6 Ways Not Everyone Gets Burned By Oil

BOSTON (TheStreet) -- Political unrest in numerous oil-producing nations has meant paying more at the pump, and the impact could be widespread for consumers for months to come.

But not everyone -- or everything -- will suffer equally from petroleum conundrums. The following is a look at who might benefit if oil prices bubble up even higher:

Railroads
Some scoffed when Warren Buffett's Berkshire Hathaway ( BRK.A) acquired the Burlington Northern Santa Fe railroad, a $34 billion investment, but an oil crunch or prolonged price spike would hurt the trucking industry and cost more for airborne cargo.

And that's good news for the comparatively cheaper alternative of shipping goods via rail.

In his traditional letter to shareholders last week, Buffet said the railroad purchase has already been "working out even better than I expected," increasing Berkshire's "normal" earning power by nearly 40% pretax and by well over 30% after tax.

Buffett and Charlie Munger, vice chairman of Berkshire Hathaway, "are enthusiastic about BNSF's future because railroads have major cost and environmental advantages over trucking, their main competitor," he wrote. "Last year BNSF moved each ton of freight it carried a record 500 miles on a single gallon of diesel fuel. That's three times more fuel efficient than trucking is, which means our railroad owns an important advantage in operating costs ... When traffic travels by rail, society benefits. Over time, the movement of goods in the United States will increase, and BNSF should get its full share of the gain."

If gas prices prod more commuters to ditch their cars for public transportation, systems may be adding more subway cars and diesel trains -- good news for that industry and the jobs it can create. In Massachusetts, for example, that state's public transit authority, the MBTA, is planning to buy 20 locomotives from Motive Power of Boise, Idaho -- part of Webtec ( WAB) -- for $114 million.

Hybrid car makers
Conventional wisdom holds that as gas prices go up, people are less inclined, or able to afford, new cars. That may not be entirely true these days.

The new wrinkle in the marketplace -- hybrid and electric cars -- could mean that pain at the pump prompts a trip to the dealership.

The website HybridCars.com, working with Michigan-based research firm Baum & Associates, issues a monthly report on hybrid car sales.

They credit the jump in gas prices as helping hybrid sales last month surge 39% from a year ago, compared with an overall jump of 27.2% for the overall car market. The Toyota ( TM) Prius was the top hybrid, with 13,539 cars sold, a 70% jump compared with last February (when safety concerns were a public relations disaster). Ford's ( F) Fusion and Escape Hybrids saw a 42% and 53% sales increase from January to February.

"Forecasters are predicting $4 gas by summer, which practically guarantees rising hybrid sales, just as new models from Toyota, Hyundai and others hit the market," the analysts wrote. "This year promises to put hybrids back on a growth path similar to the last half of 2008, the last time gas prices hit $4."

Time will tell if electric cars such as the Chevy Cruze, Nissan ( NSANY) Leaf and Chevy Volt will catch on as well.

"I test drove the all-electric Tesla ( TSLA) Roadster in Palm Springs last month," says Ken Beitel, advisory board chair for The Renewable Energy Initiative, a national educational organization that advocates for increased investment, production and use of clean energy. "Putting the pedal halfway to the floor pushed me backed in the seat like I was taking off in a jet plane. "

The car, which sells for between $110,000 and $130,000, has a range of 250 miles and acceleration of 0 to 60 mph in 3.7 seconds, he says.

Even Rolls Royce has gotten into the electric car market, with its recently unveiled $1.6 million Phantom 102EX. To achieve a range of 125 miles, it sports what is billed as the world's largest electric car battery, weighing in at 1,400 pounds. It can reach speeds of 60 miles per hour in eight seconds -- not bad for a ride that's more limousine than sports car, and just a tad slower than its traditional V12 engine counterpart.

"Every mile driven on renewable electricity means that less foreign oil has to be purchased by America," Beitel adds. "If you have solar panels on your house where you charge your car, you'll be driving for free even as gas hits $4 or $5 a gallon."

Those seeking less extravagant transportation can keep an eye open for the inevitable discounts, deals and promotions that carmakers and dealers may ramp up if sales of nongreen cars languish.

Solar companies
Beyond "green" cars, the renewable energy industry will take another step forward if petroleum prices become untenable.

Companies that specialize in solar technology and alternatives such as wind turbines could be poised for a big year.

"Renewable energy is big business," says TREI's Beitel, adding that last year solar and wind companies in America employed more than 178,000 people.

"Global clean energy investment hit a record $243 billion and employment in the U.S. solar industry is forecast to grow by 26% in 2011 with the creation of 24,000 new jobs," he says.

That's good news for growing companies such as SolarCity, the largest solar power installer on the West Coast, which last month announced it will expand into the Boston, Washington D.C., Philadelphia and Albany, N.Y., areas. The company, which secured $40 million in financing from Citi ( C) for the expansion, is now in 23 markets.

The company's recent moves, such as hiring Mark Roe, Apple's ( AAPL) senior director of world services, as its vice president of operations, has fueled rumors a public offering is in the offing.

"Concerns about rising energy costs are motivating people to consider and buy solar," SolarCity spokesman Jonathan Bass says.

"The power is clean, and that's an upside, but it is also cheaper," SolarCity Founder and CEO Lyndon Rive says. "People are cost-conscious now, they care about saving money. Every penny counts."

Web companies
Back in 2008, Vint Cerf, Google's ( GOOG) "chief Internet evangelist," said the Internet industry "may actually benefit from rising energy costs as people turn to it as an aid to improve their efficiency."

His call is as relevant now as it was then.

As oil makes business travel more expensive, companies will likely cut back on business trips. That may present greater opportunities for companies offering virtual collaboration tools, including Cisco ( CSCO) and its TelePresence and WebEx solutions.

"The oil crisis is having an impact on TelePresence," says Rick Hutley, vice president of innovation for Cisco's Internet Business Solutions Group. "What we are finding is that the reduction in travel costs and concerns over environmental impacts are accelerating the use of these technologies in general. The current oil crisis just makes it more urgent to accelerate that adoption."

"We are faced with all sorts of global challenges and natural disasters all the time, such as Katrina or the eruption of the Iceland volcano, as well as oil crises," he adds. "Companies turn to technology, first and foremost, out of necessity -- simply because there is no other way under the circumstances. Once they turn to it, they then realize how effective these technologies can be."

As oil gets more expensive, these benefits will likely become more pronounced.

Hutley makes the case that in 2009, Cisco was able to use its own technology to shave $1.1 billion off its bottom line; $596 million came from travel-related costs and inefficiencies. Since 2006, the company says, it has reduced its per-employee carbon emissions by 58%.

"Carbon emissions equate to energy, and energy costs money, so it hits our bottom line and impacts the environment," he says.

High fuel costs could mean that companies that go virtual will recoup that investment even faster. Hutley says Cisco's work for Procter & Gamble ( PG) saw a return on investment of under a year; T-Mobile's investment paid for itself in just four months.

The staycation set
Rising fuel prices has already meant a boost in airline fares.

Las Vegas-based Allegiant Air ( ALGT) has even gone so far as to request that the federal Department of Transportation allow it and other airlines to sell tickets with a fuel surcharge that can rise or fall until passengers board.

As more and more families' travel budgets can't afford more expensive flights (or the second mortgage required to fuel up an RV), that phenomena known as the "staycation" may make a return. Doing so may mean the opportunity to indulge in some bargain-priced luxury.

Hotel room rates often track in reverse from airline fares, an observation pointed out by travel writer Tim Winship. As was the case in 2008, cheap flights mean more travelers, and hotels can charge more to accommodate them. As fewer take to the skies, a potential surplus of rooms will likely mean greater competition, lower rates and more deals. So as gas soars to $5 a gallon, console yourself with the knowledge that a close-to-home weekend getaway may be far more affordable.

Consumers
Spiking oil prices, which will drive rising food costs even higher, will be a budget buster for most restaurants.

In a January earnings call, McDonald's ( MCD) executives said they expect food costs to rise by as much as 2.5% in the coming months -- and that was before the international oil panic.

But even as fast food chains such as the Golden Arches get squeezed, diners shouldn't worry too much. As 2008 showed us, with a double punch of a recession and high fuel costs, fierce competition leads to an even bigger push for value meals and dollar menus.

These chains, given their buying power and ability to hedge commodity costs, may be able to ride out things a bit better than others. They also have a growing customer base that may not mind paying a bit more to supersize their fries. A recent survey by American Express ( AXP) found that in the fourth quarter of last year, fast food spending jumped 4% among what it considers its most affluent customers (the top 10% of spenders). By comparison, casual dining purchases dropped by 4%.

-- Written by Joe Mont in Boston.

>To contact the writer of this article, click here: Joe Mont.

>To follow the writer on Twitter, go to http://twitter.com/josephmont.

>To submit a news tip, send an email to: tips@thestreet.com.

RELATED STORIES:




Get more stock ideas and investing advice on our sister site, Stockpickr.com.

More from Personal Finance

How Small-Cap Stocks Can Protect Your Portfolio From a Trade War

How Small-Cap Stocks Can Protect Your Portfolio From a Trade War

When Is It 'Worth It' to Work With a Financial Advisor?

When Is It 'Worth It' to Work With a Financial Advisor?

Why Millennials Are Ditching Stocks for ETFs

Why Millennials Are Ditching Stocks for ETFs

Amazon Prime Day 2018: When Is It and What Should You Know?

Amazon Prime Day 2018: When Is It and What Should You Know?

When Is the FAFSA Deadline and What Are the Application Requirements?

When Is the FAFSA Deadline and What Are the Application Requirements?