I am the Global Editor at MoneyShow.com and each week I interview an investing expert. This week, I spoke with Sam Hopkins, editor of Energy and Capital, who despite the recent sell-off in energy, sees potential in energy.

Q. Sam, in a recent piece on the Russia/Georgia conflict, you cautioned your subscribers to watch their Russian shares closely, but to hold onto their energy shares. Would you expand on that advice?

A. Well, we see a mix of geopolitical risk and opportunity in the flare-up between Russia and Georgia. Ironically, the opportunity for energy investors comes from the risk itself. It's hard to put your finger on exactly how much the "risk premium" in a barrel of oil is (meaning, what dollar amount is priced in to accommodate for pipeline leaks, theft, war, or other factors that can affect supply). But what we do know is that in Russia's case, as one of the world's top producers of hydrocarbons, national oil and gas companies stand to gain when futures prices rise. In this way, Russian energy stocks like Gazprom (OTC: OGZPY) and Rosneft (OTC: RNGZY), both of which trade in London and here on the Pink Sheets, may gain even while the broader Moscow market turns downward.

Q. Many investors may view this conflict as an example of why international markets may be too risky for their money. After all, the Russian stock market - the RTS - has fallen about 20% in the past month. Will you share your thoughts on why investors need to diversify abroad?

With oil prices falling, some members of OPEC would like to see price cuts to put upward pressure on crude. That would make sense. It would bring members of the cartel more money and stretch out the pace at which they need to ship their current reserves.

Venezuela, where the head of state Hugo Chavez seems to have no love for the U.S., has lobbied fellow OPEC members hard to dial back oil shipments. The Arab states may not be so eager. According to Bloomberg, "Saudi Arabia, the world's biggest producer and de facto leader of the 13-member Organization of Petroleum Exporting Countries, the United Arab Emirates, Qatar, and Kuwait may reject calls from Venezuela and Iran to trim supplies at its Sept. 9 meeting in Vienna."

Increased cash flowing into the Middle East is feeding sharp increases in inflation, but that may only be a small part of the reason behind the motivation to do nothing with fuel supplies.

Saudi Arabia and its neighbors know that extremism continues to grow in the region. They are also not geographically far removed from the trouble in Georgia. The nation, which is at "war" with Russia, is close to the norther border of Iran. In other words, there is more than one threat to stability in the region.

The United States keeps a tremendous military force in and around Saudi Arabia. The kingdom may not want to go any further than it has to alienate America.

Douglas A. McIntyre is an editor at 247wallst.com.

Just when there are signs that emerging market demand (and institutional investor frenzy) have eased in the oil markets, up pops an old friend: geopolitical risk.

Moreover, this time the old friend, 'Middle East Tensions,' brought along his long/lost cousin, 'Enboldened Russia.'

Russia's re-appearance on the international stage takes the form of a major power, not a geopolitical power capable of projecting force globally as during the Soviet era, but the gradation is minor as it relates to the oil market, so says economist Richard Felson.

"Russia has the capacity to create a remarkable amount of distress in the oil markets. It can use oil exports and natural gas as a lever against Europe and the world, and its territorial threats to Central Asia and Eastern Europe are also cause for legitimate concern," Felson said.

Oil fell $3.03 to $118.15 per barrel Friday at mid-day after Turkey restored oil flows through the Caspian Sea pipeline, Bloomberg News reported Friday. The Baku-Tbilisi-Ceyhan pipeline moves oil from Azerbaijan through George to Turkey's Mediterranean coast. Oil flows were stopped earlier this month after Russia invaded Georgia.

The other, major energy commodities also fell sharply Friday at mid-day on the Baku pipeline news. Unleaded gasoline plunged 11 cents to $2.93 per gallon, heating oil declined about 10 cents to $3.19 per gallon, and natural gas declined 14 cents to $8.11 per million BTUs.

Russia: a threat to the west's oil?

Further, Felson said Russia's action "have caused the west to re-evaluate the global oil and energy equation" to account for the new - - and unexpected - - Russia wild card.

"Whereas before the prevailing view was incorporation of Russia into the oil and energy markets and as a net-plus for production and supplies, long-term, the new view is guarded," Felson said. "Not only are supplies from Russia now viewed as liabilities, but the west now has to ask, 'what other oil-rich areas might Russia might try to threaten?' And what about it's natural gas relationship with Germany?" [Russia supplies about 20% of Germany's natural gas.]

Japan's yen resumed its rise against higher-interest currencies Thursday, suggesting that the prospect of additional credit market losses continues to lower investors' confidence in global growth and performing assets.

The yen rose as institutional investors continued to decrease their use of the carry trade.

In a carry trade, investors, especially institutional investors, borrow funds in a country with a low interest rate (or borrowing cost) and buy assets in a country where returns are higher. The investment can take many forms, including stocks, bonds, funds, or even the higher-interest currency itself.

The yen strengthened about 1.6 yen to 160.71 versus euro, about 3 yen to 201.95 versus the British pound, and about 1 yen to 108.20 versus the dollar.

Another big mortgage write-off ahead?

Currency trader Andrew Resnick told BloggingStocks Thursday sentiment is building in the foreign exchange and other markets that there will be "another, major housing-related write-off by a bank or series of banks in the U.S. or U.K, or possibly Fannie Mae (NYSE: FNM) or Freddie Mac (NYSE: FRE) problems."

Oil prices are moving up today because of a hurricane which may hit the Gulf of Mexico. It is a signal that it does not take much to move crude prices, which have fallen from $142 to $115, in the "wrong" direction again.

According to Bloomberg, "Crude oil rose for the first time in three days as a storm near Cuba prompted evacuations from rigs and platforms in the Gulf of Mexico, which accounts for about a fifth of U.S. production. " Any disruption in production brought on by the storm would be short-lived.

The news should remind those who see crude moving toward $100 a barrel that the system of supply and demand is fragile. OPEC is talking about cutting production now that prices have fallen. The conflict between Georgia and Russia could still disrupt the flow of oil from Georgian ports. Nigeria remains an extremely unstable country. Recent reports show that China's GDP is still growing at over 10%. That growth relies heavily on gas and diesel to transport exports to shipping facilities.

The drop in oil prices may drive a certain complacency about gas and heating oil prices. It could undercut the big move is the US toward "energy independence." But that would be a sucker play. There are too many pressure points that will keep oil prices high.

Douglas A. McIntyre is an editor at 247wallst.com.

Just call it another good start to the day for the oil bears.

The oil-bears -- those who believe oil prices will trend lower -- have been an isolated, much-maligned lot for a considerable portion of the decade, but lately price screens have been moving in their favor.

Oil fell for a third day on signs the U.S. economic slowdown will continue into 2009, resulting in a further reduction in oil use in the world's largest economy, Bloomberg News reported Tuesday.

Oil fell $1.16 to $113.29 per barrel Tuesday. Oil's move lower was also aided by word that Russia had halted its military offensive against Georgia, Bloomberg News reported Tuesday.

U.S. demand: a factor in oil's price

While not underestimating the geopolitical risks -- and energy risks -- implied by a renewal of Russian expansionism in the twenty-first century, economist Peter Dawson said the important data point for investors / traders to watch is oil consumption in the United States.

"I'm in the camp that argues oil's bull run has been demand-based. Up through 2007, demand in the U.S. rose but this year we've seen a decrease in demand, particularly in gasoline consumption, as the price went over $4 per gallon," Dawson said. "Some tried to argue that oil was 'decoupled' from gasoline demand and from U.S. demand in general, but that thesis is being discredited almost on a weekly basis."

Last Friday's rally was heartening, but why did it happen? I am guessing that a drop in oil and a rise in the dollar were helpful ingredients. At $115.32, oil is down 22% from its $147.27 a barrel high, and at $1.49, the dollar has strengthened 11% from its low of $1.60 per euro. But what was behind those moves? Can those factors persist? What happens to stocks if they sink?

The dollar/euro is moving based on relative economic strength and inflation policy. Some think that the dollar strengthened over recent weeks because Europe appears to be heading into a recession and the U.S. has already been in one since the fourth quarter of 2007. If the U.S. is further along, it may begin its recovery sooner.

As far as inflation policy, the U.S. has kept rates at 2%, while Europe appears more likely to raise rates to fight inflation. Bloomberg News reports that European Central bank council member Klaus Liebscher said "policy makers remain focused on the 'worrying' level of inflation." The euro has rebounded to $1.50 on this announcement.

Economists think they have most of the data they need to forecast the price of oil: The dollar is rising; consumption in the US is falling; production out of OPEC is steady; the drop in crude has driven many speculators out of the game; unrest is receding in Nigeria and Venezuela; huge deposits have been found off Brazil; the hurricane season in the Gulf of Mexico has not disrupted production.

War is harder to predict, but there it is in Georgia. Russia seems intent on destroying the military of its small neighbor state. The U.S. is pushing to keep Russia from escalating the conflict, which is driving extreme tension between Russia and NATO. Russia is an important supplier of crude, and it could decide to use that as leverage to keep the West out of the dust up.

There is some speculation that the Russian government would like to cripple other countries that share it borders to build a geographic "buffer" to its south. NATO may be forced to step in because some of these countries are close to its members' territories.

War is hard to predict and the oil market does not like the unpredictable. Oil prices are about to rise and could get much higher.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Boy, two 300-point rallies in one week. Oil's tank and some rectification in the financials in ARS issues were the breeding ground for a huge market day. Even a Russian military action in Georgia failed to kill the bulls.

Here are the unofficial closing bell levels:

DJIA 11,734.32 (+302.89; 2.65%)
S&P 500 1,296.31 (+30.25; 2.39%)
Nasdaq 2,414.10 (+58.37; 2.48%)
10-Yr Bond 3.95% (+0.015%)
52-Week lows
Analyst downgrades
Analyst upgrades

Apple Inc. (NASDAQ: AAPL) rose after Credit Suisse started it with an Outperform rating in new coverage in the sector as the firm believes the industry will continue to head its way thanks to its computers and iPhones. Shares closed up 3.6% at $169.55.

As I mentioned in my recent Investing in Georgia post, the "Empire State of the South" has a diverse industrial output that ranges from peaches and peanuts to aircraft manufacturing and tourism (much of which is taking a hit from this year's severe drought in the South).

Georgia is home to such corporate giants as Coca-Cola Co. (NYSE: KO), The Home Depot Inc. (NYSE: HD), and United Parcel Service (NYSE: UPS), and the state also has just been named the second-best U.S. state in which to do business by Site Selection magazine. Georgia has been in the top four on that list for the past four years.

The Peach State is also home to Acuity Brands Inc. (NYSE: AYI) and Global Payments Inc. (NYSE: GPN), which I examined previously, as well as RPC Inc. (NYSE: RES) and Radiant Systems Inc. (NASDAQ: RADS), covered here. RPC and Radiant both made Fortune's 2007 list of the 100 fastest growing companies in U.S. It was Radiant's first time on that list, and Radiant has also been named one of the fastest growing tech companies in Georgia for the third straight year.

It's been said that if the U.S. state of Georgia were an independent nation, it would have the 18th largest economy in world. The "Empire State of the South" ranked tenth in U.S. in per capita personal income in 2005, and has one of the fastest growing populations in the U.S. -- about a million additional people between 2000 and 2005. Its diverse industrial output ranges from peaches and peanuts, to textiles, food processing, and aircraft manufacturing, to publishing and tourism. Georgia is home to such corporate giants as Coca-Cola Co. (NYSE: KO); Delta Air Lines Inc. (NYSE: DAL); Home Depot Inc. (NYSE: HD); UPS (NYSE: UPS); Newell Rubbermaid Inc. (NYSE: NWL), and Equifax Inc. (NYSE: EFX).

It's also home to Acuity Brands Inc. (NYSE: AYI) and Global Payments Inc. (NYSE: GPN), both of which represented Georgia on the Forbes 2007 list of 100 best mid cap stocks. I examine two other Peach State companies -- RPC Inc. (NYSE: RES) and Radiant Systems Inc. (NASDAQ: RADS) -- in a separate Investing in Georgia post.

MOST NOTEWORTHY: Lowe's (LOW), Cooper Tire & Rubber (CTB), Campbell Soup (CPB), Reuters Group (RTRSY) and Netease.com (NTES) were today's noteworthy upgrades:

• JP Morgan upgraded Lowe's (NYSE: LOW) to Overweight from Neutral based on improved risk/return and conservative near-term estimates. UBS upgraded Lowe's to Buy from sell on valuation.

• Cooper Tire & Rubber (NYSE: CTB) was upgraded to Buy from Sell, as the firm thinks Copper is benefiting from surging demand for tires in Asia and considers the recent weakness a buying opportunity.

• UBS upgraded shares of Campbell Soup (NYSE: CPB) to Buy from Neutral, citing expected growth acceleration, productivity savings, and attractive valuation.

• Deutsche Bank is positive on the Thomson (TOC)-Reuters combination and expected synergies, upgrading Reuters Group (NASDAQ: RTRSY) to Buy from Hold.

• Netease.com (NASDAQ: NTES) was upgraded to Positive from Neutral at Susquehanna based on valuation and checks that indicate better than expected performance of Westward Journey Online III...

OTHER UPGRADES:

• Georgia Gulf (NYSE: GGC) was raised to Neutral from Sell.

• US Airways (NYSE: LCC) was upgraded to Buy from Neutral.

• Banc of America upgraded Glu Mobile (NASDAQ: GLUU) to Buy from Neutral.

• Think Equity upgraded Jazz Technologies (AMEX: JAZ) to Buy from Source of Funds.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Today's noteworthy upgrades include Papa John's Int'l, Inc (PZZA), ExpressJet Holdings, Inc (XJT), Nvidia Corp (NVDA),Georgia Gulf Corp (GGC) and MasterCard (MA):

• Following Q1 results, Oppenheimer upgraded shares of Papa John's Int'l, Inc (NASDAQ: PZZA) to Buy from Neutral, citing better-than-expected revenue growth, improved margins and acquisitions.

• Soleil upgraded shares of ExpressJet Holdings (NYSE: XJT) to Hold from Sell with a $7 target due to the likely absence of any real news until at least August.

• Deutsche Bank assumed shares of Nvidia (NASDAQ: NVDA) with a Buy, up from Hold, as the firm believes Vista will accelerate NVDA's growth rates making their 2008 estimates conservative.

• Citigroup upgraded shares of Georgia Gulf Corp (NYSE: GGC) to Buy from Sell based on an improved near-term outlook.

• MasterCard (NYSE: MA) was upgraded to Hold from Sell at Stifel based on the lenders impressive Q1 results and pricing power...

OTHER UPGRADES:

• Baird upgraded Barnes Group Inc (NYSE: B) to Outperform from Neutral.

• Pacific Ethanol Inc (NASDAQ: PEIX) was raised to Hold from Sell at Hambrecht.

• LCA-Vision Inc (NASDAQ: LCAV) was upgraded to Buy from Neutral at Oppenheimer.

• Bernstein raised Barr Pharmaceuticals, Inc (NYSE: BRL) to Outperform from Market Perform.

• Morgan Stanley upgraded Nektar Therapeutics (NASDAQ: NKTR) to Equal Weight from Underweight.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).