Energy likely isn’t something that is on the forefront of most people’s minds, but it surrounds us in our everyday lives from the moment we flick on our lights in the morning, fire up our furnaces to warm our homes and hop in our cars to drive to work. What’s more, there are various energy sources out there, including oil, gas, coal, nuclear, lithium and renewable energy sources like wind, solar and hydropower.

To understand what energy investing is, it is important to understand the basics of each energy source. Here is a breakdown of what the aforementioned energy have to offer, how they benefit our lives and what they might make a great investment.

What is oil and gas investing?

Oil and gas are naturally occurring chemicals made up of two elements – carbon and hydrogen – in a class of chemicals called hydrocarbons. Natural gas is a fossil fuel, meaning it comes from the remains of plants and animals from millions of years ago and is gaseous, while oil is generally in a liquid form of varying textures. Gas is lighter than air and made up of the chemical compound methane. Both oil and gas have have been main source of energy around the world for years, with many countries relying on them to fuel vehicles, heat homes and cook food.

Anyone watching the oil space knows that the commodity’s price environment has been volatile since it reached up past $140 per barrel in 2008. Since then it has crashed  down to $40 and then began to recover in mid-2015, when it started to hover in the $50 to $60 per barrel range. According to Fundamental Research analyst Sid Rajeev, the main factors include the production exceeding consumption in 2014, which continued into 2105, the appreciation of the US dollar and last but definitely not least, was the Organization of the Petroleum Exporting Countries’ (OPEC) decision not to cut back on production.

Besides being directly affected by the rise and fall of the oil price, the price of natural gas is affected by a variety of other factors – from geopolitical issues all the way down to weather – which can make it difficult to predict.What’s more, retail gasoline prices at the pump vary between markets and even within the same city. According to Suncor (TSX:SU,NYSE:SU), “[w]hile retail prices follow changes in crude and wholesale commodity prices, both up and down, they are also heavily influenced by local conditions. Factors such as market size, the level of competition, taxes, and retailing and distribution efficiencies can lead to situations where prices vary considerably between communities or change dramatically within a short period of time.”

In terms of supply, the US, which is the expected to shift from being a net importer to a net exporter by the year 2017. The second highest producer of natural gas is Russia, which also came in as the second-highest consumer and also hold the highest proven reserves.

What is coal investing?

Coal has been used as an important source of energy for thousands of years, and while it once played a crucial role in driving the Industrial Revolution, today, coal is one of the largest sources of energy for electricity generation in the world. It provides about 30 percent of global primary energy needs and generates over 40 percent of the world’s electricity, according to the World Coal Association. According to the latest BP Statistical Review of World Energy. world coal consumption was about 3881.8 million tonnes.

What is uranium investing?

Uranium is a heavy metal that is used as an abundant source of concentrated energy and occurs in most rocks in concentrations of two to four parts per million, making it as common in the earths crust as tin, tungsten and molybdenum.

In 2014 the total world production of uranium dropped to 56,217 tonnes from the previous year’s 59,370 tonnes, with all the producing countries seeing a decrease in output, including the top three uranium-producing countries – Kazakhstan, Canada and Australia. Demand is expected to grow significantly in coming years as reactors in Japan start to come back online post-Fukushima and China moves away from coal and towards uranium, which is a more environmentally friendly power source.

This looming deficit makes uranium exploration companies and miners currently producing optimistic that prices will recover by 2020, especially considering there aren’t enough new projects coming up to fill the massive supply gap. While there are other sources of energy currently being utilized, many countries, particularly China and India, have been looking to reduce their carbon footprint and improve their air quality, making uranium an ideal option.

What is lithium investing?

Lithium makes up an increasingly important part of the technologies used in the daily lives of people around the world as it is used in the making of everything from cellphones to laptops to electric vehicles. Lithium is experiencing fairly high demand, as lithium batteries are more energy efficient than traditional nickel-metal hydride batteries, making them very desirable, particularly in the automobile and electronics industries.

What’s more, the high demand is met by a limited supply, giving investments in lithium a high potential for profit. Having said that, even though market watchers like House Mountain Partners’ Chris Berry and the Disruptive Discoveries Journal have stated that there’s a slight overcapacity in the market right now, plans from Tesla Motors (NASDAQ:TSLA) to build a lithium ion battery gigafactory have certainly taken the market by storm. There are also other megafactories on the horizon, which has led plenty of analysts to believe lithium prices will continue to rise.

It’s also worth noting that unlike other commodities, it is not possible to invest in physical lithium. However, investors can buy stocks in lithium-production companies as well as exchange traded funds (ETFs).

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