Oil Sands Investing

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I have just paid $52.15 for a simple meal consisting of a seven ounce steak and two beers. The restaurant is not fancy: it is simply The Keg in Fort McMurray, Alberta where lots of money is being made off the oil sands mines.

Bear with me. I will advise you in this posting to put every cent you can spare into oil sands shares. I will not produce graphs to support my assertion. Rather I will tell sad human stories, indulge in a bit of philosophy, and tell you what I see, and why I think what I think.

I am in Fort McMurray to do real engineering work at one of the oil sands mines. Today, amid the noise of construction equipment, I chatted with a 29-year old fellow. He is pail, almost blond, descended from Irishmen where the sun never shines.

He is but one week from Newfoundland where for seven years he worked in the timber industry. But as he told me: "They dont sell no-more to America, for the economy there is shot. Cant buy our timber, so they shut us down. And I was laid off five month ago. I got two kids, seven and five, and owe money back home. Lucky my father is getting $30 and hour here so he made me come here, and I got this job for a week now, and they give me $20 an hour. Now all I gotta do is get enough money to get the mama and kids here. I got $30 in my pocket for a week and spent none, so it wont be long now."

At the other end of the scale we have todays news that the Premier of Alberta told the premiers of the other Canadian province that he is elected by Albertans, is beholden to them, and wont participate in a whole-scale transfer of money from Alberta to other provinces or foreign countries on the basis of an illusion called carbon credits.

Now the philosophy. I acknowledge the nature versus nurture debate. Are we the product of our genes or of our upbringing and environment? If I had been born the son of a mullah in Iran, would I still be what I am now?

I suspect I would have opposed the Shah and hated the current regime regardless. Maybe that is genes. But I am sure I would have been a patriot and able to argue the case against the rest.

So I acknowledge that being here in Alberta and working on an oil sands mine as a consultant colors my opinion and hence my investment advice.

Last night I had supper with a very old friend who is convinced the U.S. economy is going to go down a long way, particularly in mining. But he pointed out that the capital value of the oil sand companies far exceeds the capital value of even the biggest international metal mining companies. He is convinced that oil sands mining can only get bigger, and I agree.

You will read interminable news releases about the vast scale of the mines and their environmental impact. But come up here and see for yourself: sure the tailings piles are big, but so is the landscape. Sure the emissions are visible, but so is the need for jobs for kids from Newfoundland who have kids of their own to feed. And think of the need for gas to fuel SUVs in California.