But have no fear.

It’s not too late to grab a piece of the pie.

The trick is that you’ll have to look beyond the obvious choices like major oil companies, drillers and other sectors that are hopelessly bid up right now. And you can play various types of funds, as well as stocks, as we’ll demonstrate.

The Four Factors Giving Life to the Commodity Bull

But before we tackle the how, let’s tackle the why:

• First, it’s important to understand that high oil prices are simply going to go higher, still. There will be inevitable pullbacks, but as we’ve written so many times in the past, the math is very simple – people are simply using more oil than at any time in history and worldwide demand is accelerating.

• Second, it’s also important to note that we haven’t had a major new discovery of any substantial size in the last 30 years. And by substantial, we mean big enough to change the balance of supply and demand and, by implication, to reverse the runaway increase in prices. The lack of any new discoveries, then, also points to higher prices.

• Third, absent an immediate, cost-effective and widely available substitute, oil is increasingly nationalistic in nature. This means that oil producers – and particularly the tyrants with spigots – will begin holding back production for their own use. That will reduce the supply available on world markets, further enhancing the upward pricing pressure.

• And fourth, while higher prices are finally inducing some drivers in modern industrialized countries to drive less, developing nations don’t give damn about conservation and are guzzling gasoline like there’s no tomorrow – which, for them, is entirely true. For these nations, access to energy and to petroleum is the literal equivalent to survival and they’ll do everything they can to ensure it. So any drop in demand we’re experiencing is almost immediately offset by higher consumption in such markets as China, India and many parts of South America. And that offsetting consumption may well persist for years.

That’s a very painful reality to face. But it does bring us to the fun part of this commentary: The profits.

New Markets = New Profit Opportunities

Any time you have sustained supply-and-demand imbalances, you also the potential for huge profits. And what’s happening now is no different.

Viewed in that light, higher oil prices can actually be a good thing for the stock markets, just as the rising price of such “commodities” as gold, copper, cotton, silk and spices have been for various nations since the dawn of time.

The reason is that excess profits that would ordinarily flow to Caracas, Moscow and Riyadh, are being recycled into the best global stocks on the best first-tier global stock exchanges, including the New York Stock Exchange, the Tokyo and Hong Kong stock exchanges, and the Frankfurt, Euronext and London exchanges.

But that may be coming to a head as trillions of dollars are chasing a diminishing number of high-quality stocks, which over time will propel those shares to excessively high valuation levels.

So what’s an investor to do? Savvy investors will once again have to go with the (global money) flow, ferreting out markets that haven’t yet hit “mainstream” radar screens, but that still are likely to benefit from rising oil prices.

We refer to them as “frontier” markets and they include such mineral- and resource-rich places as Nigeria, Sudan, Egypt and Bangladesh among others. They’re obviously beyond the same old BRIC choices that have become so popular in recent years.

Most of these markets are so small that many investors overlook them altogether – but they’ll soon become very popular because of the tremendous upside they offer.

Even with political upheaval, hyperinflation, open warfare and catastrophic human and natural disasters, frontier markets are piling on stunning returns. Most are benefiting significantly from rising commodity prices that, in turn, produce higher corporate profits.

As a case in point, consider the Standard & Poor’s/IFCG Frontier Markets Composite Index posted a mouth watering 43.3% return last year. And individual markets did even better. Bangladesh turned in 128.3% while Cote d’Ivoire nailed down a 122.7% gain. The index’s worst performer, Estonia, plunged -14.2%.

Clearly with a range like that, so-called frontier markets aren’t for everybody especially since they’ve gotten so expensive as more money has flowed into them. Data shows that many are trading at Price/Earnings (P/E) ratios that range from a high of nearly 100 for Vietnam to a “mere” 35.9 in Slovenia.

Still, even at these valuations, we can make the case that higher commodity prices will allow these markets to grow for years to come – especially given that they are starting from such a small base.

Which makes them a logical choice for adventurous investors who want to get in before they become hot on the country club cocktail circuit.

Brazilian billionaire Eike Batista is planning a 5.59 billion real ($3.37 billion) initial public offering of OGX Petroleo e Gas Participacoes SA, betting the country’s recent oil finds will lure investors who snubbed 20 IPOs this year.

“The market is definitely not the best right now, but for the oil sector that doesn’t really matter,” said Daniel Gorayeb, chief investment analyst at Spinelli SA, a Sao Paulo- based brokerage. “Brazil is a very attractive investment from a macro point of view, and the outlook for oil exploration in particular makes this IPO even more interesting.”

“Brazil’s Carioca field is a reserve with tremendous potential,” says Jason Simpkins in Money Morning, “as it may hold 33 billion barrels of oil and natural gas. Unfortunately, the field is 170 miles offshore, more than 6,000 feet under the surface of the water, and trapped beneath a shelf of salt 500 miles long and 125 miles wide.

“Technologically challenging, physically intensive and costly projects like these are the future of the oil industry.”

Read on here to for a trio of petro-profit plays.

“Australia, Brazil, and Canada are the ultimate destinations for resource investors,” says Brian Hunt in Daily Wealth.

“Each is blessed with awesome energy, metals, and agricultural wealth… and each ABC currency is soaring right now.”

Marc Faber, author of the Gloom Boom & Doom Report, argues that a slowdown in the Chinese economy could put downward on oil prices.

“Let us assume that the unthinkable happens,” says Marc in The Daily Reckoning. “China’s economy slows down sharply, or even contracts – and there are reasons why it could. Commodity prices slump and bring about economic hardship in the resource-producing countries. Imports of capital and consumer goods from Europe and Japan decline. We would then have the perfect setting for a global economic contraction with dire consequences for corporate earnings and asset prices.”

“We’re not predicting this, says Bill Bonner. “We’re sticking with our middle-of-the-road forecast…for neither worldwide prosperity nor worldwide ruin. But there are risks from both directions. And while most people expect a mild recession and quick recovery…almost no one expects the kind of global meltdown Marc imagines. We could see oil below $50…the Dow below 5,000…Wall Street wiped out…and 20 million US families busted.”

A stronger dollar may also play a role in bringing down oil prices, says commodities expert Doug Casey over at Casey Research.

Doug quotes John Kilduff, of MF Global, who says: “A substantial and sustained dollar rebound should be accompanied by a renewed affinity for other asset classes, further hastening a deflation of the commodity bubble.”

Andrew Mickey at Taipan Daily argues that $120 oil is just the start, partly as a result of what’s happening with Russia.

“Russia is not finding any new oil,” says Andrew.

“The situation is already pretty bad, and it’s only getting worse. At the current rate new oil discoveries are being made, total reserves of the world’s second-largest oil producer could be cut in half by 2030. Meanwhile, production could be slashed by 75%.”

Andrew’s colleague at Taipan Daily Justice Litle sees the Fed’s hand at work in rising oil prices.

“The world oil supply has become very tight. Demand is rising. The price for oil would ordinarily be going up to clear the market. But with all the ‘extra’ money creation coming out of the US Fed, oil prices are going up even faster (this is what the chart above shows). And I should add that just the expectation of loose money is also inflating the price of oil. There is probably $15-20 worth of ’speculation premium’ built into every barrel.”