Peak Oil is approaching and an energy crisis is developing. The energy crisis results from a combination of declining oil supply - the earth only has a finite amount of oil - and increased demand for the remaining oil as more & more nations become industrialized.

China and India are the latest two nations to begin rapidly moving out of the undeveloped stage to join the high-oil consumption areas, notably the U.S. and Europe. The huge populations of those two countries want to drive cars and to have the multitude of appliances that the previous developed nations have enjoyed. The oil demand from China & India is booming?

In addition to the new high oil consumers, India and China, driving up oil demand, the U.S. has continued its wasteful habits of oil consumption. For example, the 200 million vehicles on the U.S highways is a lot of vehicles. Even the rapidly increasing cost of gasoline has failed (so far!) to appreciably reduce U.S. gasoline demand.

To compound the problem, the search for alternative energy sources to replace oil has only recently been pursued with the urgency it deserves......and, unfortunately, the most popular of the alternative energy sources - ethanol from corn - requires about as much energy to produce as the energy contained in the product. In my opinion, ethanol is just another political scam........but the corn farmers love the government subsidies!

Fortunately, some of the "good" alternative energy sources - wind energy, oil from oil sands, even solar energy - are being rapidly developed and will help with the energy crisis.

But I deviate from the subject of this lens which is to discuss oil company stocks investors should be looking at.

Oil Company Stocks Categories

I have divided the oil company stocks into 4 convenient categories:

1. Large (Major) Oil Company Stocks. These are the oil giants such as EXXON, British Petroleum, and Devon. (Devon is considered an independent oil company.) Most of the large oil company stocks are underpriced in my opinion.

2. Small Oil Company Stocks. These are the smaller companies. The small companies are more volatile but can also be more profitable.

3. Oilfield Services Company Stocks. These are the oil drilling companies, the oil tanker stocks, and the oil refinery stocks. This stocks may offer the most opportunity because their services are always needed either in the oil industry or in industry in general. Halliburton is an example of an oilfield services company.

4. Alternative Energy Company Stocks. These are the glamor stocks of the oil industry - solar energy companies, oil sands companies, wind energy companies, ethanol companies. These stocks have already had a great run so be careful....they are due a correction.

Also, beware of the scams in the alternative energy sector. For example, remember the "green pill" company that was selling green pills to improve gas mileage......the green pills turned out to be nothing more than moth balls.

The alternative energy stocks remind me a little of the Dot.com bubble of a few years ago. I received a healthy education when that bubble burst.

So, exercise due diligence in your stock trading!

Happy trading!