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Presidential Gas Investments

Nat Gas Control: Obama's Ace in the Hole

Written by Keith Kohl
Posted May 17, 2012 at 6:54PM

If you haven't noticed by now, true energy independence is at the end of a long and winding road of broken promises and wordy speeches.

We know the song and dance all too well.

It begins with a few notes about eliminating U.S. dependence on foreign oil entirely, followed by a two-step over renewables alleviating a very serious decades-long addiction to crude.

It's been done eight times since Nixon took the oath of office in 1969 — and with every repeat performance, we nod our heads and clap along.

It should be noted that the presidential dedication to energy independence doesn't come without a bit of humor...

The 32 solar panels that Carter installed on the White House were promptly taken down as soon as Reagan took a seat in the Oval Office. In fact, it was one of his first executive decisions.

So where are we today, 36 years into listening to the same broken record?

It appears the next 25 won't be much different:

aeo fossil fuels

So what's the solution to our energy independence that the last eight U.S. leaders have missed?

It's so simple, it's complicated: access to cheap energy.

Granted, our move away from oil won't happen overnight (and I wouldn't pay much heed to anyone saying it will)... but it will happen.

Over the last year, investors have been successful banking on future LNG exports.

LNG exports 5-17

U.S. LNG is the bandwagon everyone's jumping on — and the same place they could end up getting burned.

So far, our Commander in Chief has been supportive of LNG exporting projects.

(Were you expecting anything different during an election year?)

I, for one, am not expecting our future flood of shale gas to hit foreign shores just yet. The uproar we talked about last week still hasn't been felt.

Here's the catch: Obama doesn't have to openly oppose it. Because buried deep in the government's archives is a particular piece of legislation that's been tucked away for decades...

The Export Administration Act of 1969 effectively gave the president the authority to limit or suspend exports of U.S. commodities (among other things) in the interest of national security, short supply, and foreign policy.

I can think of a few individuals who consider our domestic energy supplies — specifically, our cheap natural gas — an interest to national security.

Right now, natural gas costs roughly the same as a $15 barrel of oil.

A best-case scenario wouldn't collapse current oil prices that low.

When the first shipments of LNG depart from Gulf Coast facilities, the inevitable outcome would be rising domestic natural gas prices.

When that happens, how long until political pressure reaches a boiling point for the current president?

More importantly, is there a way for us to properly prepare for the upcoming shift to natural gas?

On the one hand, low prices have been crushing North American gas producers; on the other, future LNG exports could be nipped in the bud by pushing the right political buttons.

Prepare Your Portfolio for the Flood

There's a better way to invest in natural gas — and it isn't from potential exporters whose shipments could be cut with the snap of presidential fingers.

Just as we saw in the early days of the U.S. petroleum industry, the real investment potential lies with infrastructure. 

According to EIA data, there are more than 210 natural gas pipeline systems and over 300,000 miles of transmission pipelines across the United States:

u.s. gas pipeAdd to that 1,400 compressor stations, 11,000 delivery points, 24 market hubs, and over 400 underground storage facilities... and we're still not prepared for the transition from oil.

Though we've covered several of these infrastructure plays recently, the real money here is in supplanting oil's domination in the transportation sector.

When millionaires are filling up their trucks for $1 a gallon, it's a no-brainer to hop aboard.

That's the direction we're headed.

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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