Crude oil, natural gas, coal, and refined oil products, like unleaded gas, will continue to be used extensively in the future. And while there currently is a significant large storage inventory and oversupply of all of these energy sources in today’s economic environment, the demand and supply curve is starting to shift as the world recovers. The time to invest is before that coming big demand shift happens quickly and everyone sees the recovery occurring.
Crude oil and coal are still the work horses of the energy world and that won’t change anytime soon. Furthermore, the higher demand that will be placed on these energy sources coupled with the explosive driving middle class in China and other emerging markets will put huge pressures on refined liquid gas products. We all know that inflation is coming in the next few years if not sooner.
Even during the 1970’s and early 1980’s when inflation was raging and the general stock market was falling, energy related stocks made strong gains.
This article will add to more reasons to invest money in energy stocks and energy ETFs and details support for upward price pressures going forward for years to come. Our next blog will include more reasons and stock picks.
Reason #5: Many large countries are accumulating and stockpiling oil, coal, and gas reserves and this practice will continue and therefore will deplete supplies.
China, Russia, United States (through reserves), and numerous other countries around the world are stockpiling as much oil and energy sources as they can right now. Everyone realizes that the prices will start going up soon and that supply will be limited. The increased use of our plentiful natural gas will take many years to implement in engines and power plants and oil is here to stay.
Reason #6: Oil is the commodity that skyrockets during wars and times of political and economic uncertainty.
This is the world we all live in. The Middle East is always a ticking time bomb and N. Korea is another potential war just around the corner. Past history has clearly demonstrated how fast oil and gas prices can go up during these periods of war and unrest. Unfortunately, it is probably just a matter of time. Oil prices will rise in 2012 to challenge $125 or higher.
Even if one uses the current projections of a very modest increase in oil and gas prices as well as the conservative estimates on earnings, the valuations of numerous major integrated oil and gas stocks and drilling and exploration stocks are very attractive at these price levels.
The following chart lists our favorite picks:
Major Integrated Oil & Gas Stocks and Oil Drilling and Exploration Stocks
Take partial positions after the next pullback in the market which should happen in the next few days and probably some next week. Add to your position on 5% drops (if they ever occur) to build out your investment position. Our best picks are highlighted in yellow.
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