Best Ways to Invest in Energy

By | June 14, 2017

All investing carries risks, but there are some areas that are more volatile than others. Currency and energy stocks are dependent on global politics, economics, and demand. Huge oil companies, for example, can be trading high one day and plummet the next in the event of a major spill, restricted access, or a military conflict. Many investors have won and lost a substantial amount of money in a short period of time. There are those who are comfortable with risks that high while others are not. Timid investors can still invest in energy as long as they select low-risk companies.

One way to invest in energy is to purchase shares in a Master Limited Partnership company. The risk is low because companies do not own the oil or natural gas. They are not subject to the influence of politics or economics. These companies, such as Kirby Corp and Enbridge Energy LP, store, process, or transport gas and oil. Transporting oil by railroad is fast, but expensive. Transporting it via tank barge is slower, but one-third the cost. Kirby Corp, a barge operating company, doubled in value over a five year period. The company does well and provides steady returns because the oil has to be transported regardless of the price per barrel. Companies that supply materials for pipelines and off-shore rigs, those that control feeder pipelines, and companies that maintain storage facilities typically provide low risk and steady returns. Investors can look here for more examples of energy companies that are low risk investment opportunities.

Investing in alternative energy, such as solar power and wind turbines, can also be an ideal way to invest in energy. Risks are lower because those resources are self-contained and sustainable. There is no danger of potential disasters that may occur with oil spills or gas leaks. Access to the power source cannot be blocked with military force, and developing it is more cost-effective than traditional energy sources. Solar panels and turbines only require a connection to a grid to produce power. The wind and sun do not have to be refined, do not need additives, and the power can be stored on-site. There is potential for high yields as these energy sources become more popular.