Category

Energy

Energy Investing

This Shifting Balance Will Have a Huge Impact on Energy Investors

I have written several times in Oil & Energy Investor about the shifting energy balance worldwide, stemming from the need to prioritize among both traditional and new sources.

This will have a huge impact on how you invest in the sector.

As the new balance emerges, we will see a realignment of global energy prices, and both the sourcing and use of energy will open up significant opportunities worldwide.

We are already beginning to see the revisions working themselves out among the world's most developed nations.

Yet this time around, the changes will have the most positive effect on those regions usually left out of the picture. These regions have the lowest economic diversification, relying largely on sporadic, inefficient, and ecologically damaging energy sources.

Because of high pricing considerations – prompted by collapsing power generation, rusting refineries, and deteriorating delivery infrastructures – people in developing countries are usually cut off from market expansion taking place elsewhere.

In spite of such problems, these countries will provide major demand increases going forward, resulting in significant changes to the international market landscape.

And a damaging cycle that's been churning for half a century will begin to break down…

Energy Markets

Why I Cancelled Everything in Germany and Took the Next Flight to Dubai

Something big unfolded on my trip to Frankfurt last week.

It began with meetings in Germany over natural gas prices, but morphed into an interesting sidebar on the impact government subsidies have on energy prices.

As I noted last week, a recent International Monetary Fund (IMF) staff report concluded that public-sector support largely created more harm than good.

Energy Investing

Why T. Boone Pickens Likes These Natural Gas Companies

Legendary investor T. Boone Pickens has been called the Warren Buffett of energy investing, and over the years he has built up quite a legacy.

From his days as a wildcatter drilling in unknown oilfields, Pickens went on to start his own oil company, Mesa Energy, take on the likes of Exxon Mobil Corp. (NYSE: XOM), and manage a hedge fund, BP Capital.

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Energy Investing

Why Britain is Looking to U.S. for 20 Years' Worth of LNG

With its domestic natural gas reserves nearly depleted, the U.K. is turning to a U.S. company to supply enough liquefied natural gas (LNG) to provide energy to nearly 2 million British homes for 20 years.

The $15.1 billion-plus deal between Houston-based Cheniere Energy Inc. (NYSE: LNG) and Centrica, a British energy firm, marks the first time Britain has ever imported natural gas from the U.S.

The deal has big implications for companies involved in the flourishing U.S. shale gas industry, in which gas is extracted through hydraulic fracturing, or fracking.

You see, fracking has led to an abundance of natural gas and will go a long way toward making the U.S. a net exporter of energy instead of a net importer in the coming years.

That, of course, will be a big boon to natural gas companies that export LNG.

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Energy Investing

What Germany's Energy Problems Can Teach Us About Our Own

Marina and I will soon board a plane for another trip to Europe.

We are off to Frankfurt, where I have meetings on European natural gas import costs; meanwhile, my better half gets to spoil our grandchildren, who live just outside the city.

My responsibility is to address the energy balance problems emerging for the continent. The focus may be on Germany and the rest of Western Europe, but these problems are emerging elsewhere around the world.

With Berlin opting to phase out nuclear power, the continent's largest economy now has a daunting task to assemble an energy mix that meets expected demand.

This started as a political tradeoff, but it is likely to become the major concern in the broader national strategy to stave off recession. A similar tradeoff is developing in the United States.

A much-ballyhooed German venture into solar and wind has hit a brick wall. There is now a played-down move to import additional nuclear-generated power from neighbors, but now the country is doing the unthinkable to meet its energy demands.

This environmentally conscious country, with one of the strongest green political movements in Europe, is now importing more coal than at any point in the past decade.

The options are limited, along with the time to decide on how to implement all of it. That is likely to result in a political tradeoff distasteful to just about every political party and interest group in Germany.

However, the problems do not end there.

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Natural Gas

The Best Way to Invest in the Natural Gas Rebound

On Saturday, I outlined why natural gas prices were moving up.

Today, let's talk about how investors can make some money off this.

As gas prices inch toward $4 per 1,000 cubic feet (or million BTUs) on the NYMEX futures market, we need to remember that this is not going to be either an accelerated rise or one that will be without volatility.

For reasons mentioned on Friday, gas prices will likely cap out in the mid-$4 range by the time we reach midsummer.  

That means there are not going to be any across-the-board influences raising the entire sector. This is going to require some patience and selective investing.

So how does one structure an approach to this?

Energy Investing

Investing in Clean Energy Stocks Just Got More Risky

Despite its promising future, clean energy stocks have proved to be an investing minefield.

Even China-based clean energy stocks are no longer a safe haven. Yesterday (Monday) Suntech Power Holdings Co. Ltd. (NYSE ADR: STP) defaulted on its debt.

Heavy losses caused by plummeting prices for solar panels – which fell 73% from 2010 to 2012 – left Suntech unable to make the payment on a $541 million bond that was due Friday.

The news caused Suntech stock, already down 80% over the past year, to slip another 10%.

While numerous U.S. renewable energy companies have faltered, most notably the 2011 bankruptcy of solar panel maker Solyndra, Suntech is the first Chinese clean energy company that could go under.

What's new is a reluctance on the part of the Chinese government to keep pouring subsidies into money-losing companies.

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Energy Investing

Five Reasons Why Natural Gas Prices Will Continue to Rise

Not long ago, the market was laboring under expectations that the NYMEX futures contract for natural gas would remain at around $3 per 1,000 cubic feet (or million BTUs).

The pundits were proclaiming that a surplus of shale gas, over production, and historic storage surpluses translated into long-term discounts in natural gas prices.

Last year's historically warm winter over much of the U.S. had not helped the price either.

While this year the weather is more seasonal, there are other factors in the price rise. For the investor this means there will be plays developing in specific areas that were simply nonexistent six months ago.

Make no mistake, we are not about to go back up to the $12 plus levels experienced a few years ago. Those days may be gone forever – one of the tangible impacts of the unconventional gas revolution (shale, tight, coal bed methane). There will still be volatility in this sector as the ongoing balance between extraction potential and well counts works itself out.

But we are likely to move into a manageable pricing dynamic.

And that means for investing in gas – with apologies to Sherlock Holmes – the game's afoot!

Energy Investing

Why This Chinese Company Is Investing in U.S. LNG

A private energy company based in China is reportedly investing in the construction of a network of liquefied natural gas (LNG) fueling stations in the United States.

According to a Reuters report, ENN Group Co. Ltd. is teaming with a small U.S.-based company, and the partnership plans to open 50 to 60 LNG fueling stations this year. LNG stations cost an average about $1 million each to build, industry experts say.

ENN has already built a number of natural gas fueling stations in China, which is much further along in use of LNG for heavy trucks than the United States.

LNG's been promoted by investors such as T. Boone Pickens and natural gas producers including Chesapeake Energy Corp. (NYSE: CHK) as a cheaper, cleaner fuel for long-haul trucks.

Now more natural gas companies are teaming up to provide LNG, which means more investment opportunities for energy investors.

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