NJR - 3 Beaten-Down Natural Gas Stocks You Can Buy to Weather a Recession
Utilities are the classic defensive stock because as a regulated public good they operate within strict parameters for profit, return on investment, and dividends. Besides, the reasoning is that people need light and heat even in a recession. They can cut back on discretionary spending, but gas and electricity are not in that category.
But upstream energy providers are great defensive stocks, too. Although these companies don't enjoy monopolies as utilities do, people still need energy regardless of what happens with the economy.
Nowadays the base fuel that supplies energy is also an important component in the equation. The public wants less reliance on fossil fuels to combat climate change. Among fossil fuels, they want less coal and oil and more natural gas, the cheapest and cleanest among carbon fuels. Natural gas isn't clean enough for some. But until wind, sun, waves and other renewable sources can supplant natural gas, we will continue to use more of it every year for the foreseeable future.