“It’s going down, down, down, in a burning ring of fire…”
At first, I didn’t take much heed of the singing that drifted over the cubicle wall. This wasn’t the first time I’ve heard my colleague Chris DeHaemer whistling a Cash tune.
But today was different.
His musical inspiration was a specific natural gas chart he’d pulled up his computer screen:
Click to Enlarge Chart
“Let it go down to a buck, all the better for us,” he crooned, poking his head above the partition, “the coffee’s cold and gas prices couldn’t be better for us than in the trenches…”
I’ve written before how Chris is taking a different approach to natural gas.
Unlike the “wait-and-see” tactics that have many hesitant gas investors on the sidelines, he’s buying — because unlike these other guys, Chris knows precisely which gas stocks to play during a glut.
The Never-Ending [Supply] Story
When it comes to fossil fuel supply or production, nothing should be considered endless — but in the case of natural gas, we can expect to enjoy a rosy production outlook for decades to come.
Despite the recession, four hurricanes in seven years, and ever-increasing domestic demand, the supply glut plaguing the gas industry could take years to work itself out.
Last year, nearly half a million natural gas wells across the United States produced over 24 trillion cubic feet of marketed natural gas production. According to the bean counters at the EIA, that’s a 30% increase during the last seven years — and more than we’ve ever produced before.
What to do with all that gas?
The pundits in the mainstream media spouting off about the future of LNG exports are way off the mark. Although there are currently nine projects on U.S. soil up for review, only one is actually approved.
I have no doubt you’ve heard these same people talking about Cheniere Energy’s Sabine Pass Liquefaction terminal in Louisiana.
What they fail to mention, however, is that Canada is already ahead of the game — that and Canada’s direct access to the Asian market…
And then there’s the fact that most U.S. LNG exports would be bound for Europe, where prices aren’t as sweet:
So, why the Chinese?
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The Manic Mandarin
Even though the IEA has said global gas demand will increase by 50% by 2035, much of that will come from China.
One of China’s largest state-owned gas producers has warned the country’s natural gas consumption could triple to 550 billion cubic meters a year during the next two decades.
In just the next five years, Chinese demand is expected to double.
What’s more, this newly-found addiction to natural gas comes with a major hitch: finding that much gas!
Their own shale gas revolution is still in its infancy, but it turns out extracting the gas from China’s shale formations may be as easy as it has been here in the States. And that could lead to a serious increase in gas imports, sparking an LNG war that will last decades.
A Better Way
The truth is there are better opportunities than the blooming Chinese natural gas market. And they’re much closer to home.
I often refer to our transportation sector as the holy grail of U.S. energy. Slowly, the rest of the herd will come to this realization…
The government is gearing up for a fight over shipping our abundant gas resources overseas.
The rumblings have been low-key so far: a mild warning or an outright threat made during a small energy budget meeting.
You can bet the politicians on Capitol Hill will milk our gas supplies for all they’re worth, which will inevitably hinder our LNG export ambitions.
If nothing else, government greed is the one thing we can count on. In fact, some investors already are…
I know firsthand how Chris’ readers are finding the real value in gas over the long haul.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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