Oil Stocks to Buy as Gas Prices Plunge

• Worldwide demand for crude oil in 2000 averaged around 75 million barrels a day, according to the International Energy Agency.
• Today, demand is about 85 million barrels a day.
• By 2012, the International Energy Agency estimates, rising economic growth in markets such as China and India will spur demand to around 95 million barrels a day.
• Worldwide reserves are declining by about 15% per year.

Those additional 10 million-plus barrels a day needed by the world in six years will have to come from someplace new. The leap from 75 million to 85 million was actually not that tough, as higher prices shook loose excess capacity from Saudi Arabia, Russia and Africa. But the next gap in production is expected to be a lot harder to fill, as explorers will have to drill deeper into the oceans, slash deeper into equatorial jungles and blast deeper into Arctic tundra to find it. Forces of nature gave us lots of rich fossil fuels to burn, but in a sort of big cosmic joke, they put most of them in very inhospitable places.

If you're a gambler, the best way to bet on greater world energy production is with small oil- and gas-exploration companies. But most of you won't want to go that speculative route, as their share prices tend to shoot up and down with volatile oil prices.

Instead, you need to take this opportunity to buy shares of the companies that provide the rental equipment, chemicals and engineering know-how that make life easier for the explorers, because these companies get paid whether wells work out or not. Such companies are known as oil-field-services providers, and they are really cheap right now.