Friday, July 11. Oil prices reach a new all-time high of $147 a barrel and bring with them a crescendo of buzz from investors, corporations, and world leaders. It is the peak of Peak Oil claims.

Monday, July 14. A young energy analyst sporting an ill-fitting tie tells CNBC Asia's Amanda Drury and Sri Jegarajah that oil's run will come to an end, since prices, more than twice the marginal cost to produce the oil, are disconnected from reality.

Since that conversation, oil has slid by $42 in about as many days. Who was this prescient predictor of petroleum prices? Should you be following his every move?

Me. And no.
Rest assured, this isn't a pat on the back about my lucky televised call about oil prices losing steam -- my mom has that plenty covered.

But I have another forward-looking statement for you: With energy prices having fallen precipitously, I believe now is exactly the time to start looking at energy stocks.

Since my last (and, admittedly, first) live TV appearance, oil and natural gas prices have fallen 28% and 43%, respectively -- in just two months. That means that a lot of quality energy names have suddenly found themselves with bargain-bin valuations.

What you must know about energy stocks
Before you consider pulling the trigger on oil or gas plays, though, you must understand this: In the short run, prices are entirely unpredictable. Even by so-called experts.

Witness this week's shutdown of the once-highflying flagship fund of the commodity gurus at Ospraie Management. After returning a market-crushing 15% annually for the past nine years, Ospraie is closing the fund after having lost 27% of its value in August alone. Nine years of stellar returns, and a single month can bring you down. Welcome to commodities investing.

But does the notorious volatility in energy stocks and prices over the short- and medium-term mean you should just punt on the sector? Absolutely not.

While making short-run bets on energy prices is financial roulette for all but the most in-the-know energy traders, the long-term case for keeping oil and gas exposure in your portfolio is perfectly clear. Consider that:

  • Worldwide crude oil consumption has grown 15.8% over the past 10 years. Production? Only 12.9%.
  • Some 90% of the world's oil reserves are controlled by state-sponsored oil companies -- including Saudi Aramco, China's PetroChina (NYSE:PTR), Brazil's Petrobras (NYSE:PBR), and Russia's Gazprom.
  • Recent major oil and gas finds, such as Brazil's Tupi field, the successful drilling of the Jack 2 well off the Gulf Coast, and Kazakhstan's tumultuous Kashagan field, are more than a little inconveniently located -- either a mile-plus under the ocean's surface or in frozen wastelands that make oil and gas extraction an extremely challenging (and expensive) process.

Put that all together, and it's little wonder that you've seen oil prices boom over the past several years. And with all of the strong undercurrents supporting high energy prices going forward, this is the time for you to nail down just which energy plays you'd like to snatch up, should prices fall any further.

3 outstanding energy plays
Since natural gas has been particularly hard-hit, value hawks should be looking toward producers with impressive track records, such as Chesapeake Energy (NYSE:CHK) and XTO Energy (NYSE:XTO). With price drops like this, even heavily followed oil majors such as Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) and oil-sands expert Canadian Natural Resources (NYSE:CNQ) could once again be catching the eye of forward-looking value investors.

But beyond the big boys, which energy stocks should you be looking at? We're bullish on three outstanding energy plays right now. One is a deeply out-of-favor value play, another is a steady dividend payer with room to run, and the third is a little-known E&P that's poised to pop when energy prices turn the corner.

You can get all three recommendations, along with our rationales for recommending them, by requesting our free report, What You Need to Know About the "Oil Crisis." All you have to do to get it sent to your inbox is click here.

That old Buffett maxim of being "fearful when others are greedy and greedy when others are fearful" is especially true when it comes to commodities investing. So let the fearful keep selling -- and be greedy.

Joe Magyer owns no shares of companies mentioned in this article. Petrobras is a Motley Fool Income Investor recommendation, while Chesapeake Energy is an Inside Value pick. The Motley Fool has a disclosure policy.