Natural gas prices were stagnant for a decade, but have been on the rise. Demand has increased as people and businesses switch to burning natural gas for energy. This makes the companies who venture in natural gas exploration and production more popular for investors.
Natural gas is an abundant, inexpensive and commonly used source of energy. Demand for natural gas is growing at twice the rate of oil each year, making it reasonable to assume your investments will pay off and grow even more.
Companies in the United States are producing so much natural gas, they are exporting it to other countries. Demand for U.S. natural gas from Asia and Europe is expected to increase by 20% over the next several years. Europe gets most of its natural gas from Russia. However, current tensions — as well as increased U.S. production of natural gas — have given Europe another choice.
Natural gas use on the rise
Natural gas has surpassed coal as the primary source of power production across the country. Since natural gas prices remain low, more cities, companies and individuals are switching to it. In 2010, 44% of power plants used coal. Since then, this has dropped to 30%. As natural gas prices drop, the number of power plants using natural gas rise.
In 2016, the United States consumed over 27 trillion cubic feet of natural gas. This accounted for roughly 30% of the United States’ energy consumption. Just over one-third of that natural gas was used to generate electricity, while the remaining two-thirds were used roughly equally among homes and businesses.
Natural gas is still a fossil fuel, but it burns much cleaner than coal, which makes it a better choice and an inexpensive way to comply with stricter environmental regulations being imposed on power plants. Renewable energy would be even better, but the technology is not quite there and the costs would be much higher than natural gas at this stage.
Natural gas versus propane
Natural gas is much cheaper than oil. Many people have paid to convert their furnaces to gas, which burns cleaner and more efficiently than oil. Many homes, especially in rural areas, still use propane, a gas in liquid form that is stored in a tank outside the house.
At current prices, natural gas is cheaper than propane. However, both prices will fluctuate just like everything else. In addition, it depends on how efficient your appliance runs while burning each fuel. In some cases, propane may be more efficient.
Natural gas is piped into your home, so it will never run out unless there is some sort of catastrophe. If a propane tank runs out, it is empty until your provider fills it. That said, propane is arguably more portable than natural gas.
You can have a propane barbeque grill hooked up to a propane tank anywhere you want. If it is hooked up to a natural gas line, it must stay where the connection is. Propane can also power your gas appliances just as well as natural gas. Some people like the independence of propane and not having to depend on a utility company.
Investment equals growth
As more money comes in from investors, production will increase to meet the demand. There will be better pipelines and more sources of natural gas. One of the drawbacks of natural gas is that since it is a gas, it cannot be stored in a warehouse like coal.
Natural gas needs to be stored in tanks and pipelines. Precautions must always be taken to ensure the gas does not leak into our environment, or worse, ignite and explode. Our infrastructure is not ready to handle the supply of natural gas. As long as we continue to remedy this, production and demand will increase.
Growth equals independence
Another benefit of natural gas is it is not controlled by less-than-friendly governments in the Middle East. The United States could someday see itself much less dependent on foreign oil and in a more powerful position producing its own natural gas. Supply and demand will determine the price for natural gas, unlike oil prices that are manipulated by OPEC or other cartels.
Estimates vary, but the U.S. sits atop natural gas reserves that could power the world for over 100 years. Imagine how different geopolitical relationships could be if we relied on our own sources of fossil fuels while developing and perfecting renewable resources. For now, natural gas is the cheapest, most abundant and cleanest fossil fuel available.
Natural gas is a wise investment
If you have money to invest, put it in energy exploration companies that find and produce natural gas for U.S. and worldwide consumption. Invest in companies that create the pipelines and infrastructure to make natural gas available to power plants and communities in both urban and rural areas.
Investors can rest assured knowing their money is safe and their dividends will grow. Their investment will make U.S. energy cleaner and cheaper. Investors putting their money in these commodity stocks will help build a new energy grid and change the way we use energy.
With the increase in natural gas consumption and the decrease in dependence on foreign oil, investments in natural gas will make the U.S. more energy efficient and more energy independent. Natural gas is a wise investment.
