Big upside breakout is bullish for natural gas. Excess inventories are coming down and investors are likely realizing that as a result of BP oil spill, now more than ever higher U.S. natural gas use is necessary. … [Read more...]
A 500% Return in High-Yielders
Do you invest in master limited partnerships (MLPs)? MLPs are publicly traded limited partnerships. They combine the tax benefits of a limited partnership with the liquidity of a publicly traded security. MLPs pay no entity-level tax. They are pass-through entities. MLP unit holders are allocated a proportionate share of the revenue and expenses of the partnership. Most of the publicly traded partnerships in the U.S. are in the energy transportation and storage business. These are the companies that own the pipelines and storage terminals that move oil and gas from the oil fields to the … [Read more...]
The Future of Oil Demand
According to the International Energy Agency, Organisation for Economic Co-operation and Development (OECD) countries'–i.e., rich countries'–oil demand peaked in 2005 near 50 million barrels per day. OECD oil demand is down 10% from the 2005 high, yet total oil demand is up over the same time period. The reason of course is that oil demand in non-OECD countries has risen 50% over the last decade–a 4% compound annual growth rate. Global economic growth is the primary driver of oil demand. My Oil Demand Growth vs. Economic Growth chart shows that economic growth and oil demand growth are … [Read more...]
Young Research’s Favorite Energy Play
A conservative way to play a potential rise in the prices of natural gas, coal, and even oil is to invest in renewable power. In an environment of rising fossil-fuel prices, renewable power generation assets benefit the most. Why is that? The majority of the power generated globally comes from fossil-fuel-based inputs such as coal, natural gas, and oil. If the price of natural gas rises, for example, natural-gas-fired power plants would face higher costs. Those higher costs would of course be passed on to consumers in the form of higher electricity prices. Since prices are set at the margin, … [Read more...]
A Miracle Metal
Nature's supply of the element thorium is virtually unlimited. This silvery-white metal is mildly radioactive and wouldn't do you much harm if you carried a piece around in your glove compartment. A recent well-done technical paper in Wired estimates that a liquid fluoride thorium (LFT) reactor uses only one ton of raw thorium per gigawatt output. For a uranium-fueled light water reactor, 250 tons of raw uranium are required. The annual fuel cost for a LFT 1-gigawatt reactor is estimated at $10,000 versus $50 million to $60 million for uranium. The proliferation potential for LFT reactor … [Read more...]
Commodities Investment
Since 2005, investment in commodities futures funds has increased over 200% to an estimated $250 billion. Some of the biggest inflows to commodities futures funds have been from institutional investors—pensions, endowments, and foundations. Not by mistake, the institutional crowd moved into commodities futures just as a powerful bull market was getting under way. Institutional investors are just as susceptible to performance chasing as the average investor, but they would never admit it. The institutional crowd will instead tell you that they are investing in commodities futures funds for … [Read more...]
Commodities Demand
Did you know that China accounts for close to 40% of the consumption of aluminum, copper, lead, tin, zinc, and nickel? China is by far the most important consumer of industrial metals. China is also a large consumer of energy and agricultural commodities. If you want to know what the outlook for commodities demand looks like over the coming decade, look to China. If the Chinese economy is growing, it is safe to assume that demand for commodities is on the rise. In the fourth quarter, China’s GDP growth was over 10%. So commodities demand is likely on the rise, but what about supply? You can't … [Read more...]
Natural Gas Rising
December 18, 2009 My goal for American security and safety is to cut oil use by 50%, driving the price of oil back to the $10 per barrel level of a decade ago. Americans can in fact achieve this goal by changing over our ground transportation and home heating mix from oil to gas and electric. Exxon has now made a huge domestic gas bet by seeking to acquire our #3 U.S. natural gas production player. These are America’s top 10 natural gas producers: 1.BP 2.Anadarko Petroleum 3.XTO Energy 4.Chesapeake Energy 5.Devon Energy 6.ConocoPhillips 7.EnCana 8.Chevron 9.Exxon … [Read more...]
Top 10 Mistakes #7
September 11, 2009 How does a triad of a 20% prime rate, $200-per-barrel oil and $2,000-per-ounce gold sound to you? Are these numbers possible, or even probable? Oh yeah! And, in fact, the record-breaking deficits and printing press activity at home suggests these numbers may be underestimated. If Israel attacks Iran’s nuclear sites (a 50/50 bet), you’ll perhaps see oil prices well above $200 per barrel. Your strategy is to protect yourself from such an outcome while exposing yourself to minimal risk if you are wrong. In my strategy reports, I write about what you should do. And as a client … [Read more...]
Get It While It’s Cheap
Natural gas is super cheap today, but it could get cheaper before the cycle is over. There is an abundance of it. U.S. storage capacity is almost full. If excess production does not drop before capacity fills up, the price of natural gas is likely to weaken. Natural gas is out of favor. The momentum crowd is bailing out, driving prices below the cost of production. Smart successful investors move against the crowd. You want to be a buyer when everybody else is selling. Long term, today's depressed natural gas price is unsustainable. It has to rise. Gas is cheap, clean, and available in … [Read more...]