Bullish Outlook for Oil Stocks as U.S...
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Jonathan Yates
Bullish Outlook for Oil Stocks as U.S. Energy Information Administration Study Predicts Energy Demand Almost Tripling

In a recent report, the U.S. Energy Administration projected that global energy demand will increase 56% from 2010 to 2050.  Of that usage, about 80% will be provided by fossil fuels (oil, natural gas, coal).  This is very bullish for oil and natural gas companies such as Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), and ConocoPhillips (NYSE: COP).

Despite the billions expended, alternative energy offers little hope in the future of providing any substantial portion of energy demand.   Coal (NYSE: KOL) is declining in appeal as natural gas (NYSE: UNG) becomes more attractive.  However, there will always be a demand for coal as it is much easier to be produced and distributed than natural gas.  To be utilized, natural gas requires three sets of pipelines: at the production point, then to the transportation center, and then to the individual business or home.

The U.S. Energy Administration expects the usage of natural gas to increase by 1.7% annually, providing about one-quarter of global energy demand by 2040.  For major oil companies such as Exxon Mobil, Chevron, and ConocoPhillips that is bullish as each has a strong presence in natural gas.  In addition, these oil giants have a global footprint, too, with operations around the world.

That is crucial as much of the new demand for oil and natural gas will come from India and China, and other emerging market nations.  As these two giants have much of the world’s population, that is to be expected.  China is already the world’s largest consumer of many natural resources, including coal.

As detailed in previous articles on this site, major oil companies should be profitable holdings for long term investors.  The U.S. Energy Administration report provides the information about the demand for the products and services of each, which will provide growth in revenues.  In addition to the growth ahead, Chevron, Exxon Mobil, and ConocoPhillips all pay a healthy dividend to shareholders.



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