Seeking Light Amid the Heat of Energy Investments Energy independence. Oil exports. Fracking. Electric cars. Solar power. And as of last week: the heat dome. These are phrases that are bandied about, sometimes dividing people along political lines. But all mean one thing: this is a boom time for the United States energy sector, from pulling it out of the ground to moving it around the country to finding ways to use less of it. It took last week's heat dome, with the searing heat outside and that equally uncomfortable arctic blast when you walked inside, to get me thinking about energy - and not just how much of it I was consuming. I started wondering about the investment opportunities and the associated risks around the boom in oil and gas production and the push for alternative sources of energy. So many people seemed so sure that investing in energy was the way to go, and naturally that spooked me. The United States is set to become the world's leading producer of natural gas in 2015 and oil in 2017, according to the International Energy Agency, and there is money to be made in getting both out of the ground, to the coasts and on ships. Some energy companies and new technologies will surely be wildly successful, while others that seem promising will no doubt fail. But as people rush to invest in energy, how should they think about what they are doing? "The energy renaissance is very similar to the Internet renaissance that started to develop in 1985," said Anton Bayer, chief executive of Up Capital Management. In order to find the next Apple, you need to find the next industry. Then you need to drill down to find where the innovation is. I thought that was an apt way of describing this moment. Looking back, it's easy to talk about what a great investment Apple has been, but as a youngster in the early 1980s my bet would have on the Commodore 64, with its eight-tracklike game cartridges, that I had in my bedroom. What do investors need to keep in mind when they are looking for the Apple of energy, not the Commodore? Finding Energy The technology that has allowed horizontal drilling - as opposed to drilling straight down - has radically changed how oil and natural gas are extracted. Yet drilling has always been boom and bust; five years ago, the price of natural gas was over $13 per million British thermal units before beginning a steady fall to its low of less than $2 per million B.T.U. in April 2012. There are less speculative ways to benefit than investing in the exploration and production boom. Jason T. O'Connell, director of equity research at Boston Private Bank & Trust, said he had been talking to clients about companies like Schlumberger, Cameron International and Dril-Quip that make the equipment to reach the oil. "It's become a lot harder to get this stuff out of the ground or from under the sea," Mr. O'Connell said. There is an increasing capital intensity that's a little more insulated from the price of oil. He said he was also interested in companies that work in areas related to drilling, like those that look to reduce the environmental impact of newer types of drilling, such as hydraulic fracturing, which pumps high-pressured fluids into rock to increase a well's production. Fracking has helped increase the productivity of wells, but it has drawn concern about what the process does to drinking water and the areas around wells. He said he liked companies like Waste Connections and Clean Harbors that could benefit from energy companies paying them to prevent damage and also to clean up if damage occurs. Christopher Grisanti, co-founder of Grisanti Capital Management, said he believed that companies that refine oil, like Valero Energy, Marathon Petroleum, HollyFrontier and Western Refining, are going to do well, even though the sector has struggled this year. "In the past, refiners have needed a robust economy to make strong profits, but because of the new export market brought about by the American oil renaissance, refiners are making a lot of money right now, in a mediocre economy," he wrote. As the U.S. economy strengthens, the refining industry should enter a sweet spot of profitability. Yet Matthew Rubin, director of investment strategy at Neuberger Berman, said he had urged clients to look at companies with track records, and warned about those that have rushed to make money in the Bakken shale around North Dakota. "The evolution of wealth there is being talked about as the new Saudi Arabia," Mr. Rubin said. Where the dangers and pitfalls exist is looking at companies that are much more speculative in nature, that don't have the technology to do the fracking. Moving Energy Once the oil or natural gas is out of the ground, it has to go somewhere.