Keith Fitz-Gerald

Why Every Investor Needs an Energy Strategy

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While I personally would like that, too, it's a misleading argument if for no other reason than there are millions of consumer items we use -- from plastic bags to makeup -- still created using petroleum. And there are still more than 60,000 manufacturing processes that depend on petroleum, and even the most aggressive estimates suggest that it will take the world decades to shift away from them.

We're in much the same situation when it comes to hybrid vehicles. There isn't a mass-produced electric vehicle available today that could offset the coming rise in recovery-driven demand for oil and gasoline. There's a strong effort under way, but I'm not aware of a single company ready to field the solution in cost-affordable quantities by 2010 -- which is when most analysts say a recovering economy will stoke demand for oil.

Of course, President Obama's much-lauded efficiency and greenhouse gas standards mandate will help significantly, but that's like bolting the barn door after the horses have run for the fields. The irony of watching auto executives "applaud" his press conference was almost too much to watch with a straight face. But that's a story for another time.

The bottom line is this: Our society will be highly dependent on oil for many years to come and investors should plan accordingly.

If governments around the world really want to get serious, they could collectively work to eliminate the fuel subsidies that are part of the price paid for gasoline in Asia or sugarcane ethanol in Brazil.

We could also stop our own energy pork barreling. But given the complete lack of transparency that surrounds this issue -- not to mention the influence wielded by vested industry interests, and the scores of well-paid lobbyists that patrol the halls of power in our nation's capital -- I don't think we'll see any big changes anytime soon.

So I'm left with one inescapable conclusion, at least in the intermediate term. Every investor needs to have at least some sort of energy strategy -- preferably one that includes a range of drillers, producers and suppliers to cover the spectrum from wellhead to consumer.

That way, we can profit from an increase in energy prices that we can only hope rise fast enough to jump-start the oil industry's production arm, but not so fast that it snuffs out the badly needed economic recovery.

Keith Fitz-Gerald is the Investment Director for Money Morning/The Money Map Report. For more information on Keith, read his bio here.