Chapter 3

The Power House: Making Money in Energy

In This Chapter

arrow Considering crude oil and its derivatives

arrow Investing in natural gas and coal

arrow Profiting from other power sources

arrow Making money in energy companies

Energy is the largest commodities asset class and presents some solid investment opportunities. This chapter helps you discover the ins and outs of the energy markets and shows you ways to profit in this sector, from trading crude oil futures contracts to investing in diversified electric utilities.

Investing in Crude Oil

Crude oil is undoubtedly the king of commodities, in terms of both its production value and its importance to the global economy. It's the most-traded nonfinancial commodity in the world, and it supplies 40 percent of the world's total energy needs — more than any other single commodity. About 87 million barrels of crude oil are traded on a daily basis, and crude oil is also the base product for a number of indispensable goods like gasoline, jet fuel, and plastics.

In the following sections, you get some background information on global crude oil consumption ...

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