BOSTON (TheStreet) -- Investing doesn't just have to be about increasing wealth. It can also be a means to preserve it.
Successful investors -- from speculative day traders to steadier 401(k) participants, for example -- will adjust their holdings to craft a portfolio capable of meeting or beating the rate of inflation. With the price of home heating oil on the rise, and likely to keep increasing due to global politics, now might be a good time for investors to place a bet on the price per barrel to hedge against the costs of staying warm this winter. As they say: "If you can't beat 'em, join 'em."
According to the U.S. Energy Information Administration, the mild winter thus far in the Northeast, where there is the highest concentration of oil-heated homes, has mitigated some expected cost increases.
The typical household is projected to use about 650 gallons of heating oil this winter, a decrease of about 4% compared with last winter. The cost per gallon will increase, however, averaging about $3.82 a gallon -- up about 13%, according to EIA estimates issued last week. The average home heating bill will total about $2,500 this year, an increase of roughly 8.4%. The good news, thanks to warmer-than-expected weather, is that the EIA initially estimated a 10% jump last month.Those projections could prove to be moving targets later in the season due to a variety of threats to the world's oil supply chain.
On Monday, the European Union voted to support U.S. calls for a ban on imports of Iranian oil as punitive persuasion to get that nation to back away from an effort to develop nuclear weapons. Iranian officials have threatened to blockade the Straits of Hormuz, the oceanic shipping route for most oil-producing countries in that region.
"If the Straits of Hormuz close, oil will rise above $200 per barrel," warns Chris Faulkner, CEO of Breitling Oil & Gas, an independent exploration and production company based in Irving, Texas. "It is the one bottleneck that allows Iran to choke the West's oil supply."
Seventeen million barrels of oil per day passed through the Straits last year, according to the U.S. Energy Information Agency -- approximately one-sixth of global oil production and nearly 20% of all the oil traded worldwide. Iran itself exports between 2.2 million to 2.5 million barrels a day.
Iran isn't the only hot spot that could lead to tightened supplies and higher prices. Political conflict in Nigeria threatens its output of 2.5 million barrels a day. Tensions between Sudan and the newly independent nation of South Sudan over oil-related transit fees could curtail the nearly 500,000 barrels per day that flows from that area.Domestically, it remains to be seen whether there will be any price-related pushback to President Barack Obama's refusal to grant a permit for the politically charged Keystone XL pipeline expansion pitched as running from Canada through Montana and Oklahoma to refineries in Texas for export.
All that volatility may not necessarily be terrible news from an investing standpoint, especially if your goal is to mitigate that 8.4% price increase for heating your home this winter by betting on companies in the oil business that profit while consumers get hit.
The big oil companies of the world -- ExxonMobil (Stock Quote: XOM), BP (Stock Quote: BP), Chevron (Stock Quote: CVX), ConocoPhilips (Stock Quote: COP), Occidental Petroleum (Stock Quote: OXY), Devon Energy (Stock Quote: DVN), Chesapeake Energy (Stock Quote: CHK) and Anadarko Petroleum (Stock Quote: APC) -- are well-positioned to benefit when the global commodities marketplace inflates crude prices.