Oil prices are driving the stock market these days. Higher oil prices usually lead to higher inflation, and inflation has not been good for the stock market. In the fall of 2004, oil is selling for around $50 a barrel, about triple the oil price from the fall of 2001.
If oil is moving higher while stocks seem to be going nowhere this year, a natural response might be to invest in oil. In fact, you may hear from various promoters, trying to convince you to invest in an oil well. Keep in mind, though, that oil-and-gas promoters tend to keep their best prospects for friends and family; outsiders can be counted on to take substantial risks and pay high fees.
Yes, you might come out ahead in an oil deal, counting the tax breaks, if you invest with people who have a good reputation. Still, these investments are gambles so you should be prepared to lose everything if the drilling comes up dry.
