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Natural Gas is Getting Pretty Cheap Here

|Includes: The United States Natural Gas ETF, LP (UNG)
 I ran some numbers today and came to the staggering conclusion that at $3.60/BTU, natural gas is now cheaper than coal in some markets. One ton of high grade Pennsylvania anthracite costs $65/ton. Some 18 million BTU’s of natural gas, the energy equivalent, costs $66, and doesn’t give you black lung, asthma, lung cancer, polluted air, and mountains of ash. The BTU equivalent of crude comes in at $210, and high test gasoline at an extortionate $420. The crude/NG ratio is at 19:1, an all time high, and an entire generation of ratio traders has been wiped out. It’s just another one of those six standard deviation events which seem to be happening constantly. And like a rubbernecker driving past a gory accident where the human organs  are draped over the detailing, I am always interested in wipe outs. Yes, I saw the movie Crash. Don’t ask. Why aren’t the power companies jumping in and burning gas instead of coal? There is the minor issue in that the industry needs $500 billion and ten years to build the plants to take advantage of the enormous new supply. So only frenetic production cuts will support the price until then, which are accelerating as you read this. Or a major hurricane.  Better keep UNG on your screen and buy the next wash out.