The global demand for energy is climbing higher and higher. In 2017, it was up 2.1%. This energy growth comes from demand for fuels and electricity and it is expected to grow 25% by 2040. As energy demand rises, energy stocks can increase their value over the long term. Energy prices fluctuate and are not steady, they are volatile over short term periods.
Energy stocks are publicly traded companies that operate in the energy sector, which is made up of two categories: electricity and fuels. These are companies that produce, transport, or process fuels such as oil, natural gas, coal, and gasoline, as well as those that generate or distribute electricity. Fuel companies in oil and gas can deliver large profits when prices are high, but when prices go down, they lose money. However, fuel companies can make more money when energy prices fall because they need to purchase the fuel first.
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In 2018, crude oil prices rose steadily on demand for its use as transportation fuel, but it fell sharply before the end of the year. At the same time, natural gas prices as temperatures cooled down, which drove up demand for this key heating fuel. This is the type of market volatility that investors should understand fully when navigating the energy sector before they can choose the energy companies best positioned to operate a solid business during times when energy sees lower prices.
Investors have many ways to invest in this part of the energy industry tangentially. Several other companies assist in the fuel handling process by providing services, equipment, or other supplies needed to produce fuels.
There are several types of electricity companies. Some own power-generating facilities that sell electricity to end users either under a fixed-price contract or at current market rates. On the other hand, there are “pole and wire” companies that operate transmission lines that move power from generation facilities to customers and typically generate steady income as electricity passes through their systems.
Oil
Occidental Petroleum (
NYSE:OXY)
Tellurian (
NASDAQ:TELL)
Royal Dutch Shell (
NYSE:RDS.A)
BP (
NYSE:BP)
ExxonMobil (
NYSE:XOM)
Total (
EPA:FP)
Valero (
NYSE:VLO)
Phillips 66 (
NYSE:PSX)
Midstream
Enterprise Products Partners (
NYSE:EPD)
Natural Gas
Antero Resources (
NYSE:AR)
Renewable energy
TerraForm Power (
NASDAQ:TERP)
First Solar (
NASDAQ:FSLR)
Utilities
Brookfield Infrastructure Partners (
NYSE:BIP)
Liberty Oilfield Services (
NYSE:LBRT)
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