As concerns about climate change push the world economy toward a lower-carbon future, investing in oil may seem a risky bet. For the long term, that may be true.
Yet for the moment, at least, oil and gas prices appear likely to continue to rise as the economy recovers from the pandemic-driven shutdown of millions of businesses, big and small.
These countervailing trends — increasing demand now and falling demand at some point, perhaps in the not-too-distant future — create a dilemma for investors.
The good news is that an array of traditional mutual funds and exchange-traded funds are available to help them navigate these uncertain waters. Some funds focus on slices of the industry, such as extracting crude oil and gas from the ground or delivering refined products to consumers. Others focus on so-called integrated companies that do it all. Some spice their holdings with some exposure to wind, solar or other alternative energy sources.
International Energy Agency forecast that oil consumption was not likely to return to prepandemic levels in developed economies.
“World oil markets are rebalancing after the Covid-19 crisis spurred an unprecedented collapse in demand in 2020, but they may never return to ‘normal,’” the I.E.A. said in its “Oil 2021” report. “Rapid changes in behavior from the pandemic and a stronger drive by governments toward a low-carbon future have caused a dramatic downward shift in expectations for oil demand over the next six years.”
alternative energy funds. Many enable investors to zero in on discrete segments of the industry.