Oil, Gas, & Clean Energy Investing
Oil, gas, and clean energy are some of the many ways we power our modern
lives. We’ve been discussing asset management in a crazy economy. Today, we’ll being to look at oil, gas, clean energy, and other forms which you can invest in.
Energy is a basic key to life in the modern world and the overall economy in general. Consider the fact that the world population is growing at a staggering rate and that the countries with the largest populations have just begun to leave the agrarian lifestyle they have lived for thousands of years and have become energy consumers. Now add to this the understanding that the world is not producing or finding new sources of energy at anywhere near the rate of usage growth. Together, this is a very combustible situation.
Many people believe in “Peak Oil”. This idea is that the world has run (or is running out) of new oil sources and therefore, not only is demand going up, but that supply is going down. There is certainly something to this theory. However, others say that new technology allows us to find new sources of oil or exploit previously unrecoverable oil all the time. Either way, there is no question that the supply is not growing at nearly the rate that the demand is.
On the flip side, energy prices do tend to go down as the economy turns down. The thinking is that if there is less economic activity, people will consume less energy and thus the price of energy (and its associated companies) tends to fall if the overall stock market is falling.
A catalyst on the upside is war in the Middle East. Since a large portion of the world’s oil is in the Middle East and because war tends to break out often in that region, it is always a good idea to keep your finger on this pulse. If war breaks out in the Middle East, the price of oil usually surges. If war breaks out in Iran, it could surge even more than usual because the Strait of Hormuz is a 21 mile wide body of water between Iran and Saudi Arabia that sees a large portion of the world oil passing through. Iran would surely work to cut this passage in any war dramatically sending world oil prices higher and putting a significant blow to the world economy.
Some people have a serious dislike for hydrocarbons (oil, gas, coal, etc.). If you feel that the use of these is evil, then you shouldn’t invest in them and will have to limit your search to clean energy forms. If on the other hand, you see that these materials will be used to bring a higher standard of living to millions and billions of people and you want to be a part of that, then you should consider investing in them. As with any other investment decision, you need to follow the Lord in the ways He’s leading you to steward what He’s given you.
Tomorrow, we’ll look at the advantages presented by the fact that energy sources (whether gas, oil, or even certain characteristics of clean energy sources) are commodities. If you have any thoughts or questions on this or other topics, please let us know.