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Many consumers and investors alike are asking the question, "Where are gasoline and oil prices going in the future?" Everyone wants to know how much they'll be paying per gallon of gasoline, and everyone wants to know if these energy stocks that are currently so strong will continue to be so hot. Obviously nobody knows the real answer as to exactly where the prices will go in the future or if the energy stocks will be a great buy going forward, but I wanted to take a quick look at how we got here and where we might be going in the coming years.

Oil prices have surged from their levels under $10 a barrel back in 1999, to the current $76.70 per barrel, almost an all-time high. The fact that this kind of a gain has occurred in just eight years time speaks to the volume of the problems in the energy industry right now in terms of supply and demand. It truly is simple economics at the root of this, there is more demand for oil than there is supplies of that crude oil. The United States alone uses about $20.7 million barrels of oil per day, far more than any other country in the world. The demand for oil in emerging markets and maturing economies in Asia is sure to be increasing quickly over the next few years.

The fact that so much of the world's oil reserves are located in countries where the political landscape is not very stable is also very concerning to the future price of crude oil. The Energy Information Administration's official statistics show the top 15 world oil producers from 2006. At least 8 of the top 15 oil producers are countries in which the United States has questionable at best relations with their government (or in some cases lack of government).

The number of oil and gasoline rigs are rising, but not quickly enough to keep up with demand. Also, the production per rig has gone down by a large amount in the past few years. The chart shown below, courteousy of Baker Hughes, shows the average monthly gas rig count and the monthly gas production. From this chart, we see that though the rig count (in blue) has increased steadily, the production (in red) has not.

Given the continuing rise in demand for energy worldwide, and the lack of major crude oil reserve discoveries there has been in the past 30 years, energy prices appear to me to be in a long-term move higher. While some expect oil prices to simply fall back down to their $25 or $30 levels that are seen as "normal" levels, I don't believe we will be seeing that anytime soon. From a consumer side of things I hate to say it, but from an investors side of things I must say what I believe will make money. The energy sector continues to look like a good investment to me. In the coming weeks I will be listing some of my top picks in the different parts of the energy sector.