The Coming Energy Shift

Shaping U.S. Energy Policy

By

The tabloids haven't picked up on the latest scandalous affair in Washington...

After last November's election, it should have been obvious our commander-in-chief was wooing a new energy mistress.

This courtship has been taking place for years. It was going on before he took our nation's highest office. In fact, he openly confessed in his speech at the 2008 Democratic convention: “As president, I will tap our natural gas reserves.”

Remember, this was before the words shale gas had become a household phrase. In 2008, activity the Barnett play was just beginning to take off.

Despite our president's overwhelming desire to push through green energy no matter the cost, it seems Obama's finally ready to embrace the natural gas boom with open arms...

And the first sign of a shift in U.S. energy policy could take place any day now.

In the wake of recent Senate confirmation hearings and testimonies on the Hill, one resignation may have slipped through the cracks: Stephen Chu has left his post as the Secretary of Energy.

Chu assumed the position on January 21, 2009, the day after Obama was sworn into office. He helped push the green agenda that's come under fire during the last several years, giving him more than a few nicknames — including "Mr. Solyndra."

Whoever takes over for Stephen Chu will have some difficult decisions to make regarding our future energy security. But Chu's departure serves to leave the door wide open for the next phase of our natural gas boom.

And if the new Energy Secretary's sentiment regarding U.S. energy policy is anything like those echoed recently by the ranking Senate member on the Energy and Natural Resources Committee, it'll be like shooting fish in a barrel for individual energy investors...

Political Love Affair Brewing

It seems Obama isn't the only politician with a growing love for natural gas.

Hoping to kick-start a national conversation on energy, Senator Lisa Murkowski released a report about America's energy future. (You can access the full report, called "Energy 20/20: A Vision for America's Energy Future," here.)

The report outlines a simple goal: Independence from OPEC by 2020.

In other words, we're supposed to replace the equivalent of more than four million barrels per day in the next eight years.

Murkowski's report outlined several strategies to achieve this objective — including the development of our domestic oil & gas and coal resources, as well as renewables.

But according to Murkowski, “Energy should be abundant, affordable, clean, and secure." So we can remove coal and renewables from the list right off the bat, since both conflict with one or more of those criteria.

That leaves one source of energy that meets abundance, affordability, security, and is a "clean" source: our old friend, natural gas.

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The Path Forward is Paved in Gas

Developing our domestic natural gas resources is the key if we stand a chance at energy independence.

Our dependence on imported fossil fuels may be gradually decreasing, but in order to alleviate it entirely, we'll need to replace an equivalent of more than four million barrels per day.

OPEC Imports 2-8

(We'll review in detail the many reasons we'll never completely cut ties with OPEC members next week, but keep in mind that there are only a few ways to reduce imports from them.)

So as we transition to natural gas, finding gains in the market will prove one of the easiest and most consistent ways to make money.

Not only have natural gas prices have already rebounded 77% since last April, but production is consistently breaking new records. In 2012 we extracted over 29 trillion cubic feet of gas from beneath U.S. soil. This year, we'll be on pace to surpass 30 trillion cubic feet.

It's practically impossible not to be bullish right now.

The transition to natural gas will take place for years to come. And contrary to popular belief, the most profitable investments won't necessarily come from the drillers. That's because the real story behind natural gas will come with a bit of a twist...

It's an approach few investors will take advantage of. The best players are the companies developing the infrastructure so desperately needed to supplant crude oil's dominance over our transportation sector — and none of them need to produce so much as a single cubic foot of natural gas to remain profitable.

Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.


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