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US Natural Gas (UNG): Promised Land… Or Another China Syndrome?

|Includes:Baker Hughes Inc. (BHI), CHK, ECA, LNG

In case you hadn't noticed, Matt Damon and John Krasinsky's anti-fracking movie "Promised Land" opened last weekend (January 4, 2012) to little fanfare, and even less box office success. And I do mean LITTLE box office success. For what theaters were taking in over the opening weekend, you couldn't buy a cheap used car… gas, cng, or even Hobbit-powered.

Whereas movie reviews from elites have been generally positive, the film's potential impact on the future of fracking in America has already been written off by some pundits. I truly hope that remains the case.

Thirty-three years ago another anti-energy movie opened with little fanfare. Then due to the Three Mile Island incident 12 days after its release the movie got some traction and went on to be a mild box office success.

But "Promised Land" ain't no "China Syndrome."

This current anti-energy tale need not worry about garnering that kind of success for three reasons.

  1. It is hard to imagine any kind of incident involving fracking that would generate the kind of apprehension and subsequent focus on the movie that the Three Mile Island situation caused.
  2. The 1979 flick had some great actors. Including the late Jack Lemmon turning in an academy award winning performance. Neither Damon nor the Krasinsky should feel any anxiety about duplicating Mr. Lemmon's feat.
  3. And finally, the "China Syndrome" had great characters and a story that carried the viewer through to the end. "Promised Land?" Not so much. Only 40% of its audience liking it at

But what if there's a select audience that will see it and be moved greatly by it? And THIS audience is already pre-disposed to buying in to the anti-fracking argument, even if the movie ain't so great?

The Obama administration continues to delay making any meaningful decision when it comes to energy policy. In fact, continued and rising apprehension from natural gas producers has become the norm.

Exporters of liquefied natural gas (NYSEMKT:LNG) fears have continued as well. Prior to the election, the administration punted on a decision to let Cheniere Energy export LNG to countries without free-trade agreements from its Sabine Pass terminal in Louisiana.

Now as the new Congress takes its seats and the upcoming million-dollar-donated-debauchery

of an inauguration soon wraps up, surely we can get down to the very important matter of our national energy policy.

Don't count on it… and don't call me Shirley.

Republicans continue to argue that though Mr. Obama says he supports natural gas, his energy policies have failed to walk the talk. That he is not pro natural gas and that this foot-dragging on liquefied natural gas exports validates their belief.

Mr. Obama's EPA is apparently dragging their feet on the matter as well as evident by their not weighing in on the contentious matter of the potential for groundwater contamination.

And now comes the story of the country's most powerful governor, and a democrat to boot, closely guarding an analysis from his own state health department declaring that fracking can be conducted safely.

With powerful political interests on one side (i.e. the environmental lobby), and powerful economic interests on the other (i.e. energy companies), the future of fracking remains if not clouded, then at least unclear.

On the economic side, you have billions of dollars and thousands of well-paid, hard-working employees from big name companies like Encana (NYSE: ECA), Baker Hughes (NYSE: BHI), Chesapeake (NYSE: CHK), Cheniere Energy and others either directly involved in the fracking process or waiting close by in the wings to move the fracked gas. On the environmental side you have thousands of concerned citizens passionately protesting from numerous lobbying groups principally headed up by the Sierra Club.

What could "Promised Land" do for the US and its position in the global energy environment? What could a "China Syndrome" like stoppage of fracking in America do to our long term energy health?

The International Energy Agency in November forecast that the U.S. will become the world's number one oil producer in the next ten years, eclipsing Saudi Arabia and becoming energy self-sufficient by 2030.

" …the extraordinary growth in oil and natural gas output in the United States will mean a sea-change in global energy flows. In the New Policies Scenario, the WEO's central scenario, the United States becomes a net exporter of natural gas by 2020 and is almost self-sufficient in energy, in net terms, by 2035. North America emerges as a net oil exporter, accelerating the switch in direction of international oil trade, with almost 90% of Middle Eastern oil exports being drawn to Asia by 2035."

"The China Syndrome" set back nuclear energy for decades. Thoughtful economists have argued that though it became a rallying point for anti-nuke protesters and other environmentalists, the movie, in a great example of the law of unintended consequences, became one of the greatest global warming villains of a generation. By effectively ending the building of nuclear power plants in the U.S. that would have safely and cleanly provided inexpensive electricity for the last 30 years, the energy companies instead built coal and fossil fuel fired plants. In another generation, the successful shuttering of nuclear plant in the 70's and 80's, and the "dirty" plants built to handle our ever growing energy needs, would foster the current anti-coal group of environmentalists. Talk about irony.

The current and very real potential irony would be if this new piece of fictional entertainment influences our national energy policy and we choose a path setting us back decades again in our pursuit of national energy independence.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The contributing author, Binkley Wealth Management Group, LLC, and/or its clients may be pursuing the strategies and may or may not hold positions in securities mentioned in this article at the time of publication. The opinions and strategies expressed are not meant to taken as advice to any individual investor. The opinions and strategies discussed are not to be construed as personalized recommendations to buy, sell or hold securities by any individual investor without first consulting with their own personal financial advisor.

Stocks: BHI, CHK, ECA, LNG