If you are like me, you might be interested in looking for beaten down and dramatically undervalued securities in the natural gas sector. With natural gas prices at less than $3 there aren’t many wells being drilled in the U.S. that make any money. At some point economics 101 will have to have some serious impact and supply will be reduced.
The other side of the equation of course is demand, and Boone Pickens has been pushing for the U.S. to capitalize on the abundance of this alternative fuel to Middle Eastern Oil.
In a couple of years a reduction in supply and an increase in demand could result in some very successful investments should one pick the right natural gas companies today.
Pickens was on CNBC and here are his comments:
- There is only one place where oil supply is rising and that is the U.S.; as a result we have the cheapest oil in the world today.
- Natural gas is $2.50 in the U.S. vs. $13 plus everywhere else in the world.
- Natural gas is obviously a commodity with too much supply.
- Believes oil will move up. The world demand is about 90 million barrels a day, and that is about all the world can produce. There isn’t much room for error.
- Thinks $125 WTI is likely this summer.
- Has been surprised that natural gas drillers haven’t laid down more rigs.
- Heavy duty trucks are moving to natural gas, it is a no-brainer to do so.
- Unbelievable opportunity for the U.S. to have the cheapest energy in the world.
- Believes the Keystone Pipeline will eventually be done, the U.S. has to or the oil is going to go to Asia.
- There are 8.5 million 18 wheelers in the U.S. which use 2 million barrels of oil a day; switching those to natural gas would cut OPEC reliance in half.