By MoneyMorning.com.au
‘By far the best way to eliminate tailpipe emissions is to eliminate tailpipes’
US oil billionaires, Robert Hefner III and T. Boone Pickens have championed natural gas as oil’s successor for around 15 years. They’ve done this mainly by pushing the ‘green’ attributes of natural gas. Calling it ‘the bridge’ to a cleaner future… Which it may be in some ways…
Pickens even has a plan – The Pickens Plan – to replace petrol and diesel fuel with compressed natural gas (CNG).
(The Pickens Plan used to include wind energy. But in December 2010 he revamped it to focus exclusively on natural gas. As reported on MSNBC, ‘Pickens said low natural gas prices have made utility companies view wind power as too expensive. “You’re going to get natural gas prices up, or wind — it just isn’t gonna happen.”‘ )
The thing is, even if natural gas is not the bridge to cleaner energy, enough people believe it is to make it worth thinking about as an investment.
Even the US Environmental Protection Agency (EPA) is throwing its weight behind the move towards gas.
From wealthwire.com…
‘Last week, Lisa Jackson spoke on behalf of the EPA at an energy conference in New Jersey regarding the fracking debate.
‘According to Jackson, there’s “only an upside to hydraulic fracturing.” It will greatly benefit the economy through job creation; but that doesn’t necessarily mean the environment has to suffer like many critics claim…
‘Instead, Jackson explains that fracking can be clean, it just requires technology that will ensure the process is handled properly.’
On top of that, EPA research reports a Honda Civic powered by CNG travels the same distance as a petrol-powered Civic per kilowatt hour. And it emits 11% less carbon dioxide.
Of course, CNG-powered cars still ‘burn’ fuel and pump carbon dioxide through their exhaust pipes.
But with natural gas replacing coal at the power plant, electric cars become even cleaner. Bloomberg reports, ‘Encouraged by the availability of inexpensive and cleaner domestic gas, some electric utilities are replacing their coal-burning capacity with gas-fired units.’
That is the power of the market.
People who buy electricity want something cleaner… and something cheaper.
So here you have two converging ideas…
- We Need to Replace Expensive Oil
- We Need Clean Energy
And now they’ve collided to make natural gas an attractive investment opportunity.
Is natural gas going to replace oil as the dominant energy source?
To answer that, let’s take a look at an excerpt from a recent update of Kris Sayce’s investment newsletter, Australian Small-Cap Investigator…
Gas Demand to Quadruple
‘There was a chart and comment [from the recent Coal Seam Gas Risks and Returns Conference] I found interesting…
“In BP’s recent World Energy Outlook, they stated the world will consume 30% more energy in 2030 than it does today.
“Once source of power has always dominated the energy mix. Wood in the pre-industrial age, coal in the industrial revolution and then oil in the 20th century.
“The proven world oil reserves in 1990 were, 1.0 trillion barrels, in 2000 1.3 trillion barrels and in 2010 1.5 trillion barrels, so oil reserves are growing. If new technologies and operations are implemented oil reserves can grow significantly.
“By 2030 trends in the energy mix will see fuel shares converge for the first time as gas gains in importance.”
‘If oil reserves are growing, they aren’t growing at a rate fast enough to either, a) maintain oil’s share of energy consumption, and b) to cause a major fall in the oil price.
‘That’s not to say it won’t happen. But now, with natural gas so cheap and new technology and processes resulting in big discoveries now, a shift is definitely taking place – away from oil, and into natural gas…
‘[B]illions of dollars are going into developing Australia’s natural gas and liquefied natural gas infrastructure. And that’s not surprising considering the expected quadrupling of demand:
‘Natural gas stocks have gotten off to a good start in 2012.
‘And if I’m right about natural gas replacing oil as the dominant energy source over the next few years, you can expect to see an even better future for natural gas stocks.’
Aaron Tyrrell
Editor, Money Morning
Publisher’s Note: To see more from Kris, please go here to learn more about Australian Small-Cap Investigator.
From the Archives…
The Stock Market Financial Winter is Coming
2012-03-02 – Dan Denning
Why You’ll Want to Watch This ‘Bad’ Retail Stock Very Closely
2012-03-01 – Kris Sayce
Higher Oil Prices – Government Guaranteed
2012-02-29 – Dr. Alex Cowie
Asymmetric and Economic Warfare with Iran
2012-02-28 – Dan Denning
Why the Greek Debt Crisis Has Nothing to Do With the Euro
2012-02-27 – Nick Hubble
