Energy Investing For Dummies E-Book

Nick Hodge

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 441

Veröffentlichungsjahr: 2013

Beschreibung

The fast and easy way to grasp energy sectors and their place in the global economy

With timely, substantial information about energy stocks, Energy Investing For Dummies teaches the ins and outs of energy sectors and how to incorporate them into business and investment plans. As a savvy investor and business manager you will find the important information and advice you need to incorporate these growth areas into your investment portfolio.

In Energy Investing For Dummies, you'll find important information on the big-three markets of electricity, natural gas, and oil; growing markets for liquefied natural gas, emissions, coal, and alternative energy; primers on advanced topics like storage, wheeling, load forecasting, and pipeline transportation; tips on investing in and trading  energy stocks, ETFs, dividends, and derivatives; and much more.

• Includes examples of ways to invest in wind power, carbon emissions, thermal solar power, and other new markets
• Packed with the latest information on energy investing
• Shows you how to incorporate energy investing into your investment plans

Energy Investing For Dummies is your friendly, un-intimidating guide to this hot topic in business and investment trading.

Leseprobe

Energy Investing For Dummies®

Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com

Copyright © 2013 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

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Library of Congress Control Number: 2013942774

ISBN 978-1-118-11641-8 (pbk); ISBN 978-1-118-22430-4 (ebk); ISBN 978-1-118-26254-2 (ebk); ISBN 978-1-118-23323-8 (ebk)

Manufactured in the United States of America

10 9 8 7 6 5 4 3 2 1

Energy Investing For Dummies®

Visit www.dummies.com/cheatsheet/energyinvesting to view this book's cheat sheet.

Table of Contents

Introduction

About This Book

Foolish Assumptions

Icons Used in This Book

Beyond the Book

Where to Go from Here

Part I: Getting Started with Energy Investing

Chapter 1: Powering Your Portfolio: Energy in Brief

What Is Energy?

Why Energy Investing?

Fears, Risks, and Politics

Ways to Play

Chapter 2: Making a Connection

Early Energy Sources

Water and wind

Full steam ahead

Leaving the horse behind

Fossilizing the future

A Light Bulb Goes Off

Harnessing electricity

The first utility

War of the currents

Barons to Barrels

Oil investment past to present

Carving up the future: The breakup of Standard Oil

Everyday Energy

Cheap energy: The key to modern life

Food production

Tracking Trends in Energy Use

Watching your own energy use

Keeping an eye on prices

Looking for new energy uses

A future electric

Global green movement

Sneaky sustainability

Bloated with natural gas

Chapter 3: A Bright Investment: Running the World Takes a Lot of Energy

Energy Sectors and Markets

Oil

Natural gas

Coal

Nuclear

Hydroelectricity and other renewables

Major markets

Demand: The World Always Needs More

Historic performance

Demand in the future

Trillions of Reasons to Invest

A huge global investment opportunity

The water-energy nexus

Constant Innovation and Nontraditional Energy

Addicted to energy

Fossils get modern

A peak at the future

Chapter 4: Getting Ready: The Nuts and Bolts of Energy Investing

Investing with or without a Broker

Investing on your own

Starting with a budget

Setting up your accounts

Investing beyond stocks

Ways to Play

Commodities

Equities

Indexes

Exchange-traded funds and mutual funds

Preparing for Your First Energy Investment

Getting familiar with important terms

Going long or short

Chapter 5: Risks and Rewards of Energy Investing

Watch Your Step: Getting Familiar with the Risks

Laws and policies

International energy agendas

Technology

Geopolitics

Speculation

Doing Due Diligence to Manage Risk

Energy commodity futures

Energy mutual funds

Energy companies

Diversification

The Rewards of Energy Investing

Reaping above-average returns

Serving a purpose

Getting an education

Part II: Oil and Gas Investments: Greasing the Global Economy

Chapter 6: The Crude Basics

The Complex Landscape of the Oil Market

Where the Oil Is: Reserves by Country

Proven reserves

Unproven reserves

Getting accurate data

Oil Production and Pricing: It’s All about Supply and Demand

The Consumption Junction: Global Oil Demand Numbers

Growing demand in emerging markets

Heading here and there: Imports and exports

OPEC and Geopolitics

Conventional and Unconventional Oil

Sweet and sour, heavy and light

Major oil fields

Offshore oil

Hydraulic fracturing

Chapter 7: Grasping Gas

Considering the Gas Basics

Moving from the wellhead to your doorstep

Knowing major gas drivers

Taking into account natural gas supply and demand

Eyeing the importance of imports and exports

Knowing Where the Gas Is

Who’s got gas?

Fracking: It’s shale, dummy!

Forecasting the future

Burn It if You Got It: Examining How Gas Is Used

Electricity generation

Transportation

Chapter 8: Buying the Barrel, Trading the Therm

The Basics of Oil and Gas Futures

Traders and hedgers

Inside the futures contract

Futures Broker: Best Friend or Worst Enemy

Choosing an individual broker

Opening an account

Understanding orders

Watching the margin

Doing some homework before you trade

Factors Affecting Futures

Over the barrel

Geopolitical mess

Gambling on gas

Chapter 9: Drilling Down, Extracting Profits: Investing in Oil and Gas Companies

Evaluating Oil and Gas Stocks

Size matters

Putting it all together

National Oil Companies (NOCs): Puppet Masters Pulling Supply Strings

Discussing OPEC: Inside an oil cartel

Buying your way into state-owned profits

Non-NOC Oil and Gas Companies: Fighting over Scraps

Integrated oil companies

Playing the independent field

Chapter 10: Investing in Oil and Gas Indexes and Funds

A Fund for Any Occasion

Mutual feelings, mutual profits

The dawn of ETFs

Mutual funds for the oil and gas sector

Dipping into oil and gas ETFs

Oil and Gas Price-Tracking Funds

Part III: Investing in Coal

Chapter 11: Coal: Still the King

Discovering the Coal Basics

Considering major coal drivers

Digging up the coal

Grouping types of coal

Studying coal’s uses

Looking at supply and demand

Knowing the Location of the World’s Coal

Being Aware of the War on Coal

The decline of the U.S. coal industry

Coal’s destructive effects on the environment

Chapter 12: The Future of Coal

Coal and the Climate

Developed and developing

Considering the possibility of cleaner coal

Gas and Liquid: Coal Gets a Makeover

King Coal’s Reign Continues

Producing the world’s electricity

Demand forecasts

Chapter 13: Coal: Mining for Profits

Turning Fundamentals into Decisions

Identifying and Evaluating Major Coal Miners

United States

China

Russia

Investing in Coal Funds

Coal master limited partnerships (MLPs)

Coal exchange-traded fund(s)

Investing in Coal Futures

Part IV: The Nuclear Option

Chapter 14: Nuclear Energy Basics

Nuclear Fundamentals

Percent of electricity generation

Countries with reactors

Constant Debate

Future Plans

Chapter 15: Uranium in Your Cranium

Explaining Uranium

Circling around the uranium fuel cycle

Gathering information on reserves and production

Turning Russian warheads into fuel

Mining Uranium

Mulling over milling, enrichment, and fuel fabrication

Poring over uranium production figures

Looking ahead to new mines

Chapter 16: Harnessing Nuclear Power for Profit

Investing in Uranium

Exchanges

Markets and pricing

Checking Out Uranium Mining Companies

Considering Uranium Waste and Reprocessing

Getting a Reaction: Investing in Nuclear Power Plants

Nuclear construction plays

Major nuclear utilities

Nuclear Indexes and Funds

Part V: Investing in the Future: Modern Energy

Chapter 17: Solar Investing: It’s Raining Electrons

The Three Types of Solar Technology

Examining the photovoltaic solution

Evaluating solar photovoltaic companies

Considering specific solar photovoltaic stocks

Going thermal with solar heating and cooling

Concentrating on concentrating solar power

The Future Is Organic: Organic Photovoltaics

Installation Nation

Leasing profits

Trying the Mosaic model

Chapter 18: When the Winds Change Direction

The Rise of Wind: Evaluating Wind Turbine Manufacturing Companies

First mover advantage

Technological superiority

Diversification

Going Offshore

Evaluating offshore wind turbine manufacturers

Additional offshore wind opportunities

Wind Farm Developers

Winds of Change: The Future of Wind Energy

Floating turbines

Direct-drive turbines

New designs

Chapter 19: Geothermal: The Devil’s Hot Tub

Drilling for Heat, Drilling for Profits

Considering geothermal-based electricity production

Evaluating geothermal-based electricity production companies

Geothermal electricity production companies

Enhancing the Heat: The Future of Geothermal

Chapter 20: Transportation:Plugged-In and Corn-Fed

Investing in the Electric Car

Electric vehicle technologies

Electric vehicle investments

Sugar in Your Gas Tank: Investing in Biofuels

Identifying biofuels

Evaluating biofuel investment opportunities

Chapter 21: Efficiency: Doing More with Less

High-Performance Building Fundamentals and Investments

Lighting

Windows

Motors

Energy management systems

Design

Transportation Efficiency

Personal transportation and conventional vehicle efficiency

National fuel economy standards

Mass transit

Chapter 22: Investing in Modern Energy

Funding the Modern Energy Revolution

Modern Energy Developers

Funds for Modern Energy

Modern energy mutual funds

Modern energy ETFs

Part VI: The Part of Tens

Chapter 23: Top Ten Energy Investment Resources

Energy & Capital

Energy Information Administration

International Energy Agency

The CME Group

The Oil Drum

Greentech Media

Gregor.us

Bloomberg

Oil & Gas Journal

Yahoo! Finance

Chapter 24: Top Ten Energy Data to Track

Crude Oil Prices

Natural Gas Prices

EIA Reports

World Energy Mix

OPEC Production

Gross Domestic Product

U.S. Dollar

Levelized Cost of New Electricity Generation

Forecast Growth Rates

Your Utility Bill

Chapter 25: Top Ten Energy ETFs

Energy Select Sector SPDR

Vanguard Energy

PowerShares Dynamic Energy Sector

iShares S&P Global Energy Sector

Market Vectors Uranium+Nuclear Energy

Market Vectors Coal

PowerShares DB Energy

PowerShares Global Clean Energy

Alerian MLP

Guggenheim S&P Global Water

Chapter 26: Top Ten Energy Developments on the Horizon

Demand Growth

Continued Fracking Expansion

Methane Hydrates

Natural Gas Vehicles

Energy Independence of the United States

Grid Parity

Vehicle-to-Grid Technology

Next-Gen Nuclear Reactors

Graphene

Hydrogen

About the Authors

Cheat Sheet

Connecting with Dummies

Introduction

Energy affects every single human endeavor. It’s at the heart of everything people do. From wood to whale oil to the modern forms of energy you see today, each generation has needed more energy and looked for new ways to get it. Today, supplying energy to a growing global population is one of the largest and most valuable industries in the world. Valued at around $7 trillion, the global energy industry is responsible for 10 percent of the world’s annual gross domestic product (GDP).

Energy powers your car, your house, and your phone. It moves people and goods across oceans and continents. It has created cartels, started wars, and produced family fortunes. No person or company is isolated from energy implications.

Because of constant and growing demand, energy makes for a great investment. It historically outperforms the market. Over the past 15 years, for example, a well-managed, broad-based energy fund returned 400 percent more than the Dow Jones Industrial Average. Energy prices haven’t slouched, either, as you undoubtedly see at every gas station marquee. For these reasons, retail investors have taken an extremely strong interest in energy investing.

But the energy market is complex and has many levels. It encompasses multiple fuel sources, commodities, companies, and funds. The goal of Energy Investing For Dummies is to help you understand and successfully invest in all the various parts of this market.

According to the International Energy Agency, the world needs to cumulatively invest $37 trillion in the global energy supply system to replace aging infrastructure and keep pace with rapidly growing energy demands. Using this book, you’ll prepare yourself to maximize the investment potential of this massive industry while avoiding its pitfalls and discovering how all its parts work together.

About This Book

My goal in writing Energy Investing For Dummies is to present you with an all-encompassing guide to the world’s energy markets and to give you the data and tools you need to profitably invest in them. You don’t have to speculate on crude oil prices to be an energy investor. Today, thanks to easy retail access to the market and exchange-traded funds (ETFs), investing in niche sectors of the energy market is easier than ever. You can buy individual companies, funds that hold groups of companies, or tradable instruments that represent a commodity’s price. And you can do this across multiple types of energy sources, from oil and gas to solar and wind, and everything in between. My aim is to give you a foundation of knowledge to feel confident investing in all of them while using simple language and real-world examples to demystify what can certainly be viewed as a mystifying topic.

Anyone who has tried to deconstruct the energy industry on his own realizes how many variables there are. Terms like barrels, therms, kilowatt-hours, reserves, capacities, and more can frighten off or confuse even seasoned investors. This book explains all these terms and more in simple language so you can feel confident in your understanding and ability to invest in all energy sectors.

Here are some of the energy investment concepts, techniques, and strategies you find in this book:

Getting in tune with the crude oil market: Oil prices have vast implications for everyone. But what drives them? Knowing where the world’s oil comes from, which countries use the most of it, how to get it, and how the industry is adapting to continually harder-to-get resources is critical to being able to gauge what makes oil prices tick and how to know when they’re over- or undervalued. See how all these pieces come together in Chapter 6.

Capitalizing on commodities without contracts: You no longer need a broker to profit from moves in commodity prices. Until recently, the only way to invest in commodity prices directly was to buy contracts on a futures exchange. For oil, this requires buying at least 1,000 barrels at a time. Today, exchange-traded funds (ETFs) track the price of commodities. You can buy and sell these funds just like a stock to profit from moves in the price of crude oil. I cover how it’s done in Chapter 10.

Realizing that traditional fuels encompass a global market: You’ve probably heard that there’s a “war on coal,” but this really only applies to the developed nations of North America and Europe. Emerging markets, especially in Asia, will continue to rely on coal as a primary energy source for decades to come. In 2035, the world will still be getting one-third of its energy from coal, though there will be a shift in which countries use the most of it. You can find out how to use coal’s continued dominance and shifting demographics for profit in Chapter 13.

This book has a few typographical conventions you should be aware of:

Italic is used for emphasis and to highlight new words or terms.

Boldface text is used to indicate key words in bulleted lists or the action parts of numbered steps.

Monofont is used to make web addresses stand out.

Foolish Assumptions

To avoid writing a how-to guide in basic investing, I had to assume certain things about you. Rest assured, I explain all jargon and adequately define all necessary terms, but I don’t provide entry-level investing information (although I do support and reinforce it). Here’s what I’ve assumed about you:

You’re not brand-new to investing. You’ve bought and sold stocks, and maybe even a few funds. You understand basic concepts like being long or being short. And you know stocks and funds trade on various exchanges and that each stock or fund has a ticker.

You’re looking to expand this basic investment knowledge to capitalize on different sectors of the market.

You understand that energy is a far-reaching and complex topic, and you want to gain a better understanding of its inner-workings.

You’re aware that more than just supply and demand determine energy prices. Weather, politics, macroeconomics, and random one-time events all have an impact. You want to know how to successfully incorporate these things into your investment strategy.

You know that emerging economies like those in Brazil, China, and India will require vast amounts of energy. You want to see how this is affecting and will affect the global energy picture and put that knowledge to use in your portfolio.

You’ve noticed that gasoline prices have averaged more than $3 per gallon for the past few years, and you want to know what is causing this or how you can benefit from it.

You’re aware that renewable energy is becoming a more important source of global energy. You want to see what types of renewables there are and what ways you can invest in them.

You’ve come across bits and pieces of information regarding a certain energy sector and want to know more about it.

You’ve seen sensationalized stories about energy relating to things like peak oil, fracking, or nuclear disasters, and you want some straightforward information on these topics and what they mean for your investments.

You know that a book like this is the perfect place to gain broad-based knowledge and trading skills for the energy market, but you’re also aware that a constantly evolving market like energy requires further reading and changes to your investment strategy to remain up-do-date and successful.

Icons Used in This Book

All For Dummies books use special icons to flag important pieces of information and make them easy to find. Here are the icons used in this book.

I use this icon to highlight information you’ll need to frequently recall when investing in energy or info that’s important to remember because it’s referenced in other parts of the book.

Whenever you see the bull’s-eye, pay special attention to the related text, as it offers actionable investment advice or explains how to execute a particular strategy.

Jargon inevitably appears when discussing investments in global energy markets. This icon denotes paragraphs you can skip over if you’re simply looking for an overview of energy investing. But be sure to read them for a deeper understanding of the industry or before you make any serious investments.

All investments carry risks. Make sure you fully understand them as they relate to energy investing by reading the paragraphs accompanied by this icon.

Beyond the Book

You got more than you bargained for when you bought this book. To accompany this fine text, additional information is hosted on Dummies.com:

You can download the book's Cheat Sheet at www.dummies.com/cheatsheet/energyinvesting. It's a handy resource to keep on your computer, tablet, or smartphone.

You can read interesting companion articles that supplement the book's content at www.dummies.com/extras/energyinvesting. I've even written an extra top-ten list, which ForDummies readers seem to love.

Where to Go from Here

For Dummies books are organized to be modular in nature, meaning that though you can read this book from front to back like any other, doing so isn’t entirely necessary. If you’re looking for information about one energy sector in particular, you can simply skip directly to that section. However, if you’re a true beginner, I recommend reading Part I carefully before skipping ahead.

Part I

Getting Started with Energy Investing

Visit www.dummies.com for great Dummies content online.

In this part . . .

Get a brief history of energy development and investments.

Examine the data to see how the need for energy is constantly growing.

Discover how energy is used, even in hidden ways, all around you.

Learn what you need to make your first energy investment.

Identify the risks and rewards of energy investing.

Chapter 1

Powering Your Portfolio: Energy in Brief

In This Chapter

Defining energy

Understanding why energy makes for a great investment

Knowing the risks

Identifying the various ways to invest in energy

Energy is the most vital industry the world has ever seen. It generates the most revenue and it’s a foundational requirement for all other industries. Apple needs energy to make its computers and run its warehouses full of servers. Walmart needs energy to transport its goods and keep the lights on at its thousands of retail locations. As such, the energy market is fertile ground for investment.

But where does one start? With so many sources of energy and companies to choose from, a beginner can become overwhelmed very quickly. Unlike other sectors of the market, like restaurants or retail, for example, investing in energy is about much more than just individual companies with a singular goal. Energy crosses borders, both geographically and in the way it upends the traditional approach of categorizing companies with neat and tidy labels.