Q: If I'm interested in steady, conservative returns going forward, should I look at a large integrated oil company? – D.B.

A: The key word in the question is "conservative." Oil has had an incredible run in the past 10 years, gaining nearly 1,000% since December 1998. And as my colleagues have pointed out in essays this week, oil may be due for a breather.

I'm not in the business of predicting oil prices. Good investors can find profits regardless of the direction of the underlying commodity. (In fact, both Ian Davis and Jeff Clark recommended investments in the oil patch.)

But as you probably have already figured out, I'm still a long- term oil bull. That means I believe big producers like ExxonMobil, Chevron, and Petrobras will be excellent investments for your long-term portfolio.

And don't worry if oil declines to $100 or even $80. These companies make outstanding profits when oil is in that range. As my colleague Tom Dyson wrote in a recent DailyWealth column, Big Oil companies are one of the greatest dividend-producing machines ever created. So don't get spooked out of what should be a cornerstone in your retirement portfolio.

Q: What are "upstream" and "downstream" revenues? – G.S.

A: Upstream, midstream, and downstream describe segments of the overall oil industry. Upstream is oil and gas exploration. Midstream is transport and storage. Downstream is refining and marketing.

These terms also describe parts of an integrated oil company. So, for example, Chevron collects revenues from exploration (upstream), pipelines (midstream), and refining (downstream).

The concept of integrated production began early in the oil industry, with one of the giants...

In the mid-1880s, legendary oil tycoon John D. Rockefeller owned the largest refinery in Cleveland. Rockefeller saw the possibilities of owning the entire supply chain, from top to bottom...

Bringing all the parts of his business under his control protected them from volatility and provided a competitive advantage. According to Daniel Yergin's The Prize, Rockefeller's company, Standard Oil, controlled almost every inch of the pipelines into and out of the oil producing regions of the U.S. And by 1879, it controlled 90% of America's refining capacity.

Once it controlled the pipelines and the refineries, Standard Oil controlled the entire oil industry... and all the profits as well. That's the power of integration.

But today that paradigm might be changing. ExxonMobil plans to sell about 2,200 retail gas stations. That would get the company out of selling gas to the public, reducing its "downstream" investment.

Q: I've read your recent Canadian oil commentary with interest. You say, "invest in infrastructure." Could you elaborate? How do I do this? – M.C.

A: As Rockefeller discovered in the 19th century, pipelines control oil-producing regions. And the same is true today.

The Alberta tar sands are stranded far from consumers. Without pipelines to get the oil to the refineries and eventually into our cars, the assets are worthless.

That's an opportunity for investors.

According to a recent study in The Oil and Gas Journal, Alberta's tar-sand projects will add about 2 million barrels per day of production over the next eight years. That's going to take some big pipes. Companies are lining up to build them...

TransCanada (TRP), for example, wants to build a 30-inch, high-pressure crude oil pipeline from the oil sands to Patoka, Illinois. ConocoPhillips (COP) owns half of the project. Enbridge (ENB) and Pembina Pipeline Fund (PIF.UN) both own major pipelines in the tar-sands region.

The Key to Making Money in Oil Stocks This Year... Three Reasons You Need to Invest in Tar Sands Today

The largest owner of existing pipes for the tar sands is the Inter-Pipeline fund. Inter-Pipeline owns the pipes that move about 40% of the tar-sands' crude oil. But it's open only to Canadian investors.

Alberta's pipelines will hold value and continue to pay dividends in the face of all but the most extreme declines in the price of oil. So if you want to own oil, you still have plenty of ways to profit – even if the price falls.

Good investing,

Matt