Mayor Bloomberg might not let you supersize your soda in New York City, but he doesn't seem to mind fracking in his backyard. In an op-ed letter to The Washington Post last week, Michael Bloomberg came out in support of responsible hydraulic fracturing to extract natural gas. As a political and financial superpower, Bloomberg carries clout in influential circles. Let's see how his words hold up to analysis and how you can invest in this billionaire's big bet.

It takes two to tango
Mayor Bloomberg co-wrote this op-ed with George Mitchell, the "father of fracking." Mitchell is lauded as the creator of hydraulic fracturing, a process that extracts natural gas horizontally from any vertical well. The process has been around since the 1980s, but only recently has natural gas become economically competitive for general use.

In 2002, Mitchell sold his industry-creating company (and its rights to the lucrative Barnett Shale) for $3.5 billion to Devon (NYSE: DVN). Since then, Devon's stock has shot up 240%, for an adjusted 12% annual return.

Mitchell makes a formidable sidekick. The Texan engineer adds scientific legitimacy to Bloomberg's argument, as well as a hefty chunk of change via Mitchell's research foundation.

To frack or not to frack
The title of Bloomberg's op-ed says it all: "Fracking is too important to foul up." The Mayor concedes the shortcomings of natural gas extraction but considers them concerns rather than conclusive cons. Known for his hard-handed pragmatism, Bloomberg critiques those on both sides of the issue. He doesn't mince words, admonishing the "loud voices at the extremes" that either want to ban fracking or ban banning fracking.

Bloomberg considers himself a voice in "the sensible center" and spells out his argument in a simple list. Domestic natural gas production:

  1. Reduces energy costs.
  2. Spurs economic growth, with special focus on industrial jobs.
  3. Reduces our dependence on dirty and depleting coal.
  4. Can be used in conjunction with renewable energy to generate electricity.

I'll tackle the first two points here, but be sure to check back for a follow-up highlighting Bloomberg's take on natural gas versus other energy sources.

Reduces energy costs
The U.S. ranks first in the world for natural gas production and fifth in total reserves size:

Nat

Source: CIA World Factbook.

Nat

Source: CIA World Factbook.

Dividing billions by septillions, my current estimate is that the U.S. has used 7% of its available natural gas reserves. New discoveries and improved extraction technology continue to drive up supply, meaning that this fuel is currently one of the most affordable energy sources around. At least for now, Bloomberg is right that natural gas is cheap.

Economic growth and industrial jobs
Natural gas will become increasingly important to the American economy. As the U.S. cycles out of older energy sources such as coal and oil, natural gas will provide (at least temporarily) an affordable alternative-energy source.

On Bloomberg's job-creation theory, I find myself unable to comment. The American Gas Association states that the industry currently employs 2.8 million people in drilling and manufacturing , but a quick check on the Bureau of Labor Statistics puts direct employment at 130,000, with slower-than-average 8% growth. As we've seen with the recent recovery, economic prosperity does not imply job creation, and the jury's out on whether natural gas will really be the job boon it's touted to be.

Foolish bottom line
Bloomberg and Mitchell are putting their (considerable) money where their mouths are, donating $8 million to organizations lobbying for fracking regulation in line with their "sensible center." The five main pillars of their advocacy work are:

  1. Disclosing all chemicals used in the hydraulic fracturing process.
  2. Optimizing rules for well construction and operation.
  3. Minimizing water consumption, protecting groundwater, and ensuring proper disposal of wastewater.
  4. Improving air-pollution controls, including capturing leaking methane, a potent greenhouse gas
  5. Reducing the impact on roads, ecosystems, and communities.

Source: Washington Post.

Natural gas proponents will be happy to see someone as prominently placed as Bloomberg supporting fracking, while opponents can find some solace in the fact that this new funding will ideally increase regulation and transparency in the natural gas sector. Bloomberg's op-ed letter comes at a decisive point in the debate on natural gas and could symbolize the beginning of a more fact-based approach to examining this fuel's future.

While the getting's good
Bloomberg's words come as music to many shareholders' ears as the sector continues to attract more investors. If you're looking to get in on natural gas, grabbing an ETF like United States Natural Gas Fund (NYSE: UNG) or First Trust ISE Revere Natural Gas (NYSE: FCG) will get you sectorwide exposure without having to pick specific winners and losers. Both ETFs are in the red for the past five years, so now might be the time to invest before natural gas takes center stage.

If you're looking for secondary exposure, take Cummins (NYSE: CMI) or Westport Innovations (Nasdaq: WPRT) for a test drive. These natural gas engine manufacturers put tens of thousands of natural gas-powered trucks on America's roads, and sales for both companies continue to rise. Cummins' stock has risen 110% in the past few years, while Westport's has risen 250% for any shareholder wise enough to invest in 2009.

UNG Chart

UNG data by YCharts

Bloomberg or not, natural gas isn't going anywhere anytime soon, and ETFs are the perfect way to grab a big ol' diversified piece of this sector's pie. As the recovery strengthens, there are three other ETFs that will give investors excellent exposure to emerging markets, energy, and the technology sector. The Motley Fool has prepared a special free report, "3 ETFs Set to Soar During the Recovery," outlining exactly what you need to know to win big as the U.S. economy picks up its pace. It's as free as this article and available for a limited time only, so be sure to grab your copy today.