The energy industry comprises all of the companies that are in the business of providing energy, through extracting natural resources, manufacturing fuel from those resources, or distributing the power to consumers. The term “energy industry” most often refers to gas and oil, but it also includes coal and all types of renewable resources like solar and wind power.
Natural gas is a fossil fuel that is formed when organic matter decomposes under intense pressure over millions of years. It is found underground in natural gas fields and shale formations. Natural gas is often found in proximity to oil fields, where it is extracted through drilling. Natural gas can also be extracted through fracking, which is the process of breaking up shale with jets of water and sediment to release trapped gas. It can be used to generate electricity, heat homes, and serve as transportation fuel.
Crude oil is unrefined petroleum, and it is a fossil fuel that is formed, like natural gas, from the compression of decomposing organic matter over a very long period of time. Oil is found underground and under ocean and lake beds, and it is extracted primarily by drilling. Once crude oil is extracted, it is piped to a refinery where the oil is transformed into consumer products like gasoline, diesel fuel, and kerosene, to name just a few.
Coal is a sedimentary rock that is found in layers deep underground. Similar to gas and oil, coal is formed from organic matter that is converted into peat and lignite before becoming coal. It is extracted through mining, and it is used today to generate electricity and heat.
Renewable energy resources include solar power, hydroelectric power, and wind power. Businesses in these industries include manufacturers of solar panels and windmills as well as companies that own hydroelectric facilities. While these resources account for only a small percentage of energy consumption at this time, improvements in technology and concerns about global warming are sure to drive an increase in demand.
As demand for energy around the globe is always increasing, the energy sector has a healthy outlook despite day-to-day fluctuations. For information about investing in energy stocks, check out the advice given here.