Zion Oil and Gas Inc.

Zion Oil and Gas Inc. is an AMEX listed security that has been trading in a range between $4.02 and $14.05 over the past year. With 10,067,480 shares outstanding, a recent price of $6.50 gives a total market capitalization of $62,921,750. While there are certainly larger companies, Zion Oil and Gas Inc. has definitely earned its place in the pack. Last year, Zion Oil and Gas Inc. created $-0.32 in earnings for every share outstanding.

Zion Oil and Gas Inc. is currently priced by the market at 0.00 times last year’s earnings. Many trading multiples around the world are quite attractive these days, but don’t be fooled. A Price to Earnings ratio of 0 simply means that the security didn’t make any money last year.

With a share price under $50 a share and earnings per share below $1 a share, Zion Oil and Gas Inc. is unlikely to be an interesting value proposition.

BPZ Energy Inc.

BPZ Energy Inc. is an AMEX listed security that has been trading in a range between $3.60 and $7.95 over the past year. With 54,497,870 shares outstanding, a recent price of $5.92 gives a total market capitalization of $326,987,220. While there are certainly larger companies, BPZ Energy Inc. has definitely earned its place in the pack. Last year, BPZ Energy Inc. created $-0.32 in earnings for every share outstanding.

BPZ Energy Inc. is currently priced by the market at 0.00 times last year’s earnings. Many trading multiples around the world are quite attractive these days, but don’t be fooled. A Price to Earnings ratio of 0 simply means that the security didn’t make any money last year.

With a share price under $50 a share and earnings per share below $1 a share, BPZ Energy Inc. is unlikely to be an interesting value proposition.

CanArgo Energy Corporation

CanArgo Energy Corporation is an AMEX listed security that has been trading in a range between $0.61 and $1.67 over the past year. With 238,501,000 shares outstanding, a recent price of $0.92 gives a total market capitalization of $231,345,977. While there are certainly larger companies, CanArgo Energy Corporation has definitely earned its place in the pack. Last year, CanArgo Energy Corporation created $-0.26 in earnings for every share outstanding.

CanArgo Energy Corporation is currently priced by the market at 0.00 times last year’s earnings. Many trading multiples around the world are quite attractive these days, but don’t be fooled. A Price to Earnings ratio of 0 simply means that the security didn’t make any money last year.

With a share price under $50 a share and earnings per share below $1 a share, CanArgo Energy Corporation is unlikely to be an interesting value proposition.

Claude Resources Inc.

Claude Resources Inc. is an AMEX listed security that has been trading in a range between $0.89 and $1.95 over the past year. With 92,100,000 shares outstanding, a recent price of $1.52 gives a total market capitalization of $142,754,996. While there are certainly larger companies, Claude Resources Inc. has definitely earned its place in the pack. Last year, Claude Resources Inc. created $0.03 in earnings for every share outstanding.

Claude Resources Inc. is currently priced by the market at 61.60 times last year’s earnings. Many trading multiples around the world are quite attractive these days, but don’t be fooled. A Price to Earnings ratio of 0 simply means that the security didn’t make any money last year.

With a share price under $50 a share and earnings per share below $1 a share, Claude Resources Inc. could be an interesting value proposition.

Devon Energy Corp.

Devon Energy Corp. is among the world’s largest Oil and Gas Exploration and Production sector businesses in the world.  Devon Energy Corp.’s employees generate $2.797B in profits on $10.551B of revenue.  Global output in the Oil and Gas Exploration and Production business will likely rise substantially over the next 10 years.  Long-term economic growth may lift all boats, but Devon Energy Corp. is determined to remain a market leader.  Sectoral leadership in the Oil and Gas Exploration and Production segment takes dedication and consistency, but management seeks out-sized growth.

Devon Energy Corp.’s ticker symbol DVN has recently been trading near $78.81 a share.  The Devon Energy Corp. corporate headquarters in Oklahoma City, OK predicts Oil and Gas Exploration and Production profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $35.056B ensures sufficient liquidity.  With a beta of 1.06, the company is more volatile than the market as a whole.  When the average equity moves higher, Devon Energy Corp. moves more aggressively.

EOG Resources

EOG Resources is among the world’s largest Oil and Gas Exploration and Production sector businesses in the world.  EOG Resources’s employees generate $1.091B in profits on $3.502B of revenue.  Global output in the Oil and Gas Exploration and Production business will likely rise substantially over the next 10 years.  Long-term economic growth may lift all boats, but EOG Resources is determined to remain a market leader.  Sectoral leadership in the Oil and Gas Exploration and Production segment takes dedication and consistency, but management seeks out-sized growth.

EOG Resources’s ticker symbol EOG has recently been trading near $73.22 a share.  The EOG Resources corporate headquarters in Houston, TX predicts Oil and Gas Exploration and Production profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $17.909B ensures sufficient liquidity.  With a beta of 0.93, the company is less volatile than the market as a whole.  When the average equity moves lower, EOG Resources moves less aggressively.

Baker Hughes

Baker Hughes is among the world’s largest Oil and Gas Equipment and Services sector businesses in the world. Baker Hughes’s employees generate $2.454B in profits on $9.438B of revenue. Global output in the Oil and Gas Equipment and Services business will likely rise substantially over the next 10 years. Long-term economic growth may lift all boats, but Baker Hughes is determined to remain a market leader. Sectoral leadership in the Oil and Gas Equipment and Services segment takes dedication and consistency, but management seeks out-sized growth.

Baker Hughes’s ticker symbol BHI has recently been trading near $84.98 a share. The Baker Hughes corporate headquarters in Houston, TX predicts Oil and Gas Equipment and Services profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $27.222B ensures sufficient liquidity. With a beta of 1.14, the company is more volatile than the market as a whole. When the average equity moves higher, Baker Hughes moves more aggressively.

Chevron Corp.

Chevron Corp. is among the world’s largest Integrated Oil and Gas sector businesses in the world. Chevron Corp.’s employees generate $17.857B in profits on $187.703B of revenue. Global output in the Integrated Oil and Gas business will likely rise substantially over the next 10 years. Long-term economic growth may lift all boats, but Chevron Corp. is determined to remain a market leader. Sectoral leadership in the Integrated Oil and Gas segment takes dedication and consistency, but management seeks out-sized growth.

Chevron Corp.’s ticker symbol CVX has recently been trading near $84.83 a share. The Chevron Corp. corporate headquarters in San Ramon, CA predicts Integrated Oil and Gas profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $182.320B ensures sufficient liquidity. With a beta of 1.03, the company is more volatile than the market as a whole. When the average equity moves higher, Chevron Corp. moves more aggressively.

Chesapeake Energy

Chesapeake Energy is among the world’s largest Oil and Gas Exploration and Production sector businesses in the world. Chesapeake Energy’s employees generate $1.638B in profits on $6.962B of revenue. Global output in the Oil and Gas Exploration and Production business will likely rise substantially over the next 10 years. Long-term economic growth may lift all boats, but Chesapeake Energy is determined to remain a market leader. Sectoral leadership in the Oil and Gas Exploration and Production segment takes dedication and consistency, but management seeks out-sized growth.

Chesapeake Energy’s ticker symbol CHK has recently been trading near $34.81 a share. The Chesapeake Energy corporate headquarters in Oklahoma City, OK predicts Oil and Gas Exploration and Production profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $16.038B ensures sufficient liquidity. With a beta of 0.88, the company is less volatile than the market as a whole. When the average equity moves lower, Chesapeake Energy moves less aggressively.

BJ Services

BJ Services is among the world’s largest Oil and Gas Equipment and Services sector businesses in the world. BJ Services’s employees generate $837.5M in profits on $4.703B of revenue. Global output in the Oil and Gas Equipment and Services business will likely rise substantially over the next 10 years. Long-term economic growth may lift all boats, but BJ Services is determined to remain a market leader. Sectoral leadership in the Oil and Gas Equipment and Services segment takes dedication and consistency, but management seeks out-sized growth.

BJ Services’s ticker symbol BJS has recently been trading near $28.51 a share. The BJ Services corporate headquarters in Houston, TX predicts Oil and Gas Equipment and Services profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $8.363B ensures sufficient liquidity. With a beta of 0.46, the company is less volatile than the market as a whole. When the average equity moves lower, BJ Services moves less aggressively.

Apache Corp.

Apache Corp. is among the world’s largest Oil and Gas Exploration and Production sector businesses in the world. Apache Corp.’s employees generate $2.384B in profits on $8.128B of revenue. Global output in the Oil and Gas Exploration and Production business will likely rise substantially over the next 10 years. Long-term economic growth may lift all boats, but Apache Corp. is determined to remain a market leader. Sectoral leadership in the Oil and Gas Exploration and Production segment takes dedication and consistency, but management seeks out-sized growth.

Apache Corp.’s ticker symbol APA has recently been trading near $81.72 a share. The Apache Corp. corporate headquarters in Houston, TX predicts Oil and Gas Exploration and Production profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $27.062B ensures sufficient liquidity. With a beta of 1.10, the company is more volatile than the market as a whole. When the average equity moves higher, Apache Corp. moves more aggressively.

Allegheny Energy

Allegheny Energy is among the world’s largest Electric Utilities sector businesses in the world. Allegheny Energy’s employees generate $315.7M in profits on $3.123B of revenue. Global output in the Electric Utilities business will likely rise substantially over the next 10 years. Long-term economic growth may lift all boats, but Allegheny Energy is determined to remain a market leader. Sectoral leadership in the Electric Utilities segment takes dedication and consistency, but management seeks out-sized growth.

Allegheny Energy’s ticker symbol AYE has recently been trading near $52.05 a share. The Allegheny Energy corporate headquarters in Greensburg, PA predicts Electric Utilities profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $8.625B ensures sufficient liquidity. With a beta of 0.27, the company is less volatile than the market as a whole. When the average equity moves lower, Allegheny Energy moves less aggressively.

Anadarko Petroleum

Anadarko Petroleum is among the world’s largest Oil and Gas Exploration and Production sector businesses in the world. Anadarko Petroleum’s employees generate $4.298B in profits on $11.169B of revenue. Global output in the Oil and Gas Exploration and Production business will likely rise substantially over the next 10 years. Long-term economic growth may lift all boats, but Anadarko Petroleum is determined to remain a market leader. Sectoral leadership in the Oil and Gas Exploration and Production segment takes dedication and consistency, but management seeks out-sized growth.

Anadarko Petroleum’s ticker symbol APC has recently been trading near $51.70 a share. The Anadarko Petroleum corporate headquarters in The Woodlands, TX predicts Oil and Gas Exploration and Production profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $23.985B ensures sufficient liquidity. With a beta of 1.13, the company is more volatile than the market as a whole. When the average equity moves higher, Anadarko Petroleum moves more aggressively.

Exxon Mobil Corporation

Exxon Mobil is the world's most valuable corporation. With more than $40 billion a year in profits, it is also the most profitable business in history. It would probably surprise most casual observers that Exxon Mobil owes almost all of the attention paid to the company to its tremendous scale. With annual revenues surpassing $400 billion, the company's sub-10% profit margin is hardly awe-inspiring. Even within the context of the global oil business, Exxon Mobil is just a bit player. The company contributes just 3% of the world's oil and 2% of its total energy. Several state petroleum producers are significantly larger than Exxon Mobil. But Exxon Mobil stands alone as the largest American multi-national.

Consequently, Exxon Mobil takes extreme heat in the press for its shady foreign business practices and dodgy human rights record. The Exxon Valdez oil spill still makes headlines years after the US Supreme Court left the company on the hook for $5 billion in punitive damages. Even Exxon Mobil's funding of global warming skeptics needs to be seen in light of the companies American heritage. The state oil monopolies in Saudi Arabia or Venezuela don't need to spend money to alter public opinion, Russia's Gazprom just cuts right through government red tape to open huge new projects. In contrast, Exxon Mobil must fight aggressively just to stay in business.

Yet Exxon Mobil enjoys countervailing advantages that far outweigh these disadvantages. The legal framework in the United States may make doing business difficult, but it also makes it virtually impossible to expropriate profits. For all the concern about a windfall profits tax, Exxon Mobil faces no threat even close to the danger it faces doing business in numerous autocratic nations around the world. Russia and Venezuela simply seize foreign assets at will. At least in the United States, property rights are accorded much more protection.

Exxon Mobil is the world's largest publicly traded oil company. The entire energy sector has been experiencing tremendous growth in recent years and the same regulatory structure that once nearly strangled the industry has now given rise to enormous barriers to increased production. In an ironic twist of fate, current production is now immensely more profitable without any significant increase in the cost of doing business. And regulatory hurdles to new production have made the industry completely impregnable to new competition.

Exxon Mobil is a risky energy play. If any company is going to be held back due to political pressure, that company will surely be Exxon Mobil. Nonetheless, the company stands to profit more than any other company on the planet if current trends continue. Stock symbol XOM is a definite buy. Any investments of fresh capital should be balanced by other investments without significant energy exposure.

Dow Chemical Company

A chemical companies' chemical company, most of Dow Chemical's sales are intermediate products that other companies integrate into their own products rather than consumer goods. As a consequence, Dow Chemical has been able to effectively inoculate itself against the rising costs of industrial inputs.

Only BASF is a larger manufacturer of chemicals. But Dow Chemical is very heavily invested in hydrocarbons. Deriving approximately 50% of its sales from basic and performance plastics, the company needs access to enormous quantities of petroleum products even though its Hydrocarbons and Energy segment only accounts for 13% of sales.

Dow Chemical tends not to make large capital investments on its own. Rather, the company leverages its extensive intellectual capital to make joint projects work using someone else's capital. Dow Chemical is effectively moving from the restrictive operating environment in Western Europe and the United States and making increasing investments in the Middle East and Asia.

Dow Chemical faces significant downside risks coming from increasing environmental regulation, litigation relating to past environmental pollution, and geopolitical risk that its Middle Eastern and Asian operations could be either confiscated or otherwise rendered unprofitable by autocratic governments.

Dow Chemical's downside risks are more than balanced by the continuing strength of its core plastics business as well as a strong history of technological innovation. While Dow Chemical is more tightly integrated with the risk of petrochemical supply disruption, it is also better positioned to benefit from sustained higher prices. Dow Chemical is a strong buy, but its obvious dependence on the global oil industry needs to be considered when constructing any portfolio. Don't buy lots of energy industry stocks and expect Dow Chemical to provide any significant diversification.

ConocoPhillips

ConocoPhillips, a Houston, Texas based energy titan, is the second largest oil refiner in the United States. The company's concentration in the United States combined with its worldwide reach makes ConocoPhillips uniquely suited to profit in the coming years.

Yet ConocoPhillips' strengths are by no means a complete assurance of increasing profits. Competition from industry leader Exxon Mobil is unlikely to take the form that most observers are used to. None of the major oil producers has demonstrated any particular ability to influence the price of fuel by anything less drastic than accidentally destroying their facilities. As a consequence, in an environment of constantly increasing demand for energy, all of the major oil companies see their profits curtailed only by their inability to increase production. Unfortunately for the industry as a whole, however, political pressure to reduce gas prices has put most politicians in the position of aggressively opposing large profits for oil companies.

The current situation in the oil industry is one of practically guaranteed profits on a scale previously unimaginable. Unfortunately for American multinationals, there is a substantial risk that the winner of the 2008 Presidential election is going to endorse imposing a windfall profits tax on the industry that effectively destroys the profit potential of the industry.

ConocoPhillips is not the largest oil company in the world, but it is one of the largest. The company is particularly well placed to make substantial refining profits. While ConocoPhillips is perhaps not as favored as industry leader Exxon Mobil, stock symbol COP is a definite hold and a possible buy.

Coal

The fuel that powered the industrial revolution is not typically put forward as the likely successor to today's oil-based economy. But in an energy-intensive economy trying desperately to free itself from foreign supply disruptions, coal is poised to play a central role in near-term energy production.

Nuclear energy has been effectively hamstrung by excessive regulation and an aggressive environmental movement. Wind and solar don't even offer a competitive price and suffer from reliability issues. With world oil production prone to disruptions from inaccessible, unstable foreign nations, coal offers a compelling alternative.

While "clean coal" is still a slogan rather than a reality, the basic technology is proven and the environmental trade-offs well-understood, if unsavory. The United States has massive supplies of coal that provide substantial independence from foreign entanglements. Just as importantly, China is also home to enormous reserves. And while the United States is still hoping for a miracle energy source, China is moving forward with an ambitious building spree. Putting a new coal-powered plant into service every week, China has already decided that the energy supply of its future will be coal.

Technology companies are fond of advertising their ability to offer tomorrow's business solutions today, but British Petroleum may need to change its ad campaign. The company likes to imagine that BP stands for "beyond petroleum", but the implication is all wrong. Biofuels and other alternative energy make for good public relations, but the simple truth is that coal is the most likely successor to oil.

Cambodia and the Oil Curse

The IHT reports that Cambodia is struggling to balance the historical legacy of the Khmer Rouge and the country's new ambitions as it moves into the future. The entire transformation of the nation is perhaps almost totally encapsulated in the government's upcoming decisions regarding the massive oil deposits Chevron found off its southern coast.

On one hand, off-shore deposits, while initially more expensive to develop, are a godsend for international markets that don't want to be influenced by domestic unrest and governments that don't have complete control over their people. Only 28 years after the Khmer Rouge was ousted, Cambodia is desperately trying to avoid the example set by Nigeria and Chad. Despite massive oil revenues, the average people of Nigeria and Chad have actually gotten worse off due to corruption and economic dislocation.

Unfortunately for the people of Cambodia, the only solution that has ever succeeded in the presence of an oil bonanza - strong, yet market-sensitive government institutions - is woefully absent. Standard oil industry practice is to make "signature payments" to countries at the time oil contracts are signed, but Cambodia's government won't disclose how much money it received or what happened to the revenue. The money machine is just getting started, and the government is already mismanaging things.

Cambodia has a history of failing to exploit its natural resources. Already much of Cambodia's natural bounty of gems and timber has disappeared without substantial benefit to the people. And even the monies generated by tourism at the national treasure of Angkor Wat go into private hands.

Cambodia's record doesn't inspire much hope of lifting the oil curse, but in a country where 35 percent of the population lives on less than 50 cents a day the situation ever more bleak.

China displaces French Colonial Power in Africa

The IHT reports that France's residual influence in its former colonies in Chad and throughout Africa is being replaced by Chinese interests. This is a somewhat surprising development because the French worked diligently for decades to prevent perceived American hegemony. The Chinese, on the other hand, have moved in largely under the radar and have shown a disturbing willingness to cooperate with local warlords in order to ensure access to natural resources.

In one sense, the Chinese role in supplanting French interests reflects a growing awareness by the West that outside interventions are ultimately of only minimal value in fostering the kinds of free and open society's that can grow organically without relying solely on extracting mineral resources and heavy foreign investment. Despite enormous humanitarian efforts to fight HIV/AIDS, Africa remains an international basket case. Despite cumulative investments from the West totalling more than $1 trillion over the past half-century, Africa has been unable to show sustained progress.

Unfortunately for Africa, the Chinese influence that is replacing traditional Western powers is largely a reflection of a desire for access to natural resources. Because the Chinese notion of soft power rather conspicuously excludes any encouragement to improve local institutions, the despots and kleptocracies that have taken root in Africa will not be dislodged by outside influence. In particular, American attempts to discourage corruption and demand accountability have already been thwarted by Chinese money that comes without those onerous restrictions.

Chinese hegemony is obviously good for the Chinese, but Chad and other African countries will not be helped by an international environment that allows them to sink or swim on the basis of their own decisions.

The Dollar's Plunge Continues

Bloomberg reports that Fed chair Ben Bernanke warned that housing weakness will likely continue "somewhat longer" than expected and hold back the rest of the economy. As interest rates approach 5 percent, many investors are finding stocks less attractive now that their dividends are unlikely to follow interest rates higher. Even though the services sector expanded last month, the dollar continued its prolonged weakness, especially against the euro.

Now that equities in the United States have risen so strongly in recent months, many foreign investors are taking risk off the table by winding down the carry trade in the yen and the Swiss franc. For a long time, these investors took advantage of especially low interest rates in Japan and Switzerland by borrowing money there and then investing that money in the United States. The difference between prevailing interest rates has the effect of juicing profit margins, but if the carry trade acted as a force multiplier that drove the US market higher, it could also have a multiplied effect as it unwinds.

The dollar's decline against the euro in particular and most world currencies in general is at once a long overdue structural adjustment to reflect the growing economic clout of the rest of the world and also a repudiation of US economic leadership.

Oil prices around the world have risen dramatically in recent years, yet when the dollar's effect on dollar-denominated oil contracts is factored out, the price of oil in euros and yen has not grown nearly so much. While no one expects the oil sheiks to sell their product in other currencies, a much higher percentage of global commerce will be taking place in foreign currencies as time goes on.