2006: FINIS

Energy’s Winners and Losers In 2006
Steve Hargreaves, December 27, 2006 (CNN Money)
- Even with oil prices little changed from the end of 2005, 2006 was still a very good time to be an energy investor.

- The AMEX oil and gas index is up nearly 14 percent in the year to date, while the electric utility index on Baseline is up 17 percent, and the Wilder Hill clean energy index is up about 6 percent…
- In the oil and gas sector, the big integrated oil companies turned in stellar performances…ExxonMobil is up 35 percent in 2006,Chevron has gained 28 percent and the stock of ConocoPhillips has risen 23 percent…Smaller oil companies like…rose 49 percent this year, while Occidental is up 22 percent…partially explained by the fact that the price of oil fell…investors jumped into the safer stocks...
- The fall in oil's price has, however, hurt more specialized companies, the stock of which tends to depend more directly on the price of crude.
- The stock of refiner Sunoco…lost 20 percent…unable to take advantage of the price difference between heavy and light grades of oil…Exploration and production specialist Anadarko fell 10 percent in a year during which it made big acquisitions, including the $21 billion outlay for Western Gas Resources and Kerr-McGee Corp…

- Looking ahead, a similar trend is expected to continue in 2007, as the price of oil is seen trading in a fairly narrow range…between $55 and $70 per barrel…
- In the renewable field, 2006 was the year of ethanol. Several companies went public this year, including the nation's No. 2 producer VeraSun, which debuted near the peak of the ethanol craze in June at around $28 a share…
Yet, VeraSun fell steadily for several months after its IPO, and most other ethanol stocks have cooled…as the challenges surrounding the product - producing it cheaply, shipping it, finding enough raw materials - sink in…
- companies specializing in making enzymes for ethanol production - a critical step where there is room for big cost cuts essential to commercialize cellulosic ethanol, which promises the ability to replace gasoline on a much larger scale - have made astounding gains…Diversa and MGP Ingredients are two of the best performers on the Wilder Hill clean energy index, a 43-company index that covers all types of clean energy firms. Diversa stock is up 108 percent, and MGP has risen 81 percent…Other top performers: MEMC Electronic Materials, which makes solar panel components, and OM Group, which supplies specialty metals for batteries…the push to renewable energy is helping…they may also have benefited from silicon and commodity prices…

- At the bottom end of the index lies hydrogen companies. Hydrogenics lost 60 percent…Quantum Fuel Systems has fallen 37 percent…having trouble as they attempt to commercialize an expensive product with hardly any distribution system…
- Utilities also turned in a solid performance in 2006… the sector, considered a defensive play, benefited as the economy slowed…Low interest rates, high wholesale power prices and approval for capital expenditures (which can be passed on to ratepayers) all contributed to rising share prices…Allegheny Energy and FPL Group were among some of the years top performers…with stock gains of 45 and 32 percent respectively…Edison International and Southern Co. brought up the rear…But the outlook for 2007 may not be as good…