The next major bailout isn’t around the corner…
It’s happening now!
I’m not talking about some big bank raking in billions in revenue, or an automaker about to go under. No, this is a rescue of a different sort.
The helpless victim of circumstance in this case is none other than Mexico.
Mexico is on a collision course for a full-blown energy crisis. This crisis has been brewing for years, and it’s only going to be exacerbated in the coming decade.
For this reason, the country may soon open its doors to foreign oil and gas companies.
It’s not easy to admit, certainly, but the soon-to-be 51st state of the Union will heavily rely on the United States for its future gas supply.
And it’s important to note that as Mexico’s natural gas crisis grows, it’s not all bad news for individual investors…
Barreling Toward an Energy Crisis
Take a look at the numbers, and you’ll see that Mexico’s gas crisis really started to develop in the 1990s, when demand began to take off…
Daily consumption of 1.69 billion cubic feet of natural gas doesn’t exactly register as a “crisis” to us Americans — especially given the fact that U.S. demand is nearly 3,400% higher, or roughly 70 billion cubic feet, per day.
Unfortunately, Mexico’s burgeoning demand (while still small, comparatively) can only be met by more imports.
This situation has deteriorated over the last 15 years.
Mexico’s country’s natural gas production will never be able to keep up with its growing consumption.
As it stands now, Pemex is having a difficult enough time keeping gas output steady.
Also remember that despite having 545 trillion cubic feet in shale gas resources underground, Mexico is sorely dependent on its conventional gas reserves (which presently total 17 trillion cubic feet).
If this all sounds eerily familiar, well, that’s because it is…
This is the exact situation the United States faced in 2007, when imports of natural gas reached record levels of nearly 4.2 trillion cubic feet. And although much of our imports came from Canada, the real buzz surrounded liquefied natural gas: LNG shipments to the United States totaled more than 770 billion cubic feet that same year.
Of course, we all know what happened next…
Earlier this week, we talked about how the shale gas boom turned the U.S. natural gas market on its head within a few short years.
But don’t expect a quick rush of supply from shale wells in Mexico. Tapping into those shale gas resources is going to take a lot of both time and money — neither of which Mexico can spare right now.
Fat Gas Profits for U.S. Investors
As was the case for the United States in 2007, most of Mexico’s natural gas imports come from one place.
While the subject of LNG exports dominates today’s headlines, the fact is 80% of Mexican gas imports are from pipelines. In other words, the U.S. will supply that much-needed supply going forward.
If we’re being realistic, Canada is going to win the LNG export race to Asia. Canadian gas stocks are currently in a much better geographical position to capitalize from the growing Asian LNG market.
Trust me, exporting LNG doesn’t come cheap. There are chartering fees, fuel costs, port costs, canal costs, and insurance costs to deal with — and that’s not to mention brokering deals for the LNG tanker itself!
Even after the Panama Canal is widened to accommodate the large LNG tankers, it can still cost upwards of half a million bucks for access to the Pacific.
And barring some serious development in Alaska’s shale gas production, I can’t imagine production from Alaska hitting Asian ports within the decade.
Besides, can you possibly think of a better provider of natural gas for Mexico than the United States? Neither can we…
And Mexico is busy gearing up for more of this supply.
Helping matters are plays like the Eagle Ford in South Texas, which have been ramping up natural gas production at a considerable pace.
At less than $4 per MMBtu, natural gas may be incredibly cheap right now. But individual investors with their eye on the long term will see prices steadily rise in the years ahead.
The problem is finding the most profitable gas plays isn’t as easy as it once was — like in 2009, when natural gas prices were plummeting, and the market was in a selling frenzy.
This is precisely why I’m putting the finishing touches on a new report that will separate these gas plays from the rest of the pack…
You’ll have free access to this report the moment it goes to print, so stay tuned.
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.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
