As I write this, the price of oil is up more than $10 a barrel on the day. By the time you read it, crude could be up another couple of bucks -- or down by some significant amount. The key is that, at anything approaching current levels, our collective oil bill will do far more damage to our economy than is generally recognized.

Earlier this week, T. Boone Pickens, the Dallas-based, octogenarian energy expert and majordomo of a successful hedge fund specializing in the sector, noted that at current levels, we're sending about $700 billion a year to friendly and not-so-friendly suppliers to keep ourselves well-oiled. It's a level that Boone says will crumple our economy.

"It's not sustainable," he recently told Fox News viewers in an interview with Neil Cavuto. "If you want to break the United States, you just keep pouring out $700 billion a year, and you'll do it."

How to fix the problem
Is there a solution? Well, for starters, Pickens recommends that we move to the use of natural gas as our primary transportation fuel, a change that he figures would cut our total energy costs by about 35%.

That would be a fine beginning. But effecting such a substantial change would clearly require an extra-market push, such as an initiative from our nation's capital. So far, though, the primary interests there appear to be limited to fostering more corn production, thwarting domestic drilling, and slapping bigger taxes on producers' profits.

In the meantime, it seems to me that Fools can remain ahead of the game by carefully tailoring a portfolio that includes strong energy representation. My basket of appropriate names would start with Schlumberger (NYSE:SLB), the leader of the oilfield services group and a key player in finding and producing larger amounts of oil and gas.

I'd also include Chesapeake Energy (NYSE:CHK), a superbly managed company that's bearing down on U.S. natural-gas production leadership, along with deepwater drilling twins Transocean (NYSE:RIG) and Diamond Offshore (NYSE:DO). And for balance, I might include representation in the big daddy of them all, ExxonMobil (NYSE:XOM), which currently appears undervalued.

There are, of course, a number of other compelling oil and gas names you might slip into your portfolio. The key is that we're unlikely to emerge from our energy quandary without a lot of travail and sacrifice, as well as a probable weakening of our economy. Nevertheless, our worsening (and untreated) state of affairs doesn't have to result in a slashing of your investment returns.  

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