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Find or Refer a Contractor in Tyler

Tyler Energy Companies, Recession Proof

January 12th, 2010

Call Our Preferred Energy and Electric Service Company At 1-800-971-4020 To Compare Electricity Rates

Tyler Texas is home to a large amount of oil and drilling companies, machine shops, natural gas, and oil refining companies. Tyler and the East Texas area actually did great even during the depression because of our reliance upon the energy field as our primary income source for our economy. Now Tyler and East Texas is also known for being a strong medical center having some of the top facilities and doctors in the country for certain procedures. Even if the energy sector were to decline the medical area in Tyler would still thrive as everyone needs medical care. Everyone also needs oil, natural gas, and gasoline but sometimes the price of oil or natural gas goes down and so the need to extract more from the ground is not needed. When there is enough natural gas and oil in storage and the price is too low there is not as much drilling that is done. People in the energy field get laid off when the prices are low because drilling companies are holding off on drilling until it is cost effective to start up again.

Most of the drilling that you see in Tyler Texas is actually natural gas drilling. Natural gas is the fastest growing energy commodity being used right now. It has quickly surpassed all other energy commodities because of its ease of storage and how cheap it is. Many companies in the past and even now have burned off natural gas when pumping oil and this is still being done in several Asian countries. The natural gas that is being burned off is potential billions of dollars in additional profit to these energy companies although East Texas has been profiting from natural gas for several decades. The local refining plant here in Tyler actually burns off energy from one of their stacks as of July 2009 which is counter productive and a little archaic in this day in age. We know how to store and transport natural gas and it could mean several hundred thousand dollars if not millions of dollars simply by capping it and storing it to sell to other companies.

Since natural gas is one of the primary energy fuels in East Texas and because the world is quickly utilizing this fuel as the fuel of choice for things like electricity generation power plants we see a bright future a head for the Tyler and East Texas area. Historically when the stock market’s drop in price things like US currency and energy commodities go up in price. Energy and currency many times acts as a hedge against recessionary behaviors in the US economy. I have talked to some hair brained loonies in Tyler who have suggested investing in oil and natural gas drilling companies because of this. I strongly suggest staying away from investing in small cap stocks held by small time energy drilling companies. Oil and natural gas drilling is extremely speculative and trying to sell your small cap stock for a profit can be quite difficult when it goes up because there is not enough volume from other people wanting to buy.

A smarter way to invest in the global trend and Tyler strong hold in natural gas is to buy what is known as an ETF from a stock or commodities broker in Tyler. There are ETF’s for stock indexes, energy commodities, Gold, Silver, and many other popular items. There is no diamond ETF because diamonds have no commodity index that they are traded on. Diamonds are basically run by a monopoly company that sets their prices without interference from any type of index or market. We recommend avoiding any type of scheme related to buying diamonds or diamond stock in a small cap company. An ETF is like a mutual fund because it is a composite of several different companies in a related field but without the fees you would pay to buy a mutual fund. By saving money in fees an ETF diversifies your holdings in your preferred commodity as well as save you money you would pay a brokerage in fees to continually invest in a mutual fund. An ETF is a little more risky than investing in a mutual fund but a lot less risky than putting all your money in only one stock or commodity. Instead of investing in a small cap oil or natural gas drilling company in Tyler Texas we recommend buying an ETF. You will save yourself a lot of heartache and will likely still have something to show for your investing efforts several years down the road.

Next time you are driving down an East Texas road and see a drilling pump and get the desire of wanting to invest in drilling yourself just consider looking into ETF’s to satisfy such a risky endeavor and still participate in the East Texas and global trend towards natural gas energy. There is actually a 90% correlation with the price of natural gas and electricity in East Texas and Tyler because most of our electricity power is generated using natural gas. When picking a natural gas power company for your home you only have one choice which is Centerpoint Energy. When picking an electricity power company in Tyler and East Texas you have up to 50 different choices in electricity service companies. All of these Tyler electricity companies get their energy off of the ERCOT grid which also goes by the name Electric Reliability Council of Texas electric grid. This Texas grid operator approves a bidding system called the balancing energy market that lets power wholesalers, marketers, and generation companies to bid their power price on this enclosed Texas electric grid.

Most of the power generation companies are producing their electricity through natural gas or coal fired power plants. These generation companies then sell this electricity power on the ERCOT balancing energy market. Retail electric companies in Tyler can then buy natural gas commodities in a paper transaction in order to create a fixed retail electricity price they can sell to the Tyler or East Texas energy consumer. Whenever you buy a fixed electricity price you are actually buying a variable electricity rate that was hedged through a paper transaction over a natural gas commodities exchange. The Tyler electricity companies selling retail electric service usually has an agreement with a company who specializes in hedging energy in order to be resold as a fixed electricity rate. This allows a Texas electricity provider and consumer to avoid any risk or exposure when power prices go up.