While we all grumble when gas prices rise, it’s rare for consumers or businesses to dial back how much of it they use. In fact, long-term demand for energy is growing regardless of costs. The same goes for heating oil, natural gas, or any other energy-centric commodity. We’re addicted, and alternative energy sources — despite how interesting they are — just aren’t ready to make a dent. The Energy SPDR (XLE) will work nicely in most portfolios.
Top industry in the energy sector: Natural gas.
Another cliché, but one that will get traction for years to come.
When natural gas prices slumped to a low of $2.12 per million BTUs in early 2012, most explorers and miners could no longer produce it profitably, calling into question the long-term viability of natural gas as a business opportunity. That big price plunge, however, was simply the natural response to an equally-ridiculous surge in natural gas prices in 2008, to a high of $13.60.
Now that the volatility kinks have been worked out, the tug-of-war between gas explorers, utility companies, and consumers seems to be stabilizing around $4.00 per million btu. That’s a price that rewards the efficient and cost-effective producers, but doesn’t allow the poorly-run companies to thrive. Look at Chesapeake Energy (CHK) as a way to play.