Like the energy bull run of the ’70s, this one is fueled by a seismic shift in the balance of power between producers and consumers. From the mid-’80s to the late ’90s, consumers held the power in the energy market. Today, it’s the producers who hold sway, with even the threat of a supply disruption capable of triggering massive price spikes.

That fact has clearly been on display during the past couple weeks, as the troubles at BP PLC’S (NYSE: BP) Prudhoe Bay, Ala., fields sent oil prices to a new high. The Anglo-American giant had apparently neglected to do necessary maintenance on its pipelines in recent years and belatedly discovered a great deal of corrosion that threatened the integrity of its system. It’s since elected both to make extensive repairs and keep the oil flowing, a move that calmed the market.

Israel’s invasion of Lebanon also roiled the oil market in recent weeks, largely because it sparked fears of a wider conflict with another major producer--Iran. The danger of such a conflagration is considerably less now that the Israeli army has begun to withdraw from its forward positions in that country. However, Israel apparently failed in its objective to take out the Hezbollah fighters that had been raining death on northern Israel. And with the Lebanese government not disarming Hezbollah, odds of another outbreak of hostilities are heavy.

Oil bears point out that inventories are relatively fat in this country, even as the economy is apparently slowing down. But as these events show, any surplus under these conditions--no matter how great it appears--can be sopped up very quickly. And we have yet to see the worst of this year’s hurricane season.

Political conflict, faulty maintenance and harsh weather are, of course, nothing new; they occurred during the ’90s as well. The difference is there’s far less of a cushion now. And there won’t be one until we see the same factors that ended the ’70s bull market in

energy: a real push for conservation--such as that decade’s move to small cars from gas guzzlers; a switch to alternatives; at least one major new discovery of conventional oil and gas reserves on the par with the North Sea of the ’70s; and probably a global recession that kills off demand in the developing world.

As of now, we’re seeing none of these factors. Outside of the West Coast, hybrid vehicle sales are sluggish to stagnant. New nuclear plants are years away and--despite strong growth at some producers like AES CORP (NYSE: AES) and FPL Group (NYSE: FPL)--wind power is still only a marginal provider of energy. Meanwhile, fuels produced from ethanol and Canadian tar sands are only economic with conventional gasoline at a very high price, and the cost of producing them is rising, not falling.

The world’s central bankers could bring on a crushing global recession if they wished. The US Federal Reserve, however, halted its monthly streak of raising interest rates, despite signs inflation is far from fully reined in. That’s a pretty clear sign the Fed and its counterparts are very concerned about not triggering a recession of the magnitude that will bring down energy prices in a meaningful way, for fear of far-worse consequences.

The bottom line is the long-term foundations of this energy bull market are still very much intact and are likely to be for some time to come. In fact, a pullback in oil prices in the near-term will merely further delay the conservation, alternatives and new discoveries needed to decisively shift the supply/demand balance back to consumers and end the bull market.

As long as the energy bull market runs, high-quality energy stocks will move higher dramatically over time from current levels. Those who buy and hold are almost certain to see some dramatic ups and downs in their positions along the way. But the trend will remain for higher prices, and the best strategy will be to hold on to good stocks.

The key word here is quality. There’s no such assurance for those who dabble in the riskier corners of the energy patch. In fact, it’s quite possible to lose your shirt, even if oil moves well north of $100 a barrel and gas revisits the high teens.

The fate of BP Prudhoe Bay (NYSE: BPT) last week is a pretty good case in point. This unit trust is basically a royalty stream on the first 90,000 barrels of oil equivalent per day produced from BPT properties. As oil prices have risen during the past few years, so has the value of that output. That’s pushed up the dividend for BPT, and the share price has soared from the low teens to the low 90s.

All that came apart quickly as BP’s pipeline problems came to light, with the unit trust plunging to the low 70s in a matter of hours.

The shares have come off those lows, and sufficient production has been restored to maintain the payout. But further pipeline problems, a drop in oil prices or complications regarding the trust’s scheduled liquidation in 2012 could do it all again, with devastating consequences for shareholders.

Another area for caution is Canada’s oil sands, particularly the myriad penny stocks that have sprouted up. Simply, costs of developing oil from tar sands continue to rise, and even large companies have been put under strain. The fry have no chance of making it.

Happily, in stark contrast to the risky side of the energy patch, the quality plays are still quite cheap, basically discounting another big downleg in energy prices. That’s especially true of quite a few companies that are growing production like gangbusters.

Chesapeake Energy (NYSE: CHK), for example, is on track to boost its output of oil and gas by 25 percent this year, even as it posted a

308 percent reserve replacement rate. Yet, because of investor fears about natural gas prices, the stock trades at less than eight times earnings and just 1.4 times book value.

This is where wealth is being created in the energy patch--companies like Chesapeake that are producing at the drillbit. And thus far, the market isn’t giving them any credit. In fact, many are trading at prices that seem to suggest natural gas prices as low as $4 per million British Thermal Units (MMBtu) and oil in the $40 per barrel range.

Super oils are also very cheap. Leaving aside BP--which is plagued by a host of reliability problems as well as serious questions about its Russian investments--the world’s biggest producers and refiners are by and large trading at single-digit price-to-earnings ratios.

That’s despite consistent double-digit profit growth. And amazingly, the companies with rising production are the cheapest of all.

As long as we’re seeing this level of prices in the context of a very bullish long-term picture for energy, it’s hard to see how anyone is going to go wrong buying and holding high-quality energy stocks. That also goes for the better-quality Canadian oil and gas income trusts like ARC ENERGY (AET.UN, AETUF) and Penn West Resources Trust (PWT.UN, NYSE: PWE).

In contrast to most of the smaller trusts--which I would continue to avoid--these are large, well-capitalized enterprises with solid reserve bases. They can replace what they produce at a reasonable price and pay out big dividends as well.

Looking to the near term, whether or not oil holds $70 a barrel will likely depend on weather and political events. If there’s a break under $70, look for energy investments of all stripes to have at least a few bad days, as they did this week.

Should that happen, however, it will be a time to pick up more shares of the best-quality companies--those that are increasing their output and improving their reserve bases.

There will come a day when we’ll want to sell even the highest-quality energy plays. But again, we’re still not seeing anything close to the conservation, alternatives, new discoveries and probable recession that ended the ’70s energy bull market. And until we do, high-quality energy stocks will be essential pieces of everyone’s portfolios.