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Mailbag: A Timeline for the Natural Gas Revolution

by Dr. Kent Moors | published February 22nd, 2012

The energy markets are really heating up right now.

With gasoline prices surging to historic highs and natural gas prices falling to historic lows, we’ve gotten many questions lately from subscribers wondering about the best ways to play the energy markets.

So, I want to take the time right now to answer a great question I got about natural gas last week, and, in the process, provide you with a timeline for you to profit on the coming “natural” revolution.

Remember, if you have a question or a comment of your own, be sure to register below and type your thoughts into the box. We’d love to hear from you.

Q: Can you give us a timeline as to when gas will be in such great demand? What is “long term” as you put it for our investments? Thank you for your expertise on the gas and oil investments. ~ Jere R.

If you watch CNBC or any of the other financial news channels, you’re probably hearing a lot about the opportunity to invest in natural gas. They’re chatting up natural gas vehicles, pipeline companies, and anyone else who is pulling this stuff out of the ground.

But what they don’t discuss are the fundamentals. And if you are too swept up in the hype to acknowledge them yourself, you could miss out on some of the best opportunities to invest.

That’s why I chatted with Kent about this question last week, to get his take.

What we want to evaluate is natural gas’ long-term prospects.

And the reality is, natural gas has a very bright future in the United States.

Kent argues that the crux to increasing gas demand will be realized from four events.

Three Ducks in Little Rock (Why They Matter)

by Dr. Kent Moors | published September 30th, 2011

Legend has it that one weekend some 80 years ago, Frank Schutt, then the general manager of the famed Peabody Hotel in Memphis, had gone duck-hunting in Arkansas with some good ole’ boys. They had been imbibing a bit too much Tennessee sippin’ whiskey. And on their return, Frank thought it would be funny to put their live decoy ducks (it was legal back then for hunters to use live decoys) in a beautiful fountain – smack dab in the middle of the hotel’s lobby.

Three small English call ducks were chosen for the prank.

But the ducks soon became so famous, they stayed. They’re still there.

Every afternoon at 5, the duck master comes out to a crowd of onlookers and marches the three residents from their fountain to their residence, only to return – to much fanfare – the next morning.

In the intervening years, the traditions extended to other Peabodys. Today, it continues at only a few. The gorgeous high-lobbied edifice in Little Rock is one of them.

That’s where I was yesterday, giving the annual keynote address to the Arkansas Independent Producers & Royalty Owners Organization.

These are the oil and gas operating companies that work to bring up both conventional and unconventional (mainly shale gas) volume in the state.

With cameras at the ready, a crowd of people swarmed together in the hotel lobby that morning.

But not to hear me.

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Europe’s New Economic Crunch (Oil Prices Sure Aren’t Helping)

by Dr. Kent Moors | published September 16th, 2011

As we sit down here in Krakow to begin government sessions on shale gas policy, and European Union ministers meet in the southwestern city of Wrocław, Poland, thoughts are turning once again to oil pricing…

In case you haven’t been watching, Brent prices in London trade are accelerating, approaching $113 per barrel, while the West Texas Intermediate (WTI) benchmark traded in New York is about to break the $90 per level again.

The spread between the two remains at all-time highs, indicating that Brent will continue to appreciate quicker than U.S. pricing, although both are rising.

That spread is “in favor” of Brent.

This creates a continuing problem for the E.U., which is faced with mounting eurozone currency and liquidity problems, weakness in its banking sector, and a European Central Bank that’s experiencing dissent – within its own ranks – over the proper course of action.

Today’s meeting in Wrocław concerns whether Greece will receive the next tranche of a bailout package. That package is already widely perceived as being insufficient to prevent some sort of Greek default. Plus, the Germans are taking a hard line on what is necessary for that largess to keep coming.

Meanwhile, the internal dispute is getting intense.

A good example is the decision made this morning by the ministers. Or actually the non-decision. The ministers decided… not to decide until next month.

The prospect of higher prices for Brent further complicates matters with the common currency.

The euro has been losing ground against the dollar throughout the latest period of the debt crisis. Of course, that says less about the dollar’s strength that it does about the euro’s enduring weakness.

That, combined with a rise in the cost of energy, means Europe is facing the prospect of a new economic crunch.

This one has the potential of completely derailing this continent-wide recovery already distinctive for its anemic performance.

In Krakow, Too, Our Problem Is Oil

There are essentially three reasons Poland has decided to expedite decisions on developing its domestic shale gas.

First, they may well have a lot of it. The estimate I will be giving them puts the extractable reserves in the five basins already identified in the country at more than 187 trillion cubic feet, or five times the rest of Europe combined.

Second, Poland is dependent upon Russian imported gas, introducing the latest stage in a political disagreement 500 years in the making.

But it is the third reason that is most compelling…

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