Energy
The energy sector is a category of stocks related to producing or supplying energy. The energy sector or industry includes companies involved in the exploration and development of oil or gas reserves, oil and gas drilling, and refining. The energy industry also includes integrated power utility companies such as renewable energy and coal.
Not only has the energy sector been an important driver of industrialisation and innovation over the past century, but it stimulated the economy. Households depend on energy to power vital appliances such as fridges and stoves, lights to see at night, vehicles for transportation, and Internet connections.
Understanding the Energy Sector
The energy sector is a large and all-encompassing term that describes a complex and interrelated network of companies, directly and indirectly, involved in the production and distribution of energy needed to power the economy and facilitate the means of production and transportation.
The energy sector in South Africa consists of both indigenous production and imported sources. Most of this is used within the country, with few quantities that are exported. Data from 2021 shows that the country’s energy supply consists of the following:
- 82% of the energy supply is made from coal
- 9% of the national supply comes from crude oil
- Nuclear power is responsible for 4% of the energy produced
- Natural gas supplies 3% of the country’s energy
- Renewable energy holds last place with 1%
Companies within the energy sector are involved in various types of energy. For the most part, energy companies are categorised based on how the energy that they produce is sourced and will typically fall into one of two categories:
Non-renewable
Non-renewable energy sources mean that once these resources are depleted, they cannot be refilled. Most of the energy needs of humans across the globe are filled by non-renewable sources.
- Petroleum products and oil
- Natural gas
- Gasoline
- Diesel fuel
- Heating oil
- Nuclear
- Coal
Renewable
Renewable energy sources are those that naturally occur and are unlimited. Unlimited is either without end, or it replenishes naturally. These are much more sustainable in the long run, however, harnessing their power can be more expensive.
- Hydropower
- Biofuels, such as ethanol
- Wind power
- Solar power
- Hydroelectric
Types of Energy-Sector Companies
Below are some of the types of companies found in the energy industry. Each has a distinct
role in bringing energy to businesses and consumers.
Oil and Gas Drilling and Production
These companies drill, pump, and produce oil and natural gas. Production typically involves pulling oil from underground reserves.
Pipeline and Refining
Oil and natural gas must be delivered from the production site to a refinery to be refined into a final product, such as gasoline. Companies within this portion of the energy sector are called midstream providers. Under the category of refineries, companies that specialise in the recycling of used oil can also be found.
Mining Companies
Coal companies can be classified as energy companies since coal is used to power plants, including nuclear. Other companies that fall in the mining category aren’t necessarily part of the energy sector.
Renewable Energy
Clean energy has gained traction and investment dollars over the years and is likely to be a growing part of the energy sector in the future. Examples of renewable energy include wind and solar. Hydropower, electricity generated from water flowing over a generator, is also a popular form of renewable energy.
Chemicals
Some companies specialise in refining oil and gas into specialty chemicals, However, many larger oil producers, such as Exxon Mobil, are integrated energy producers, meaning they produce multiple types of energy and control the entire process, from diesel, petroleum and other chemicals.
The energy sector is a vast one. It covers various energy sources, including natural gas, electricity, petroleum, coal, and renewable sources, and phases of getting energy to market, from extraction to transportation of the finished product and marketing.
To find out about business opportunities that exist in this industry, consider speaking to a mentor. Find an expert in our directory.
No question is too big or too small. Our Experts are here to help you find answers.