firehose gusher profits, real actual profit not techco “pro forma” profit, is so high they still have very low multiples.

The only real issue oilcos have is political risk and cost inflation.

But political risk can be largely avoided by sticking to companies focused on the US and Canada, and also by just keeping a diverse portfolio. And cost inflation only matters if they want to ramp up production. For milking existing wells, inflation is a benefit since capital costs are baked in at old prices and marginal costs are small.

The spike in natural gas costs in Europe the past year has been stunning, and barely put a dent in demand. I believe we’ll see this worldwide over the next year with oil and NGLs.

On top of these profits, refining margins I believe will also increase. Nobody in their right mind would build a big new refinery if it were even possible, making the existing ones more valuable each year.