Commodity ETFs: Energy ETFs
Commodity ETFs (exchange traded funds) are growing in popularity with today’s economy around the world. Energy ETFs are no exception. Energy exchange traded funds cover a wide range of energy sources, including crude oil, coal, natural gas, gasoline, and uranium. Even the sun and the wind have ETFs, and water is the most recent to follow them to Wall Street. Why are energy exchange traded funds the commodity to have?
That’s actually an easy question to answer. Energy ETFs are banking on the futures of the energies; the futures of the prices, the contracts, and the resources. Crude oil and gasoline are probably the most watched energy exchange traded funds because of the fact that these prices not only guide the economy, but they are not projected to go down anytime soon. One recent prediction that gasoline will be $7.00 per gallon by 2010 is pretty scary to most people. The people who own gasoline and crude oil ETFs aren’t afraid. Sure they are paying the same thing at the pump as the rest of us, but they can do it with a smile on their faces.
Natural gas energy ETFs are certain to grow, not only because of the economy but because of global warming and the ecology. Natural gas is the cleanest burning type of gas energy and chances are good that the government is going to pass an energy bill that will require companies to clean it up. Natural gas will be in demand more than ever before.
The sun and wind have their own energy ETFs as well. Solar energy and more recently wind energy are being packaged up (in the form of exchange traded funds, that is) and sold to anyone who wants in on the action. Wind energy is not new to the United States, but the popularity of it is, and that popularity is growing. Europe and Asia have done much more with wind energy and the US needs to step it up some. Wind energy is exciting because one wind turbine (those great big windmills that you see mostly in rural areas of the western United States) that is capable of generating 1 megawatt of power, most can do more but for the sake of the equation we’ll use 1, can provide power for 380 residential homes. It is estimated that wind turbines in each of the 48 continental US states could easily account for 20% of all power generated in the country. How can this not be exciting to investors?
Solar and wind energy are considered alternative energy funds. Other alternative energies sold as energy ETFs are nuclear and water is coming soon. Some funds are bundled alternative energies, appropriately called alternative energy ETFs. Experts warn that investors should wait until new alternative energy ETFs level off before buying them up. This is because of the volatility that energy exchange traded funds are well known for. They also suggest 12 month contracts on energy ETFs for added security.
If you are looking for an energy ETF to invest in, there are plenty to choose from. But no matter what commodity ETFs you invest in, chances are you’re going to come out a winner.
Get more info on currency etfs, silver etfs, gold etfs, oil etfs, and agriculture etfs.
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Allen Taylor
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