Should you invest in oil companies?

I recently had a conversation with someone about this very interesting dilemma. He was torn on whether or not he should invest in oil company stocks. If you look at it from a purely short-term (1 year) financial point of view, then the answer is probably yes. Most experts believe that oil will only increase this year. In addition, the global economy, U.S. included, is improving and gaining steam. This means that oil demand will go up. China is continuing to demand more and more oil as well, so the story for oil companies is that their commodity is likely to keeping going up in price.

However, there is much more to this decision then just the short-term financial aspect. Investing in oil companies means contributing to the destruction of our planet and way of life. I am no tree hugger, quite the opposite actually. It is clear though, that our dependence on oil is harming our ability to maintain our way of life because it is contributing to poor air quality and climate change, not to mention the huge debt it is helping build in the U.S.

The other negative part of investing in oil companies is that it supports economies of countries that are unfriendly to the West. A lot of oil comes from the Middle East where awful governments use the money gained from selling oil to try to destabilize Western nations and their allies. In other words, it is possible that investing in oil companies can indirectly be funding terrorism or other enemy entities.

It is a very tough call, but I see a silver lining in it. I don’t see how to overcome the climate change, air quality and U.S. debt issues that this contributes to. However, if you (assuming you are from and/or live in a Western nation) were to invest in an oil company, then that is stock represents some share of the company’s earnings and value that will not go to enemy entities. It will instead go to you and this will enable you to help contribute to your country’s economy which indirectly helps alternative fuels in the long-term. I know this is a complex concept, but it makes sense if you think about it. Maybe investing in these oil companies is not so bad after all. It’s a personal choice and one that is not easy to make. Perhaps my take on it will help you decide one way or the other.