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Natural Gas: Clean, Quality, Cheap, Domestic, & Abundant

Apr. 26, 2011 3:50 AM ETEOG, KMI, XOM
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James Hartje's Blog
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Long/Short Equity, Growth, Value

Seeking Alpha Analyst Since 2009

Natural Gas has received no love from investors, Washington, etc. So for those of you who hated on Natural Gas for the longest time, maybe its time your perceptions will change? Lets first look at what you missed out on.

I personally see a huge valuation error in Natural Gas, which leads to a bullish opportunity for this commodity. The collapse of our global economy and the unfolding credit crunch sent natural gas prices spiraling downwards to 10-year lows back in September hitting $2.41/MMBtu. Throughout the year Natural Gas prices have been in the doldrums as it has been almost forgotten all together whereas other commodities, most notably Oil have been skyrocketing. The fact is the fundamentals have been screaming BUY, BUY, BUY yet very few people are listening, until now. I see this acquisition creating a buzz around the commodity leading to a new rush to buy up Natural Gas assets.

Natural Gas: Clean, Quality, Cheap, Domestic, & Abundant

Natural Gas is a clean, quality energy that is cheap and domestic. Natural Gas is the second most abundant fossil fuel in America. It’s estimated that we have upwards of 100 years of Natural Gas usage. Plus if you add Canada into the equation who is the largest holder of Natural Gas then combined we are the Mecca of Natural Gas. With this surplus we could develop it into the energy of America and tell the Middle East to screw off for holding us hostage to oil for so many years. Its only now that people are finally catching on that Natural Gas is the cleanest of the renewable resources. As of right now, natural gas is used to heat homes, cook food, power lights, and fuel the revolutionary new Natural Gas powered vehicles. With the winter season coming up, Natural Gas is a huge play as due to the cold winters people crank up the heating.

This is even more important as this is expected to be the coldest winter in the past decade. The next great part about Natural Gas is since it is so cheap its getting huge backing from both the consumer and the government. The government is pushing natural gas as the future energy through tax breaks, stipends, etc. The goal is to make it more centered and help push America off oil and onto Natural Gas. With sustained price levels it has become a strong long-term energy play. The demand side of the equation for Natural Gas is starting to look a lot brighter day-by-day. A weak dollar and a recovering U.S. economy should boost demand from the industrial sector. Natural Gas is far more reliable than other options, solar, wind, etc. Washington’s green initiative will push for cleaner fuel options. The government’s green initiative is also positive for the natural gas, as it is a cleaner fuel option. With increased demands there is no reason to not think that natural gas can rise.

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