Investing In Energy Stocks

Investing in energy stocks may be a great idea for the next ten years or more.Gas companies, alternative energy companies, utilities and the companies that service them are all companies that a savvy investor should be looking at.

Gas companies are making higher profits than ever before, and they are doing it while getting away with not paying for their mistakes.Exxon/Mobil topped Forbes Fortune 500 list for profits, and despite the amount of money they have made, the victims of the Exxon Valdez disaster have yet to have a healthy recovery.In fact, the settlement was reduced in court, so that Exxon did not even have to pay back as much as they should have.British Petroleum (BP) has also been very profitable despite the damage done to the Gulf of Mexico by the Deepwater Horizon leak.Not only has there been evidence of a cover up, but the wildlife in the area has shown several ill effects.BP has done a bang up job with the marketing of its cleanup efforts and its attempts to help convince people to go back to the Gulf for vacations, but they have been less than stellar in their responsibility to the environment.

None of that may matter to the investor because both companies, along with everyone in the gas sector, are experiencing record profit margins, and gas prices per barrel and at the pump are only expected to rise over the course of the coming years.

Investors who may want to be a little more socially conscious should look at alternative energy providers.Unfortunately, this sector has had some setbacks recently, but at some point, the economy is going to have to move away from fossil fuels and into solar, wind and water power.Each sector faces its own challenges, but there are government subsidies that will help people to purchase the technologies, and the right research and development could turn a company into the next energy juggernaut.Green energy is a little bit of a risky play, especially with the upcoming presidential elections, but the right risk will bring incredible rewards if the investor can get in on the ground floor.

Utilities offer their own unique set of challenges, but they also offer a high reward opportunity.Because utilities are often monopolies in the geographical area that they service, they are the only game in town.That makes the business beyond viable because there is no one that people can turn to for their energy needs other than the energy utility in the area.The downside is that the utility often has to get state legislature approval to raise prices.That means that in some ways, profits can be related to who is in power at a state level.

Utilities may also be responsible for repairing the energy infrastructure.As the infrastructure continues to age, there is the threat of imminent break down.When that happens, the energy utility will be stuck with footing the bill or possibly not delivering energy in the hopes that the government will take care of the needed repairs.Either way is bad for profits and bad for investors.

Investing in energy stocks is just like investing in any other stock.Fossil fuels may look sexy now and for the foreseeable future, but investors need to be aware of any change to the world's energy usage.If the bottom suddenly falls out of the market or the supply no longer exists for any reason, an investor needs to be ready to get out of the sector and into something safer.The important thing is to remember that gas and energy operate on a world scale.That means that no matter what happens specifically in the U.S., companies that deliver to developing countries will have a better opportunity to be profitable.