The New Wildcard in the U.S. Energy Poker Game

Natural gas prices are at the highest levels in four years, yet many were not prepared for this.

Feb 2, 2014 at 1:21PM

Talking to countless energy executives in recent years, I can vividly recall conversations with various senior leaders of major energy companies who adamantly told me the price of natural gas would remain depressed for years to come. Ever a 'glass half full' debater, I often posed the very simple question: What if natural gas prices were to suddenly rise? The responses would typically vary from "well, they won't," to "we are swimming in gas so that's not likely," and my favorite, "we'll worry about that when the time comes." That last one is great management, right? 

In any event, thinking natural gas prices would remain at 40-year lows is foolish. The sheer fact we are using or planning to use more and more natural gas in residential heating, in cogeneration plants, and in transportation suggests demand is rising and supply can't and won't stay in a nirvana-like state. Why? Pipeline disruptions can and do happen from time to time, there is increased discussion about exporting natural gas, and natural gas will likely be used in conjunction with renewable energy sources to help offset older coal plants that are retiring. 

So who wins and loses if the new wildcard is dealt to the American people? Well, producers of natural gas such as Chesapeake Energy (NYSE:CHK), Devon Energy (NYSE:DVN), and Anadarko Petroleum (NYSE:APC) are surely beneficiaries of higher natural gas prices, but utilities like Duke Energy (NYSE:DUK), NRG Energy (NYSE:NRG), and others may be hard-pressed to raise consumer prices. They may suffer before blessing the passing of costs along. I'm all for electric vehicles, but unless storage solutions develop sooner than later, consumers may begin to think twice about charging their vehicles, especially if they just switched over to natural gas in their homes and escalating natural gas prices hit their wallets.

With natural gas prices now at the highest levels since August 2010, the wildcard of continued rising prices could disrupt a lot of "hopium" that this power source was the ultimate key to our energy independence. Without emphasizing more renewable energy sources here at home, the bridge fuel that is natural gas is a dangerous trip for consumers, especially if that bridge is not leading them to the diverse, low-carbon power sources that really should come next. 

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John Licata has no position in any stocks mentioned. The Motley Fool owns shares of Devon Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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