Best of the Week
Most Popular
1.Ukraine Preface, the Emerging Dynamics Of Petro-Yuan Standard - Jim_Willie_CB
2. Speculations Reversed - Gold Price Stealth Rally 2014 - Peter_Schiff
3.Bubbleberg News Drivel Masquerading as Financial Reporting - David A. Stockman
4.Nationwide UK House Prices 9.5% Inflation, Housing Market on Steroids, Help to Buy Anniversary - Nadeem_Walayat
5.How to Profit from Palladium Huge Price Surge… - Peter Krauth
6.UK Home Solar Panel Installations Good or Bad for House Buying and Selling? - Nadeem_Walayat
7.Global Gold Manipulation Update - MAP Wave Analysis - Marc_Horn
8.Ukraine Capital Controls and 200% Inflation But Still In Better Shape Than US! - Jeff_Berwick
9.The Rise of a Euro-Chino-Russian Superpower - Stephan Bogner
10.Across Europe Secession Movements Intensify - BATR
Last 72 Hrs
10 Ways to Screw up Your Retirement - 17th Apr - 14
One of Harry Dent’s Three Keys to Market Prediction is Cycles - 17th Apr - 14
Obamacare Proof Stocks - 17th Apr - 14
Gold, Silver And The Mining Sector: Prepare For A Severe Fall - 17th Apr - 14
Hidden Australian Life Sciences Bio-tech Growth Stocks - 17th Apr - 14
Disrupting Big Data Status Quo - 17th Apr - 14
What the Stock Market Bears Have Been Waiting for... - 17th Apr - 14
Copper Is Pathological and Suffers from SAD, but It Has Value - 17th Apr - 14
Old World Order New World Order, Chaos And Change - 17th Apr - 14
Even The US Government Will Abandon the U.S. Dollar - 17th Apr - 14
Gold - Coming Super Bubble - 17th Apr - 14
Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - 16th Apr 14
High-Frequency Insider Trading - 16th Apr 14
Gold Prices 2014: Do What Goldman Does, Not What It Says - 16th Apr 14
These CEOs Will Make Investors Rich - 16th Apr 14
Climate Change, Central Banking And The Faustian Bargain - 16th Apr 14
Every Central Bank for Itself - 16th Apr 14
Social Security, U.S. Treasury Stealing Every Last Penny From Americans - 16th Apr 14
Ukraine Falling to Economic Warfare and Its Own Missteps - 16th Apr 14
Silver and Gold Miners Still Disappoint - 16th Apr 14
Silver, Gold, and What Could Go Wrong - 15th Apr 14
How I Intend to Survive the Meltdown of America - 15th Apr 14
France Wakes Up To The Multicultural Multi-Threat - 15th Apr 14
The Real Purpose Of QE - It’s Not Employment - 15th Apr 14
Peak Coal - 15th Apr 14
Flash Crash, Rigged Markets - What’s the Frequency Zenith? - 15th Apr 14
Forecasting U.S. GDP Growth: A Look at WSJ Economists’ Collective Crystal Ball - 15th Apr 14
Stock Market - Is Something Nasty About to Happen? - 15th Apr 14
How to Trade Your Way To Freedom - 15th Apr 14
Understanding (and Ignoring) the Media Bandwagon Against Gold - 15th Apr 14
When Stock Market Bubble Crashes, Take Refuge in Gold Stocks - 15th Apr 14
Bitcoin Price Strong Appreciation to Be Followed by Declines? - 14th Apr 14
Greece, Turkey, We're Shuffling The Cards on Our Europe Investing Play - 14th Apr 14
Silver Price Ultimate Rally: When Paper Assets Collapse - 14th Apr 14
Get Your Share of an Extra Trillion Euros Money Printing - 14th Apr 14
Fourth Reversals in The Gold and Silver Charts - 14th Apr 14
Stock Market Nearing Rally in a Downtrend - 14th Apr 14
London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - 14th Apr 14
Four Horsemen - Top Economists Explain the Source of Our Economic Crisis - Video - 13th Apr 14
Peak Oil And Global Warming – A Question Of Culture - 13th Apr 14
The Global Banking Game Is Rigged, and the FDIC Is Suing - 13th Apr 14
College Degree Earnings Propaganda - 13th Apr 14 - Andrew Syrios
Stock Market Potential Diagonal Triangle Pattern Forming - 12th Apr 14
Ukraine Crisis – Military Flash Drive Thinking - 12th Apr 14
Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - 12th Apr 14
Gold Preparing to Launch as U.S. Dollar Drops to Key Support - 12th Apr 14
Manipulated Stocks Markets And The Empty Bag - 12th Apr 14
Stock Market - It’s Not Time to Panic… It’s Time to Buy - 12th Apr 14
Doctor Doom on the Fiat Money Empire Coming Financial Crisis - 12th Apr 14
Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - 11th Apr 14
This Bitcoin Price Rally Might Be a Fake One - 11th Apr 14
GDX Gold Stocks Benchmark - 11th Apr 14
Silver Price Finally Outperforms – How Bullish Is That? - 11th Apr 14
Limits to Employment Participation, and Societal Change - 11th Apr 14
US Moves To Restrict Travelers Taking International Flights - 11th Apr 14
Bill Gross to El-Erian: 'Come on, Mohamed, Tell Us Why' You Resigned PIMCO - 11th Apr 14
British Pound GBP/USD - Double Top or Further Rally? - 11th Apr 14
Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - 11th Apr 14
Russia Invaded Crimea and These US Energy Companies Made a Killing - 11th Apr 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Next Stage of America's Rise to Energy Dominance

Commodities / Natural Gas Dec 07, 2012 - 01:03 PM GMT

By: DailyWealth

Commodities

By Porter Stansberry:

An incredible shift in the global energy markets is going on right now... and it's about to make the United States the world's most important producer of oil and natural gas.
 
Most people don't realize it, of course. Americans are used to thinking of our country as dependent on shaky, hostile nations for our energy needs.

That's changing... fast.
 
Advanced technologies, notably hydraulic fracturing and horizontal drilling, have opened vast domestic resources. Longtime DailyWealth readers should be familiar with this trend... we've been covering it for years. (You can read more here and here.) 
 
But it's safe to say that despite the huge new supplies... I'm bullish on natural gas.
 
In April, just as natural gas was hitting its most recent lows, I told my Investment Advisory readers ...
 
Sooner or later, the price of natural gas will rebound sharply... and not just because it always has in the past. What will propel natural gas prices over the medium term (say, five years) is an economic truism: It's impossible for a surplus of energy to exist for long. As prices fall, more and more uses for natural gas will appear. At some price, natural gas becomes competitive with other forms of energy...
 
The big problem with the natural gas markets isn't that there's too much gas. You really can't have too much energy. People will always consume it, if it's cheap enough. The real problem with the natural gas markets is there's no global distribution.
 
To understand my argument, you need to understand why and how natural gas will become a global fuel, with a consistent global price – just like oil.
 
The prices for liquefied natural gas (LNG) are determined by long-term supply contracts. Little gas is available on the spot market (the market for immediately available gas). And currently, the prices on these long-term contracts are highly variable. In the U.S., natural gas sells for around $3 per thousand cubic feet (mcf). In Europe, it goes for around $11 per mcf. And in Asia, it sells for approximately $17.
 
These price discrepancies present a huge opportunity for investors ...
 
In the U.S., gas production has jumped 20% in the past five years. The International Energy Agency (IEA) reports that last year, the U.S. was the world's second-largest producer behind Russia. The difference in production volumes between the two was a minuscule 3.8%.
 
Last year, Russia produced 677 billion cubic meters (bcm) of natural gas, 20% of the world's total supply. The U.S. produced 651 bcm, 19.2% of world production. Russia exported about 29% of its production, which made it the No. 1 exporter.
 
You might expect that, as the world's No. 2 producer, only a fraction behind top dog Russia, the U.S. would also be among the world's largest exporters.
 
But we're not. The tiny Arab nation of Qatar – with 2 million people, its population is roughly the size of Houston – claims the title of No. 2 global exporter, behind Russia.
 
It produces about 151 bcm a year. That's about 4.5% of the world's annual total... but it ships out nearly all of it – 119 bcm. And resource-rich Australia is ramping up natural gas production for export. Experts say Australia will surpass Qatar in exports by 2017.
 
Even though the U.S. is producing a huge surplus of natural gas, we export essentially none of it. U.S. producers want to export their product to higher-paying markets... But right now, the U.S. has no operating export facility.
 
Cheniere Energy, a company I recommended last July in my Investment Advisory, will be the first. It's constructing a huge LNG export terminal in Louisiana. It expects to start operating in 2015.
 
The company has already signed a 20-year supply agreement with the Spanish natural gas infrastructure and utility company Gas Natural. The Spanish company agreed to buy 3.5 million metric tons of LNG annually... beginning in 2017. Chenier also struck a 20-year deal with the United Kingdom's oil and gas company BG Group. And other customers that are lined up include the Indian gas transmission and marketing company GAIL India Ltd and the Korea Gas Corp.
 
But Cheniere is not the only opportunity out there. This abundance of natural gas is one of the biggest economic trends of my lifetime. And the world needs a lot more LNG infrastructure. Things like LNG export terminals, LNG tankers, and storage-and-distribution facilities.
 
According to an estimate by trade group Interstate Natural Gas Association, North American industries need to invest $6 billion-$10 billion per year to maintain the storage network capable of handling the growth in production.
 
I've pointed out this opportunity to you before. In April, I wrote: 
 
Fortunes will be made as entrepreneurs and investors build the ships and pipelines necessary to take advantage of the higher price of LNG across the world's markets.
 
It's not going to happen overnight... but years down the road, there will eventually be a large, global distribution system for natural gas. Prices around the world will converge. And those holding the best distributions assets will make a fortune.
 
While the surplus of natural gas in the U.S. has most people bearish on the sector, I'm bullish. I know it's impossible for a surplus of energy to exist for long. I know billions will be spent making natural gas a global fuel... with a global price. And I know it will be a boon to companies that transport or are preparing to transport LNG.
 
Good investing, 
 
Porter Stansberry
P.S. My staff and I have performed an enormous amount of research on this trend. We've identified the companies that are small today... and will become enormous in five years (enriching shareholders along the way). But there's a shocking aspect to our research... one that involves Barack Obama. You can see all of the details here, for yourself. No matter if you're a Democrat or a Republican, you'll probably be surprised at what is around the corner...

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2011 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014