All signs point to higher oil prices. Natural gas advocate and billionaire T. Boone Pickens believes new oil discoveries can't keep up with increasing demand, which will result in higher prices.
To make matters worse, some believe the Saudis are overstating oil reserves by a whopping 40%. These prognosticators could be wrong, but if they aren't then the days of $3.50 a gallon gasoline might soon be viewed with nostalgia. The good news is, with the right investment, you can actually profit from high gas prices.
An unconventional investment
Many energy companies are exploring for oil from unconventional sources. Extracting oil from tar sands is one such source.
Energy companies are flocking to the Canadian province of Alberta to tap the estimated 173 billion recoverable barrels of tar sands worth approximately $18.5 trillion at recent oil prices.
The biggest tar sands player is Suncor Energy
What about those frackers?
Many people believe natural gas is the natural alternative to oil and coal. Rising oil prices are fueling interest in this abundant resource. The United States is the Saudi Arabia of natural gas. And it's likely that U.S. natural resource reserves are understated.
A multitalented resource
The main question now becomes, where does natural gas fit in our nation's energy equation? Or does it fit at all?
Researchers at MIT released a report last June suggesting natural gas as a logical replacement for coal-fired power plants. Utility companies are realizing this as well. The Energy Information Administration projects that natural-gas-fired plants will account for 82% of new capacity in 2013, up from 42% in 2009. If such a shift occurs, natural gas utility companies such as Piedmont Natural Gas
Natural gas is also gaining momentum as a cheap alternative transportation fuel. Congress recently introduced a bill offering sizable tax credits in order to jump-start the natural gas transportation industry. If the bill passes, and some believe it will, Westport Innovations
An energy exporter?
If we don't use our natural gas, then other nations will and natural gas exporter Cheniere Energy
The possibility of actually exporting natural gas continues to rise as natural gas producers frantically search for customers. Last year, Cheniere obtained the necessary permits from the U.S. government to export natural gas, signaling the company will build the first plant in the lower 48 states capable of exporting the abundant resource.
The bottom line
Barring economic collapse, new highs in oil could be the new norm. Now's the time to seek some pocketbook protection by investing in stocks that could thrive in an expensive oil environment.
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Fool contributor Adam J. Crawford does not own shares in any of the companies mentioned in this article. Range Resources is a Motley Fool Inside Value selection. Westport Innovations is a Motley Fool Stock Advisor recommendation. Piedmont Natural Gas is a Motley Fool Income Investor recommendation. The Fool owns shares of ExxonMobil and Range Resources. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.