Why Do Oil and Gas Investments Belong in Your Portfolio?

Energy is the linchpin of modern industrial society, enabling us not only to light our homes and drive our kids to school, but also to power factories and heat offices, thereby creating jobs and wealth. Petroleum and petroleum by-products are utilized by consumers every day in ways they don't even realize. In addition to gasoline and home heating oil, consumables from plastics to toothpaste, shampoo to house paint, and even antihistamines contain some form of petroleum. It's hard to imagine life without these everyday conveniences!

Demand for products originating in the oil and gas/petrochemical industry continues to increase over time. Whilst the current global economic crisis will have a dampening effect on oil and gas demand for a few years, growing economies such as India and China are the driving force behind demand growth for energy and plastics. .

While efforts to expand alternative energy sources are increasing, the costs involved are prohibitively expensive, and are unlikely to yield a significant return for investors for many years to come. Even when they do, they still will meet such a small percentage of the total energy need that their impact upon the oil and gas industry will be minimal.

Do oil and gas investments belong in your portfolio? We definitely think so for three reasons:

  1. Oil and gas are key components of daily life, and that fundamental fact is not going to change.
  2. Based on the fundamentals of global oil supply and demand, we expect prices to move from current levels to significantly higher prices between 2010 and 2012, thereby reinforcing the already attractive economics of the investment activities we can offer you.
  3. Oil investments are not correlated with world stock and real estate markets

A better understanding of the global supply and demand for oil underpins this conviction.