The hottest investment question on Wall Street grew even hotter yesterday as the price of oil topped a record $57 a barrel. In a nutshell, what’s next for those stampeding energy stocks, which, fueled by the surge in oil prices, have rocketed an average 94.4% since the end of 2002, nearly three-fold the 32.6% rise in the same period for the S&P 500? The perplexing questions: Can you still climb aboard the bandwagon? Or is it time to head for the hills?

That’s what a reader, Aaron Cantor, wants to know. In an e-mail the other day, he wrote: “Dan, I own ChevronTexaco and Marathon Oil and I have a substantial profit in both. My brother, a financial planner, is urging me to sell them. I have a copy of a column you wrote on March 9 quoting Alan Gaines where you describe him as one of country’s savviest energy minds. Could you please ask him what he thinks about my two stocks and energy, in general?”

First, Mr. Gaines’ credentials. He was a former crack institutional analyst at Gaines, Berland, a small New York brokerage firm specializing in energy research. Mr. Gaines, who has an eight figure equity portfolio, about 80% of which is energy shares, also advised corporate raider Carl Icahn in his hostile bids for such energy bigwigs as Texaco, Phillips Petroleum, and USX Corporation. He is currently CEO of Dune Energy, a small Houston-based oil and gas exploration company that’s 78% owned by Itera Holdings, Russia’s second biggest gas producer.

Though hit by a growing number of recent brokerage downgrades because of the hefty stock gains, Mr. Gaines hasn’t lost his enthusiasm for the energy sector. Oil and gas haven’t run out of steam yet, he tells me. There are still more gushers in the offing.

Taking note of lofty and near-record energy prices, Mr. Gaines tells me: “Get used to $50-a-barrel oil and $6 gas (per thousand cubic feet); they’re here to stay.”

Why so? Because nothing has changed, he said, that led to the surging prices, which is the key to future prices. In particular, he points to these factors:

* Increasing global demand.

* Decreasing domestic production.

* Insatiable thirst for oil from China and India.

* Questionable export capacity from Russia.

* Questionable incremental output from embattled OPEC, which at a meeting Tuesday in Iran announced it would step up its oil output by 500,000 barrels a day.

* Constant threat of terrorism, which could disrupt oil and gas production.

* Supply disruptions from the volatile Mideast.

* Uncertain supply from Venezuela, Nigeria, and non-OPEC member Russia.

“It’s Economics 101,” Mr. Gaines said. “Increased consumption and questionable incremental supply add up to higher prices, and if there’s any surprise, it will be associated with higher highs, not lower lows.”

Over the next 12 months, Mr. Gaines figures oil will range from the low $40s to the high $50s, but he thinks the price could easily jump to $70-$80 on any given day. “For the foreseeable future, $30 oil is gone,” he said. Likewise, he thinks natural gas could rise at any point to $7.50-$8, or even to $10 if there’s a cold snap. As for gassing up at the pump, Mr. Gaines thinks $2.40 to $2.50 a gallon, which is inexpensive by world standards, is a near certainty in three years. The current average price is $2.05.

What about the stocks? Our energy expert favors such large cap independent oil companies as Unocal, Marathon Oil, Anadarko Petroleum, and Chesapeake Energy, all of which he personally owns and regards as legitimate takeover candidates. Given their lusty gains, he thinks you’ve got to take a 2-3 year investment horizon, a period in which he thinks these stocks can generate additional 30%-50% gains.

As for the big integrated oil companies – none of which he owns – Mr. Gaines thinks it’s still worth holding on. Historically, they’re not expensive, he said, and they’re also ripe candidates for additional dividend growth and share repurchases. His top picks are ChevronTexaco, British Petroleum, and Total, stocks he thinks can appreciate 20%-25% over the next two to three years.

Not everyone, of course, shares Mr. Gaines’s enthusiasm. Recent Wall Street research commentaries, for example, feature a number of energy company downgrades, chiefly reflecting the sharp stock advances. One of the latest is from Banc of America Securities’ energy team, which lowered its investment ratings on ChevronTexaco, Marathon Oil, and Norwegian energy giant Statoil, each from a buy to neutral. It also takes a dim view of Kerr-McGee, observing “we don’t see much further upside” despite a recent announcement that corporate raider Carl Icahn had accumulated a 7.6% stake in the company. Mr. Gaines also views shares of Kerr-Mcgee, which he owns, as unattractive over the near term.

Meanwhile, Merrill Lynch’s chief American strategist, Richard Bernstein, said he’s cooling down on energy stocks. Pointing to their big gains, surveys that show institutional investors are way overweight in energy, some by as much as 75%,and the substantial upward spike in inflows into energy mutual funds, Mr. Bernstein expresses some concern, observing that “the once underappreciated [energy] story is now clearly appreciated.” In a related development, Merrill has downgraded four energy stocks from buy to neutral – Apache Corporation, Forest Oil, Devon Energy, and Kerr-McGee.