Something's got to give regarding the price disparity between oil and natural gas.

Natural gas, although off its lows for the year, is still cheap at about $4.85 per million Btus (MMBtu), largely due to record stock piles, as a result of the U.S. recession and probable increased reserves in the years ahead, stemming from shale gas.

Go figure the energy markets. Oil, which despite the U.S.'s worst recession in more than a generation, never really approached its 150-year real average of $25-30, is trading around $72 per barrel.

Meanwhile, a prime competitor, natural gas, hit a 7-year low Thursday, falling through the psychologically-significant $3 per million BTUs (MMBtu) level on rising supplies and low demand from industry and power plants.

Last year when crude oil prices rose to $147.00 per barrel, many homeowners and businesses converted from oil to natural gas.

On Wednesday, U.S. gas futures fell to $3.049 per mBtu, the lowest in seven years, as the market remains oversupplied.

Now enters a large unknown hedge fund that spent millions buying $10.00 January and February call options. The options give buyers the right to purchase natural gas at $10.00 per million BTUs.

The United States is a nation whose electric power generation system and grid is becoming increasing inadequate, even as the nation grapples with another energy problem -- the $4 per gallon gasoline era.

Moreover, an economic slowdown and a relatively mild summer have to-date reduced the typical electric load electric power generation plants would face, but that respite will end when the U.S. economy starts to expand at a healthy rate again. And when it does, electric power demand will increase.

What's one model the United States could follow to generate more electricity while the same time reducing coal-based pollution and climate change? France.

That's right: France. Nuclear power is experiencing a mild comeback in the United States, with 34 new reactor applications on file at the U.S.'s Nuclear Regulatory Agency. In France, it never left. Further, had the United States followed the French model, the U.S. would be vastly more energy self-sufficient today.

France: liberty, fraternity, equality, fission

Nuclear power never went out of style in France, and for this reason France is decades ahead of the United States -- and much of the world, for that matter -- regarding energy self-sufficiency, The New York Times reported. An astounding 77% of France's electricity comes from its 58 nuclear power plants, and it is a net-exporter of electricity to Europe. The United States has 104 nuclear power plants, which account for only 19.4% of its generated electricity, according to U.S. Department of Energy data, The Times reported.

That the developing and developed world will need considerably more electricity in the decades ahead would not surprise most investors / readers.

That both economic zones can achieve this goal while adding a minimal amount of soot to the atmosphere, however, would.

And the technology that will undoubtedly serve as a key energy-generation component in emerging markets' 21st century power grid? You guessed it: nuclear power -- the power generation form that has lagged in the United States for more than 20 years, due to environmental regulations.

China, India push forward with plant plans

China and India are two emerging market nations that recognize that nuclear power is an essential part of meeting future electricity demand. Nuclear power will account for more than 5% of China's power output by 2020, Bloomberg News reported Monday. Meanwhile, India will start three nuclear reactors this year.

Economist Glen Langan said that while nuclear power is not, strictly speaking, a renewable energy, it has to be considered as part of the next-generation energy mix [along with wind and solar power] to meet the U.S.'s growing demand for electricity.

The record run of oil, already up a gaudy 400% since 2000, continues, with prices breaking through $122 per barrel on Tuesday, May 6, 2008.

Meanwhile, gasoline prices, up about 20% in the past six months alone, and about 100% in the past four years, show few signs of moderating in the months ahead.

It's the era of high oil/energy prices, and until a readily-available, affordable energy substitute is found and/or oil prices decline, the oil / oil services sector will be in demand, which bodes well for Occidental Petroleum Corporation (NYSE: OXY).

Oil closed Thursday up $2.95 to $102.59 per barrel -- another record-high print close -- after a combination of geopolitical, production, and trading factors sent investors piling into crude oil futures as an investment/inflation hedge, Bloomberg News reported Thursday.

Earlier in the day oil hit an intra-session high of $102.70 -- within 10 cents of the all-time high, in inflation-adjusted terms, of $102.80 per barrel set in April 1980.

The other major energy commodities also rose. Heating oil surged about 6 cents to $2.83 per gallon, unleaded gasoline climbed about 2 cent to $2.49, and natural gas rocketed 39 cents to $9.45 per million BTUs.

Devon Energy (NYSE: DVN) is an oil/natural gas exploration company, with operations in the U.S., Canada, and abroad.

Readers of this space know that one argument forwarded here is that in the era of elevated energy prices, oil/natural gas companies are likely to remain promising plays for the foreseeable future, baring the discovery of a cheap, widely-available, alternative energy. And among oil/natural gas companies, Devon Energy is worth an evaluation.

Analysts like DVN's sizable proved oil/gas reserves of 2.34 billion barrels of oil equivalent. Production volume should increase 4-5% in 2007 and 7-11% in 2008. Analysts also like Devon's strategy decision to sell international assets with lower growth prospects. Meanwhile, the company's overall costs remain reasonable.

Oil plummeted $2.38 to $89.52 in early trading Wednesday after the U.S. Energy Information Agency announced that weekly crude oil inventories rose 4.3 million barrels to 287.1 million barrels, well above the 1.25 million barrel increase consensus estimate.

Heating oil fell 4 cents to $2.49, unleaded gasoline fell about 5 cents to $2.26, and natural gas fell about 4 cents to $8.15 per million BTUs.

However, despite the prospect of a U.S. recession that could lower oil demand, the International Energy Agency maintained its 2008 global oil demand forecast at 87.8 million barrels per day, a 2.3% increase from 2007, the organization announced Wednesday in a statement.

Still, the IEA qualified its 2008 oil demand projection by saying the estimate would be adjusted downward if evidence indicated the U.S. economy continues to slow.

Readers of this space know that one argument forwarded here is that in the era of elevated energy prices, oil and natural gas companies are likely to remain promising plays for the foreseeable future, barring the discovery of a cheap, widely available, alternative energy. And among oil/natural gas companies, Ultra Petroleum is worth an evaluation.

Ultra Petroleum (AMEX: UPL) is in independent oil/natural gas company with core properties in the Green River Basin of southwest Wyoming

Analysts like UPL's proven reserves of 2.4 trillion cubic feet of natural gas equivalent, modest cost structure, adequate-to-good pricing power and likely production increases. The latter stems from the start of operations at the Rocky Express Pipeline in 2008, among other efforts. Further, look for UPL to attract increased attention from investors as the value and benefits of natural gas rise amid continued high oil prices. The Reuters F2007/F2008 EPS consensus estimates for UPL are $1.29/$2.37.

Oil pressured $99 per barrel before easing back in Monday morning trading, as traders anticipated another bullish week for oil prices with the winter season approaching.

Jim Dietz, an independent energy trader, told BloggingStocks that weather will begin to play a larger factor in the oil markets.

"Up until now it's been emerging market demand, gasoline use, geopolitical concerns, and the falling dollar that's been supporting oil's price. Now that colder temperatures are here, the winter season will begin to act as a support for prices," Dietz said. "Not that the other factors have disappeared, it's just that we'll watch heating oil's price. Heating oil supplies are O.K. right now, but if heating oil climbs, it will force the price of crude oil higher."

In the U.S., heating oil and crude oil demand peaks during the December-February period, the Northern Hemisphere winter.

Heating oil rose about 1 cent to $2.71 per gallon, unleaded gasoline gained about 1 cent to $2.47 per gallon, and natural gas climbed $0.245 to $7.946 per million but in Monday morning trading.

Crude oil was virtually unchanged at $98.02 Wednesday at midday, as traders took a wait-and-see approach following a 1.07-million-barrel drop in weekly crude inventories for the week ending November 16 .

Analysts had expected an 800,000-barrel inventory gain, hence Wednesday's draw down struck some traders as an anomaly, perhaps attributable to thinner trading conditions ahead of the [U.S.] Thanksgiving Day holiday.

Earlier, crude oil had reached a record $99.29 per barrel in electronic trading.

Heating oil gained about 2 cents to $2.70 and unleaded gasoline rose about 1 cent to $2.45. Natural gas dropped 0.007 to $7.470 per million BTUs.

Oil Analysis: Fundamental and technical indicators continue to favor an oil price move toward and beyond $100 per barrel, although Wednesday's thin trading conditions will make it harder to clear the $100 hurdle today, than in a normal trading volume session. Further, traders underscored that no factors have appeared that suggest the oil-higher trend is set to end.

Oklahoma celebrates its centennial in November -- Happy Birthday, Oklahoma!

Today, Oklahoma is known as one of the most business-friendly states, due in part to low tax rates. Oklahoma's economy is based largely on the energy, aviation, and food processing sectors. From 2000 to 2006, Oklahoma's gross domestic product increased 50 percent. The GDP per capita grew almost 10 percent between 2005 and 2006, one of the highest rates in the nation.

Fortune magazine's 2007 list of the fastest growing companies in the U.S. included six from Oklahoma. At number three on the list was Tulsa-based Arena Resources Inc. (NYSE: ARD), a seven-year old oil and gas firm with a three-year annual growth rate of 165 percent. Back in August, Arena announced strong second quarter 2007 financial and operating results. Arena is also a major holding in the Bruce Fund, which recently made the 2007 Forbes Honor Roll.

Tulsa-based oil and gas driller Helmerich & Payne Inc. (NYSE: HP) had a three-year annual growth rate of 37 percent, which beat the S&P 500. In August, H&P announced strong second quarter 2007 results, as well as two new contracts. The Motley Fool sees expansion in other sectors as good news for drillers such as H&P.

Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.

Chris Mayer, editor of Capital & Crisis, chose Rosetta Resources Inc. (NASDAQ: ROSE) as his top pick for 2007. The stock rose 32%, as of June 1, 2007. Here is Chris's original recommendation for Rosetta and his new favorite stock for the rest of 2007.

Updating Rosetta, the advisor now says, "I continue to like ROSE, which should increase production greatly this year. The company is in good financial shape. It still has a relatively low-risk portfolio of drilling projects.

"I also feel good about the future of natural gas prices. In a world where we're draining the conventional natural gas wells at a fast rate, large fields of relatively untapped gas potential in the lower 48 are going to be worth a lot. Rosetta has that in its Rio Vista interests.

The company also keeps blowing away estimates. In the March quarter, earnings came in 33% better than analysts expected. In December, they beat the consensus by 24%. All of this and it still trades for a reasonable multiple -- only 14 times next year's (too low) estimate."

See all 20 stocks the advisors picked for the second half of 2007.