Energy stocks are attracting huge investor interest. Chevron Texaco (CVX) has risen from the mid $60 range to over $80/share just since March. Over that time, we have had exactly one day--one day!--of negative money flow in the stock. Every other day, funds have been flowing into CVX.
Exxon (XOM) has risen from the low 70s to over $80/share in that same time. We've seen only four days of money outflows from the stock since the mid-March lows.
Schlumberger (SLB) has risen from the mid $60's to about $80/share since mid March. How many days of negative money flow have we seen during that time?
I'd say that's a pretty strong performance for a sector. The S&P Energy Sector ETF (XLE) has risen over 20% since mid-March, helping to underpin the strength in the large cap stocks.
A recent Congressional vote on funding the Iraq war set benchmarks for the Iraqi government needed for continued funding of the war. While most discussion of the benchmarks has focused on the achievement of democratic reforms, quelling of sectarian hostilities, and the like, a less-remarked benchmark concerns the disposition of Iraqi oil.
The Iraq Hydrocarbon Law requires a privatization of Iraqi oil to develop Iraq's untapped resources. Understandably, oil companies are reluctant to commit funds to such an effort without the protection of such a law. It has been difficult for the various factions to agree on revenue sharing, creating limbo for the proposed law--and opposition to the notion of foreign control. Each of the sectarian groups has reasons for opposing the law. There is expectation that oil and gas assets will be auctioned off within the next couple of months, however.
In the U.S., serious political opposition to the privatization of Iraqi energy assets appears minimal, given that the recent bill passed by Congress represented a Democratic compromise with the White House. When Dennis Kucinich took an hour of House time to blast the "exploitation" of Iraqi oil, his remarks went without further comment or debate.
Christopher Hitchens, on the other hand, makes a case for the Iraq Hydrocarbon Law, suggesting that the proper development and distribution of oil revenues will benefit the entire country and abolish the economic rationale for dictatorship.
The American public, seeing higher gasoline prices at the pump thanks to refining bottlenecks, is unlikely to oppose any efforts to expand energy reserves, as oil companies blame the push for biofuels for reduced refining capacity.
I don't think the U.S. would be building the world's largest embassy complex in Baghdad unless there was a solid economic rationale, whether you agree with the rationale or not. The stock market seems to agree, and investors--seeing higher energy prices and availability of what appears to be the world's second largest oil reserves--are steadily pouring money into international oil/energy companies as a result.