The energy sector of the investing marketplace includes the stocks of a wide variety of companies. The primary types of energy stocks are oil industry stocks, natural gas stocks, coal stocks, nuclear energy stocks, utility stocks and alternative energy stocks. Many large energy companies are heavily diversified, so some overlap exists among the main categories of energy stocks. The primary groups can also be further divided into more specific categories.
The oil industry sector contains energy stocks of companies involved in the exploration, production and distribution of petroleum, including the transportation of fuel and the operation of gas stations. This sector also encompasses the stocks of companies engaged in drilling, well-site management and similar endeavors in the oil service business. Some oil companies also have invested in technology related to the exploration and production of shale oil.
Natural gas stocks are linked to companies primarily involved with harvesting, processing or shipping natural gas. This group includes companies that sell natural gas to commercial, industrial or residential customers. It also includes companies that own and operate natural gas storage facilities.
Companies engaged in the production and sale of coal, the main source of electricity generation in many countries, fall under the heading of coal stocks. This sector includes companies that mine coal or ship coal from mines to power plants, mills or other industrial facilities. Some coal firms also control technology designed to convert coal into natural gas or transportation fuels.
Nuclear energy stocks, or nuclear power stocks, are attached to companies that harness the power produced by nuclear reactions. Nuclear reactors generally cost more to build but produce cheaper electricity compared to other types of power plants. A related group is uranium stocks, which are linked to companies that acquire, operate or develop uranium properties. Utility stocks are stocks of companies that provide and transmit electricity, regardless of its source, as well as water or gas to its customers. Utility companies typically own and operate their own energy facilities.
Alternative energy stocks encompass a diverse selection of stocks of companies involved in green energy, clean energy, renewable energy and other non-traditional energy resources. Green energy is generally defined as energy that does not promote pollution and does not rely on fossil fuels. This group includes companies devoted to the development of wind power, solar energy and alternative fuels such as ethanol, which can be used as a stand-alone fuel or as a fuel additive.