Time to Get Bullish
on Natual Gas
Denishia Martin's Energy Outlook
With
storage levels reaching near capacity, the price of natural gas drops lower
and lower. The American Gas Association reports that natural gas storage
now is 73 percent of capacity causing both storage activity and prices to
stall, at least for now. Everything shifts to the "Hold" mode
from now until autumn when usage will pick up and prices will follow suit.
Natural
Gas prices for September delivery from the Henry Hub in Louisiana, which
handles the bulk of Gulf Coast production, fell by 6.2 cents to the lowest
price per thousand cubic feet since March 1997. The September price is at
$1.84 per thousand cubic feet. The 3 percent drop represents a 16-month
low due to the excessive amount of gas already set aside for the coming
winter's demand.
Prices
are low; demand is low; production is low, now is the time to buy! Now is
the time to buy stock in exploration and development companies because their
stocks will follow the trend of the market and right now all energy companies'
stocks are far undervalued. These companies have little incentive in this
market to aggressively pursue the production of more gas when the market
is low and the demand is even lower. Now is the time to add these companies
to the portfolio because this situation won't last long.
America,
like the rest of the world, must move toward an energy source that is more
efficient, cleaner, and, perhaps most important of all, domestic. Natural
gas is the energy of choice to meet all criteria.
"Efficient Energy"
Means Increasing Demand
Natural
gas is America's best energy value. Compared to electricity, gas is four
times less expensive for residential use while heating oil cost about 15
percent more than gas. Over the years natural gas has become increasing
popular for both residential and industrial usage and hit an record high
in 1998, a 35% increase just the last decade.
Matthew
Simmons, president of Simmons & Co. and a 21-year veteran of the oil
and gas industry, explains his reason for loading up on natural gas stocks,
"Demand has been growing 3.5% per year for the last eight years, and
its projected to grow 3.8% this year, if by the year 2,000 we've had another
couple years of the same 3.5% compounded growth rate-to be able to deliver
that means that we basically have to find and have in production the equivalent
of a brand new Gulf of Mexico or a brand new Canada and, in addition, to
have found had replaced 70% of our current production. We can't do it. It's
impossible."
With
the merging of the natural gas and the utility market, natural gas demand
will continue to grow at even greater rates. Natural gas utilities are important
to the nation and its economy. Gas utilities employ more than 170,000 people
in all 50 states, with an annual payroll of nearly $8 billion. Natural gas
provides about 25 percent of all the energy used in the United States; one-third
of the total consumption excluding transportation fuels. Right now, in this
country, natural gas utilities operate and maintain more than 1 million
miles of safe, efficient underground pipesan energy delivery system that
is the envy of the entire world.
Clean - That's natural
gas!
Natural
gas is the cleanest and most efficient fossil fuel. As today's "fuel
of choice" increased use the environmental-friendly energy can help
address several environmental concerns simultaneously, including smog, acid
rain and greenhouse gas emissions. Historically, most electricity in the
United States comes from coal, which produces far more emissions than natural
gas but today using natural gas to replace electricity in heating systems
and appliances is better for the environment. In addition to being clean,
natural gas is inherently efficient about 90 percent of the gas produced
is delivered to the customer as usable energy. In contrast, only about 27
percent of the energy converted to electricity reaches the customer. More
and more consumers are now using gas utilities, in fact, approximately 60
million customers now use electricity generated from natural gas.
Domestic pride
Made in America!
Natural
gas is safe, reliable and it's made in America. Currently, about 99 percent
of the natural gas used in the United States comes from North America and
supplies are abundant. And, while prices are currently depressed, soaring
worldwide demand and supply concerns ensure an uptrend is forming. Now is
the time to invest in the companies who will make America, and American
investors, proud! Here are a few to keep an eye on: Tengasco (OTC: TNGO);
Harken Energy (AMEX: HEC) and Kismet Energy Corp. (OTC: KISS) See report
on Kismet Energy Corp. produced by Natural Resource Investor below.
Editor's Note: Denishia Martin is a free lance writer for the oil and
gas industry and a regular contributor to the Bull & Bear Financial
Report. She is also the founder and president of Martin & Sons,
Inc., a public relations firm specializing in the oil and gas industry and
providing investor relation services to emerging natural resource companies.
All information included is copyrighted and available for reproduction only
through reprint by permission. Unauthorized reproduction is strictly prohibited.
Contact Ms. Martin at 1213 High Street, Bowling Green, Kentucky 42101 or
at 502-793-9475 via fax @ 502-782-5713 or E-mail: DenishiaM@aol.com.
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