Types of Energy Commodities - dummies

By Amine Bouchentouf

Energy has always been indispensable for human survival and also makes for a great commodities investment. Energy, whether fossil fuels or renewable energy sources, has attracted a lot of attention from investors as they seek to profit from the world’s seemingly unquenchable thirst for energy.

  • Crude oil: Crude oil is the undisputed heavyweight champion in the commodities world. More barrels of crude oil are traded every single day (87 million and growing) than any other commodity. Accounting for 40 percent of total global energy consumption, coal provides some terrific investment opportunities.

  • Natural gas: Natural gas, the gaseous fossil fuel, is often overshadowed by crude oil. Nevertheless, it’s a major commodity in its own right, used for everything from cooking food to heating houses during the winter.

  • Coal: Coal accounts for more than 20 percent of total world energy consumption. In the United States, the largest energy market, 50 percent of electricity is generated through coal. Because of abundant supply, coal is making a resurgence.

  • Uranium/nuclear power: Because of improved environmental standards within the industry, nuclear power use is on the rise.

  • Electricity: Electricity is a necessity of modern life, and the companies responsible for generating this special commodity have some unique characteristics.

  • Solar power: For a number of reasons that range from environmental to geopolitical, demand for renewable energy sources such as solar power is increasing.

  • Wind power: Wind power is getting a lot of attention from investors as a viable alternative source of energy.

  • Ethanol: Ethanol, which is produced primarily from corn or sugar, is an increasingly popular fuel additive that offers investment potential.

Other commodities are in the energy complex, such as heating oil, propane, and gasoline.