Tuesday, September 25, 2012

Nat Gas is the future

I firmly believe that over the next few years the world, and this country in particular, will make a huge shift toward the use of natural gas as a transportation fuel. The recent declines in the price of OIL in the U.S. has been the result of the lack of world demand as a result of the Euro slowdown, the China slackening, and the increased output of the bituminous oil coming out of Canada. The economics of shale oil are dependant largely on a high price for oil. And world demand will continue to grow for oil. In this country meanwhile, the advances in "fracking" as a nat. gas recovery technology has reduced the price of natural gas dramatically while supply has skyrocketed. Estimates of useable natural gas in the ground have gone up dramatically as well. I think it will only be a matter of time before we switch on a large scale to the use of nat gas as transportation fuel and the price will change accordingly. With this in mind I have been looking for opportunities to trade and invest in NG.

Looking at the UNG chart it looks like NG may be set for another rise. Trading...

And from a longer term perspective a look at some nat gas operators are interesting. Particularly if they pay dividends... Here is a chart of Pengrowth Energy Trust... A recent lowering of the dividend has brought the price down as well. The decline in the dividend has co-incided with the recent decline in NG prices. If NG prices are set to rise it seems that the expectation for a rise in the dividend could cause a rise in the price of the shares of PGH. This would be the best of both worlds. An 8% dividend and a rise in share price...... Time will tell of course.


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