Tempted by Oil's Surge, Investors May Overlook the Downside

Youssouf Traore, a driver for a courier service in New York, said it takes about $135 per week to fuel a delivery van. Only a few months ago, he said, it cost about $110.

"I don't like it. I want to see it coming down," he said. But he added he had little choice but to pay.

Those hardest hit by higher energy costs probably don't have spare money to invest. But those with money available should consider the reasons why energy might be a good bet and not simply look at the recent run. Analysts have variously blamed supply disruptions, strained refining capacity, a weaker dollar and speculators for pushing energy prices higher, with oil trading near $120 per barrel.

But new Energy Department data show that demand for finished petroleum products fell 8.5 percent in February from January and that demand for gasoline declined by 6.2 percent.

Kelly noted that oil use isn't surging, though it is expected to increase in coming years, with the economic rise of countries like China and India.

"One of the things I think is very important to realize is that the growth in world oil consumption is not that strong. In fact, if you look over the last two years, world oil demand in total barrels has only gone up by about 1 percent per year," Kelly said.

"There is a genuine shortage, in the long run, of oil, but the prices that we're seeing right now are prices that should have cleared the market in five, 10 years from now, not today," he said.