Low-Risk Investing in Energy Companies

Investing in traditional energy resources, such as oil and natural gas, is often high-risk, especially for those not interested in investing long-term. Pricing waxes and wanes, politics get in the way, and access is not always secured. Investors willing to maintain shares for decades will see their dividends fall and rise several times. The comfort level with that type of investing is high for independently wealthy investors, and those who want shares to pass down from generation to generation. It is not for casual investors, or the faint of heart.

Investors not comfortable with high levels of risk can still invest in oil and natural gas. Low-risk investing that has the potential for high-yield can be found in Master Limited Partnership (MLP) companies. Example of MLPs include Genesis Energy LP and Crestwood Midstream Partners LP. The reason the risk is low is that these companies do not own natural energy commodities. What these partnership companies do is handle the transport, processing, and storing of oil and natural gas. They control transfer facilities, provide supplies for pipelines, transport via land and sea, and offer feeder pipelines as a way to move product. Regardless of the price per barrel for oil, it still has to get from point A to point B. Returns on the investment tend to be steady, without extreme risk. Obtaining this kind of investment information is easy on the internet. Some sites provide analysis, tips, and suggestions free of charge, while others charge a subscription fee for membership.

Investing in alternative energy sources can also be low-risk for a number of reasons. Solar power and wind turbine companies are growing rapidly as more and more countries seek inexpensive and independent resources. These resources can be developed within a country, making it less dependent on other countries. That eliminates the effects of global politics on energy sources. Another reason the risk is low is due to reduced liability. Leaks, spills, and contaminated ground water are not a by-product of wind or solar energy. These energy sources are also less expensive to develop, build, and maintain that natural gas or oil. Solar panels, for example, are being designed to be smaller to provide reliable energy while taking up less space.