Fisher Investments on Energy

Aaron M. Azelton (San Francisco, California) is an equity research analyst covering the Energy sector at Fisher Investments. He graduated from the University of California at Berkeley with a B.A. in Economics. He has been with Fisher Investments since 2002. Aaron grew up in Santa Monica, California, and is currently living in San Francisco. Andrew S. Teufel (San Francisco, California) has been a member of Fisher Investments research staff since 1995 and is currently Co-President and Director of Research. Prior to joining the firm, he worked at Bear Stearns as a corporate finance analyst. He is a graduate of the University of California at Berkeley, and has lectured at the Haas School of Business on topics in investment management. Andrew has conducted hundreds of investment seminars and educational workshops throughout the US and the United Kingdom. He also serves as Editor-in-Chief of MarketMinder.com.

• Foreword ixPreface xiAcknowledgments xvPart 1: Getting Started in Energy 1Chapter 1: Energy Basics 3Oil & Gas Industry 4Energy Equipment & Services Industry 14Chapter 2: What Makes Energy Burn: Key Drivers ofthe Energy Sector 19Oil Demand Drivers 20Oil Supply Drivers 30Natural Gas Demand Drivers 40Natural Gas Supply Drivers 45Additional Drivers 52Part 2: Next Steps: Energy Details 61Chapter 3: Energy Sector Breakdown 63Global Industry Classification Standard (GICS) 64Global Energy Benchmarks 65Oil, Gas, & Consumable Fuels Industry 70Energy Equipment & Services Industry 82Sub-Industry Drivers 88Chapter 4: Why We’ll Never Run Dry 103The World Will Never Run Out of Oil 104The Tipping Point? 109Peak Oil and You 116Peak Oil Reading 118Chapter 5: Staying Current: Tracking IndustryFundamentals 121Crude Oil Market Fundamentals 121Natural Gas Market Fundamentals 131Refining Margin Fundamentals 136Energy Equipment & Services Fundamentals 144Chapter 6: Alternative Energy 151What Is Alternative Energy? 152Alternative Energy Drivers 167Alternative Energy Investment Universe 170Part 3: Thinking Like a Portfolio Manager 175Chapter 7: The Top-Down Method 177Investing Is a Science 177Einstein’s Brain and the Stock Market 178The Top-Down Method 180Top-Down Deconstructed 185Managing Against an Energy Benchmark 193Chapter 8: Security Analysis 197Make Your Selection 198A Five-Step Process 199Important Questions to Ask 207Chapter 9: Energize Your Portfolio 217Strategy 1: Commoditize 218Strategy 2: Playing Sub-Industries 219Strategy 3: Company Bets 228More Sub-Industry Tips 228Appendix: Energy Sector Resources 233Notes 236Glossary 243About the Authors 249Index 250