The End of Cheap Oil §
The reason BP and Exxon-Mobil and Petrobras, etc. are drilling in deeper and deeper waters is because the cheap, easy-to-get oil has already been discovered decades ago.
Oil-producing countries have largely nationalized resources - Russia, China, Brazil, Iran, Venezuela, Mexico, etc. - squeezing out Western oil companies over the past decades. Places where Western oil companies continue to operate often remains hazardous. Royal Dutch Shell operates in Nigeria and Burma, helping support oppressive regimes. Invading Iraq was definitely a major oil play, though it backfired for Western oil companies, as the Iraqis have signed up with Chinese state companies.
In addition, oil field production is in decline. Mexico's oil production has been in steady decline even as her domestic oil use has steadily increased. Within this decade, Mexico - from whom we get a large portion of our oil - will likely see production decline to their level of domestic consumption. Even Saudi Arabia is only able to continue pumping oil from their fields at high volume with massive amounts of salt water injection and other advanced extraction methods to float the oil to the surface. Domestic oil demand is also growing in Saudi Arabia.
While there is still plenty of oil left in the world, the cheap, easy-to-get oil is in decline. The harder-to-get oil will be more difficult and more costly to obtain. There is no cheap replacement for cheap oil. Bio-fuel production requires intense efforts supplanted with fertilizers and pesticides made from oil and natural gas. Algae requires intense use of water and fertilizers. Hydrogen requires more energy to create than can be obtained. Ethanol from corn requires billions in Federal subsidies to make it work and essentially costs more in energy input - fuel, fertilizers, pesticides, etc. - than output.
Solar, wind, and water may product electricity, but at low efficiencies. Their storage medium is batteries made of toxic substances that gradually lose their ability to store power over time and must eventually be replaced at great cost.
The future of energy looks to be difficult. If you are interested in investing in energy for the future, look for companies that have large, safe reserves of energy - coal, natural gas, hydro-electric power, oil in politically stable and relatively easy-to-obtain areas. Examples include companies that collect royalties on coal resource, and oil and natural gas pipelines, which can deliver dividends in the range of 7% to 9% per annum. Examples include NRP, PVR, LINE, EEP. Even BP, if it continues paying its steady dividends, delivers 7%. The total cost of the Gulf of Mexico spill cleanup and related lawsuits will likely be easily absorbed, as BP made over $14 billion in profits in 2009 alone. (Although I personally wouldn't invest in BP.)
If you want to live a similar lifestyle to what you have now, be prepared to think about conserving energy and using energy efficiently and cheaply. Old technology with simply incredible cost-efficiency will become even more incredibly cost-efficient as conventional energy costs continue to rise. Passive solar hot water heating, rocket stove and bench/bed heating that uses 5 to 10 times less wood than conventional wood-heat sources, unconventional building materials and methods - such as earth-berm, cob or wotabi - to provide exceptional summer cooling and winter heat-retention values, obtaining your own organic foods from orchard trees, berry bushes, complementary no-weeding plantings, green-houses, etc. These will help keep your overall living costs down and quality of life up, all while other costs - energy, taxes by cash-strapped governments, health care, inflation caused by Fed money printing, etc. - continue to rise all around you.