Demand and Disasters Complicate Global Energy Picture
The global energy picture has become more complicated in 2011, but investors are making some sense of it.
The nuclear outage in
"Our energy challenge is constantly being highlighted by issues around the world, and it has been made clear that we have no magic bullet to call upon," observed
Strong economic demand in
Noteworthy is the ongoing controversy over the natural gas industry's process called "fracturing," the injecting of enormous volumes of water mixed with sand and chemicals deep underground to fracture rock formations and release natural gas. While the Obama administration favors increased development of natural gas, the administration, regulators and activists have expressed concern that water supply and air quality not be endangered in the process.
Diversity of energy options will be key.
"Events such as those in
Energy and the economic cycle are always tied together, said Byrum, whose fund takes a quantitative approach, with the biggest energy companies as its largest holdings. With increases in manufacturing and economic activity, there is likely to be demand for these kinds of companies, he said.
Coal has long been controversial on numerous counts, among them pollution caused by emissions of contaminants such as sulfur dioxide, nitrogen oxides and mercury, as well as emissions of greenhouse gases believed to add to global warming.
Nonetheless, it always seems to hang around. Demand has been especially strong in
Demand is tied directly to GDP growth reflecting consumer, commercial and industrial growth, he noted. The world's coal market is closely linked, so higher coal prices in one part of the world always eventually translates into higher prices elsewhere.
Here are some coal stocks Tian considers worth monitoring:
"It is fine if an investor feels confident about individual company stocks, but another alternative is to buy an exchange-traded fund," concluded Tian, noting that the Market Vectors Coal ETF (KOL) that tracks a global index of coal companies provides another alternative.
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