How Oil and Gas Investing Can Stabilize Returns and Shield Against Market Volatility: Tips From a Financial Pro

Direct exposure to oil and natural gas projects can strengthen a portfolio's long-term resilience by providing non-market-correlated cash flow and acting as a natural hedge against inflation.

By Jay R. Young

published 12 January 2026

in Features

Wooden blocks fall like dominoes against a red block that stops them. A trading screen is in the background.

In today's fast-moving investment environment, stability is more valuable than ever. Markets react sharply to interest rate changes, global events and sector-wide sentiment.

While traditional diversification across stocks, bonds and real estate remains essential, recent years have underscored a challenge: These asset classes often move together.

As a result, more investors are exploring assets outside the usual mix, such as investments that behave differently and offer income that isn't tied to daily market swings.

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One of the most underutilized among them is direct exposure to energy, particularly oil and natural gas projects that can generate commodity-based cash flow.

After decades as both an operator and educator in this industry, I've seen how thoughtfully structured energy investments can add resilience through non-correlated income, inflation protection and long-term relevance.

About Adviser Intel

The author of this article is a participant in Kiplinger's Adviser Intel program, a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Why energy can strengthen a portfolio

1. Energy revenue doesn't track the stock market.

Cash flow from producing wells is driven by commodity prices, not equity valuations or monetary policy. As a result:

Oil and gas income typically doesn't mirror stock market volatility
Revenue can remain durable even in declining equity markets
Energy exposure can help stabilize an otherwise market-linked portfolio

For investors seeking true diversification, energy can function as a valuable counterbalance.

2. Energy is a natural inflation hedge.

Energy is directly tied to the cost of transportation, manufacturing and goods movement. When prices rise across the economy, energy commodities often rise as well. This gives investors:

A practical hedge against inflation
The potential for increased income during inflationary periods
Exposure to assets with essential, ongoing demand

Energy isn't theoretical — it powers the global economy, which makes it a meaningful complement to paper assets that may lose purchasing power over time.

3. Long-term global demand remains strong.

Even with growth in renewables, forecasts consistently show that oil and natural gas will continue supplying a major share of global energy needs for decades. Industrialization, transportation and petrochemicals all continue to drive consumption.

For longer-term investors, this suggests:

Continued global reliance on hydrocarbons
Opportunities to develop and produce long-life reserves
A strategic role for energy within diversified portfolios

The energy future isn't "either-or"; it's a blend. Oil and gas remain foundational.

Cash flow as a strategy

Unlike investments that rely primarily on appreciation, producing energy assets can deliver ongoing cash distributions tied to commodity sales. This structure may offer:

Income that is not correlated with equity markets
Revenue backed by hard assets
Meaningful return potential as long as wells remain productive

While commodity prices fluctuate and risks exist, the ability to generate steady income is a distinguishing characteristic of the sector.

Balancing risk through structure and expertise

Energy investing works best when guided by a disciplined strategy. In my experience, several principles consistently matter:

Favor acquire-develop-divest models over pure exploration
Work with operators who have proven technical and operational track records
Diversify across multiple wells, fields and geologic formations
Set transparent expectations regarding risk, timelines and production data

This is an industry where experience and execution make a measurable difference.

Who energy may be appropriate for

While not suited for everyone, energy may complement portfolios for investors seeking:

Non-market-correlated cash flow
A potential inflation hedge
Long-term exposure to essential global commodities
A blend of income and hard-asset support

As always, investors should consult their financial, tax and legal professionals to determine suitability.

In a volatile world, durable cash flow matters

Market cycles change, but energy remains indispensable. Thoughtful exposure to oil and gas can help:

Reduce correlation risk
Enhance income stability
Hedge inflation
Participate in a sector vital to global growth

Energy doesn't replace traditional assets — it supports them. For investors focused on diversified cash flow and long-term resilience, the sector merits careful evaluation.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Jay Young is the Founder and CEO of King Operating Corporation, headquartered in Addison, Texas. Jay earned his Bachelor of Business Administration (BBA) degree from Angelo State University. His journey started with various roles that eventually led to the establishment of King Operating Corporation in October 1996. Prior to establishing King, Jay gained experience with roles in both finance and the oil and gas industry. He served as Vice President and a Registered Representative of Texakoma Financial, Inc., worked with stocks and commodities as a Vice President at Dillon Gage and traded stocks at World Market Equities.