Like the old gray mare and the New York Yankees, those once torrid oil and gas stocks ain’t what they used to be. After running rings around the market the last three years, the energy sector — sparked by an outburst of brokerage earnings and rating downgrades, and brisk profit-taking by hedge funds and commodity traders — has run afoul of a wave of selling the past six weeks, with the stocks averaging 10% to 15% declines and some smaller names tumbling as much as 70%.

Key factors behind those downgrades:

• Rising crude inventories around the world.

• A slowing global economy.

• Demand has weakened, what with the summer driving season coming to an end and the winter heating season not yet under way.

• This year’s hurricane season has yet to have caused any damage or oil production stoppages in the Gulf of Mexico.

• Fears that Democrats could snare control of Congress in the upcoming elections.

• Despite fiery rhetoric from Iranian president Ahmadinejad, Iran, the world’s fourth-largest oil producer, has shown some willingness to compromise in its nuclear standoff with the United Nations, thus alleviating worries about a cut in its oil exports.

In early September, a consortium of oil companies, including Chevron, Devon Energy, and Statoil announced it had discovered 15 billion barrels of oil and gas reserves in the Gulf of Mexico. That’s equivalent to half of America’s reserves.

Remember those flamboyant forecasts from the likes of Boone Pickens, Merrill Lynch, and Goldman Sachs that oil was headed to $100 a barrel, probably sooner than later? With the price of oil dictating the price of oil stocks, crude skidding from its July high of $78.40 a barrel to currently the high $50s and some analysts predicting more carnage, that a $100 forecast, at least for now, barring some catastrophic event (such as America attacking Iran), seems little more than hot-air prognosis.

Consensus estimates on Wall Street call for crude to average $68.62 for all of 2006, up 21% from last year. For next year, the consensus outlook is $63.01 a barrel, with the high estimate $75 and the low estimate $50. The futures market, though, is more bullish on oil prices, with oil to be delivered in December 2007 trading at $70.23 a barrel.

About a month ago, Oppenheimer & Co.’s veteran oil industry tracker Fadel Gheit fired off the first analyst’s salvo at the energy sector by withdrawing what had been a blanket recommendation of the group based on his conviction oil prices would trend lower and that refining margins had peaked. In fact, Mr. Gheit tells me, “I think the whole energy complex has peaked.”

For a couple of days last week, the price of oil spurted a bit after dropping

to the high $50s, an action largely predicated on comments from OPEC that it would cut production.

“I don’t believe it,” Mr. Gheit says. “Oil prices are not low enough to hurt them and I expect they’ll continue to produce as much as they can to capitalize on the current high oil price.”

The analyst says he was told by an OPEC official that the cartel’s “comfort zone” was $45 a barrel, a price that would enable it, he was told, to continue its social programs.

That’s the very same price Mr. Gheit sees oil trending to over the next six months to two years because, as he sees it, there’s no shortage of oil, inventories are surging globally and there are behind-the-scenes political efforts by governments around the world, including America, to bring down prices.

While Mr. Gheit thinks oil will average in the low $60s next year, he believes the $50 range is a reasonable expectation if global economic growth should slow.

Although he sees oil prices headed lower, Mr. Gheit doesn’t rule out periodic jumps from such events as an armed conflict with Iran, which he thinks could easily push up the price of oil $10, $20, or $30 a barrel. By the same token, if there is no cold winter, he would expect oil to fall about $5 to $10 a barrel.

What does all of this mean for energy stocks? “I’m neutral,” Mr. Gheit says; “I now expect these stock to enter a trading range.”

Still, he’s not abandoning the group, noting in an uncertain oil pricing environment shares of Chevron, Exxon Mobil, and British Petroleum make the most investment sense.

And if the price should rise, his preferred stocks are Occidental Petroleum and Hess Corp. because they’re the most highly leveraged to rising oil. Ditto Anadarko Petroleum and Devon Energy, he says, in the event of rising natural gas prices.

Bucking the bearish sentiment, former crack institutional energy analyst Alan Gaines, now CEO of Dune Energy, a small Houston-based oil and gas producer, takes a very constructive view. Taking note of the negative energy sentiment, he predicts it will vanish quickly in the face of the first signs of a cold winter or supply disruption.

Asserting “nothing in the world has changed but Wall Street sentiment,” Mr. Gaines points to the ongoing, if not worsening geopolitical dangers (namely from developments in Nigeria, Iran, and Venezuela), the uncertainty of supply and politics in Russia, pretty strong global demand, especially from China and India, and a continuing decline in American production.

Mr. Gaines, who doesn’t see any sustained oil pricing weakness lasting more than three to six months, believes investors can still make a boatload of money in energy stocks, even at $50 a barrel. “I would nibble away at them because the sector is rife with buying opportunities,” he says. His favorites, each of which he owns personally and all of which he regards as takeover candidates, are POGO Producing, Cimarex Energy, Range Resources, and Chesapeake Energy.

Mr. Gaines’ optimism may indeed be justified, but the $64,000 unanswered question for now: Has the energy stock boom run out of gas?