Oil Prices And Detroit F, GM, DCX
At the Reuters Global Energy Summit, Deutsche Bank's chief oil economist said "oil could spike above $100 a barrel if a new shortfall were to hit already tight crude supplies." This, of course, could spell trouble for the automobile industry, and particularly Ford and GM.
Both stock have risen in the last two days. GM, which traded under $25 two days ago, rose over $28 in intraday trading yesterday. However, all is not well. S&P said it may downgrade Ford's debt due to its drop in market share.
Rising oil and gas prices would have the greatest impact on the Ford and GM SUV and pick-up lines, which are essential to their overall vehicle margins.
The next month of sales for both companies should give some indication of whether gas prices are hurting the sales of these important segments of the product mix. But, if oil spikes sharply for some period, the idea of underwriting gas costs for customers may expand beyond the limited program GM introduced. And, that could be very, very expensive.
Douglas A. McIntyre
Both stock have risen in the last two days. GM, which traded under $25 two days ago, rose over $28 in intraday trading yesterday. However, all is not well. S&P said it may downgrade Ford's debt due to its drop in market share.
Rising oil and gas prices would have the greatest impact on the Ford and GM SUV and pick-up lines, which are essential to their overall vehicle margins.
The next month of sales for both companies should give some indication of whether gas prices are hurting the sales of these important segments of the product mix. But, if oil spikes sharply for some period, the idea of underwriting gas costs for customers may expand beyond the limited program GM introduced. And, that could be very, very expensive.
Douglas A. McIntyre
posted by douglas mcintyre at 7:16 AM
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