The forgotten energy play
By Andrew Mickey
Oil and gasoline prices have been on a tear over the past few months. And top oil and refinery stocks have been doing just as well. But, we’re on the verge of the next hot energy sector roaring back to life.
That’s right, I’m talking about natural gas. Most natural gas stocks still haven’t recovered from their post-Hurricane Katrina highs and sudden fall off a few months later.
Now, that’s all changing and the bulls are moving back in.
CNBC’s Jim Cramer says, “Natural gas keeps ramping.”
And Charlie Sanchez, vice president of energy markets for Houston-based Gelber & Associates, says, “Bargain hunters buy the dips and there are positions that are non-commercial that are being protected, they’ve gotten long and they’re waiting for the first wave of heat or hurricane threat.”
The U.S. isn’t doing anything about it either. Earlier this week California terminated the construction of an offshore $1 billion natural gas terminal.
That was going to be a big help in relieving our exposure to any hurricane-related production cuts in the future. The project, which was to be constructed by Australian mining and energy giant BHP Billiton, was going to be huge. But now we’ve got nothing.
No wonder the mainstream Wall Street community is starting to move back into natural gas stocks. And this is just the start. After natural gas prices hit a multi-year low in late 2006, it hasn’t been a fun ride.
As you can see in the chart above, it’s been a pretty wild ride for natural gas over the past two years. But now that all the speculators have left the market and an unusually warm winter has passed, it’s the perfect time to strike.
All the fundamentals are there for a big bull run.
“900 of the next 1,000 U.S. power plants will use natural gas.” – U.S. Department of Energy
“Natural gas companies would need to spend around $658 billion for drilling, development, and new construction, plus an additional $128 billion to upgrade existing capacity.” – National Petroleum Council
“Total consumption was up more than 10 percent in the first quarter of 2007 compared with the same period last year.” – U.S. Energy Information Administration
Clearly, natural gas is not something you want to miss out on this summer or beyond that. And my top natural gas play has been kicking but for the past year and just reported another record profit even though natural gas prices have been highly volatile.
The company is absolutely an essential part to the growth of the natural gas industry. In fact, the company can take natural gas wells that were left for dead and turn them into producing wells again.
To learn more about this unique technology that is helping the world meet its growing natural gas demand, and make money regardless of where natural gas prices are headed, view my complete special report here.
That’s all for now,
Andrew Mickey
Editor in Chief, BreakAway Investor
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