NEW YORK (MONEY) -- Ernesto was downgraded Monday and looks as though it's headed away from the most vulnerable part of the Gulf Coast. The price of oil pulled back almost $2 a barrel as a result.

Perhaps the United States will escape any energy setbacks this year. Let's hope so.

But the long-term issue remains: However much the industrialized world tries to conserve oil and gas, the demand is going to increase for the foreseeable future.

More serious, much of the oil and gas supply is in countries that are either at risk for war (the Middle East) or for political instability (Russia and Venezuela).

One smart investing strategy, which I've written about before, is to buy shares of oil and gas producers with large reserves in safe parts of the world. Those places include the United States, Canada, Australia and the North Sea.

Among the companies that meet those criteria, Anadarko Petroleum is emerging as a leader. This past month, the company completed the purchase of both Kerr-McGee and Western Gas Resources.

These acquisitions will have an enormous impact on Anadarko. As of last year, the company had revenues of $7.1 billion and reserves equivalent to 2.45 billion barrels of oil, 46 percent of which was oil and the rest in gas.

Most important, 85 percent of those reserves were in the continental U.S., Canada and the Gulf of Mexico.

Anadarko's two acquisitions will cost a total of about $21 billion. By comparison, both Anadarko's market capitalization and appraised value are less than $25 billion.

The combined annual revenues of the two additions are greater than Anadarko's sales, and total reserves will grow more than 40 percent. Most of the additional reserves, which lean toward natural gas, will be in the Rocky Mountains or the Gulf of Mexico.

The bottom line is that Anadarko (Charts) is well on its way to becoming one of the world's largest independent oil and gas producers.

Since the acquisitions of Kerr-McGee and Western Gas are being paid for in cash, Anadarko will not have to issue a lot of new stock, though it will be assuming about $2.2 billion in debt.

Ratings companies such as Standard & Poor's have cautioned that Anadarko could overextend itself financially. To ensure that doesn't happen, the company is planning to raise money by selling off some assets totaling as much as $10 billion.

For the most recent quarter, Anadarko reported a whopping 39 percent earnings gain after adjustment for one-time factors, and earnings have grown at a 21 percent compound rate over the past 5 years.

Future results will depend greatly on changes in the price of oil, but analysts expect Anadarko to outperform the averages for its peer group. Best of oil, much of the company's reserves will be safe in the good old US of A.

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