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Gas

Article Index

Why Gas Prices Will Continue to Climb

By , Money Morning -

The average price of gas in the United States is still below the 2012 average of $3.63 for a gallon of regular, but that won't be true for long.

Gas prices have risen every day for three weeks, and motorists are starting to wonder when the surge will end.

Nationwide, the average price for a gallon of regular gas is up 26.3 cents, or about 8%, this year to $3.55, the highest level since the end of October.

And the 17.4-cent spike in the average price of gas between Jan. 28 and Feb. 4 was the largest weekly increase in almost two years.

Unfortunately, it's unlikely gas prices will drop anytime soon.

Here's why.

To continue reading, please click here...

EPA Official Resigns over Crucifixion Comments

By , Money Morning -

On Friday, we discussed the regulatory philosophy of certain Environmental Protection Agency officials in how they regulate the U.S. oil and gas sector.

Dr. Alfredo Armendariz, the EPA regional administrator for Region 6, was overly candid in a 2010 policy discussion in which he said that the agency's stance is to "crucify" a few oil and gas companies in order to set an example and force the rest of the industry to submit to new rules.

"You make examples out of people who are not complying with the law," he stated.

Now, it looks like those comments have cost him his job.

Morgan Little at the LA Times explains.

"Alfredo Armendariz, a regional administrator for theEnvironmental Protection Agency, has resigned in the wake of criticism for comments made in Texas two years ago comparing the methods of the EPA to those of Romans using crucifixions to conquer foreign lands."

The resignation is certainly a starting point in order to limit the political damage.

Read More…

There's Always Money in this Fund

By , Money Morning -

It's a tricky market out there for energy investors.

Even though opportunity abounds, there are plenty of factors driving ordinary investors away from the market, like global political tensions, ongoing concerns about available supplies, credit limitations for producers, increased volatility on the derivatives markets, and rising global demand.

There's a lot of noise, and short-term irrationality is trumping fundamentals.

But even amid the confusion, we know one thing for sure.

The price of oil is going to accelerate.

As Kent said on Monday, we have a very different dynamic taking place in the markets from the events of 2008. Three years ago, speculation drove oil prices, but an outside crisis decimated the global markets (namely, the subprime mortgage mess and the corresponding credit freeze).

But this time, we're experiencing a constriction produced by a significant cutback in new oil drilling. With greater unconventional production in the cards and greater concerns about the availability of supply, we're witnessing a perfectly predictable storm of events that will drive prices higher.

Still there's one thing that Kent and I continue to stress before you go out and start buying up energy stocks. That's this:

Rising oil prices will not drive similar performances in all energy companies.

You need to grasp an overall strategy to profit this time around.

The lack of cheap supplies and the cost of procurement in unconventional sources are major concerns. So is the acceleration in short-term swings in volatility. We are entering a period of boosted unconventional oil and gas production to tackle these challenges.

Access to unconventional sources has set off an energy boom here in the United States, as new technologies have enabled this country to greatly improve its oil and gas sourcing. Moving forward, the United States will look to its oil and gas shale plays and to source an expanding fuel supply from our neighbor to the north: Canada.

But it won't be cheap to do this, especially while increased swings in volatility become the norm.

So what's the best way to play volatility while managing your risk?

To continue reading, please click here...

Congress' Next Bad Idea Would Destroy the Shale Boom

By , Money Morning -

Last week, six Members of Congress, led by Rep. Dennis Kucinich (D-Ohio), introduced the "Gas Price Spike Act."

With concerns over the likelihood of higher gas prices this summer, the bill and its sponsors propose the creation of a "Reasonable Profits Board" that would control the profits of oil and gas companies.

Under the bill, this board - made up of unelected bureaucrats - could apply a "windfall profit tax" on the sale of oil and gas at rates of 50% to 100%. These taxes would take aim at corporate profits that the board feels are "unreasonable" or "unfair."

Congress would then appropriate the money raised to subsidize electric vehicles and mass transit.

Now you may want to take a second and breathe, because this is no satire.

Oh, and the proposed bill offers no specific guidance on how the board would determine what represents a "reasonable profit." How do we even begin to define this term? Are some profits more unreasonable than others? And who decides what is "reasonable?"

Apple Inc. (Nasdaq: AAPL) last week shattered earnings expectations. The electronics company has a profit margin north of 20%; meanwhile, the oil and gas industry has a sector-wide margin a little less than 10%.

And though the price of oil and gas will rise in the future - and despite the name of the bill - a reasonable profits board would do nothing to improve consumers' plights at the pump.

In fact, it would only make things worse for people like you and me.



To continue reading, please click here...

Russian Oil & Gas Sector Headed for Major Shakeup

By , Global Energy Strategist, Oil & Energy Investor • @KentMoors_OEI -

SURGUT CITY, Central Russia – Welcome to Surgut City, about 1,325 miles east of Moscow in the Surgut district, which in turn is the primary area of the Khanty-Mansi Autonomous Region (KMAR).

I am here at the request of the Russian Ministry of Energy, to sit as an outside member on a task force reviewing production options for the next five years.

But the "here" that I referred to is in Siberia – in every sense of the word.

The cold snap I experienced before leaving Moscow has hit Surgut City with a much greater bite. When our government plane landed here at 3 a.m. one recent morning, the temperature had fallen to 35°F below zero. The pilot kept the engine running while we disembarked. Otherwise, the plane's oil lines could freeze.

But there was no need to worry. A heat wave was to hit the next day – pushing temperatures all the way up to minus 3°F.

For an inside look at the looming shakeup, please read on...

How the U.S.-China Trade Spat is Jeopardizing Energy Sector Development

By , Global Energy Strategist, Oil & Energy Investor • @KentMoors_OEI -

Usually, a government decision to subsidize clean energy alternatives would be applauded by others.

Not so when the government is Beijing, and Washington politicians halfway around the world are busy looking for votes.

This tiff could be filed away as just another tempest in a teapot... if it were not for the other important projects it could derail along the way. Those projects just happen to have a major impact for American natural gas technology and the companies likely to benefit from its foreign introduction.

If the two countries can get it together, it could mean profitable new opportunities for both.

To find out how the energy sector would benefit from U.S.-China cooperation, read on...

Read More…

CNOOC Creates Biggest China-U.S. Oil Deal For Stake in Shale Gas Industry

By , Associate Editor, Money Morning -

China's state-owned energy company China National Offshore Oil Corp. (CNOOC) (NYSE ADR: CEO) late Sunday announced it would invest $2.16 billion in U.S.-based Chesapeake Energy Corp. (NYSE:CHK) to increase China's stake in unconventional gas resources like shale gas. It is the largest ever China-U.S. oil and gas deal.

CNOOC initially will pay $1.08 billion for a 33% stake in Chesapeake's Eagle Ford shale acreage in Southern Texas. China's third-largest oil company will invest an additional $1.08 billion by paying 75% of Chesapeake's drilling and completion costs in coming years, allowing Chesapeake to tap hard-to-extract shale gas deposits and boosting its weak balance sheet.

The deal highlights China's need to develop its shale-gas extraction techniques. The country has 26 trillion cubic meters of shale gas reserves that are largely unexplored due to a lack of drilling ability - and Chesapeake is a pioneer in the shale gas industry.

Read More…

This China Province Will Become a Global Oil-and-Gas Market Powerhouse

By , Global Energy Strategist, Oil & Energy Investor • @KentMoors_OEI -

Like everything else, the balance of power in the global energy market is shifting toward China, where a little-known province is perfectly situated to become a global oil-and-gas market powerhouse.

Nestled in the far northwest of China, Xinjiang is the country's largest province and the primary domestic source for oil and gas. It is sparsely populated and as big as Western Europe. The name, Xinjiang, literally means "New Frontier." And recent decisions in Beijing are going to give that translation even more meaning - transforming this province into a "new frontier" for the global energy sector.

To understand how to profit from this development, please read on...

Gasoline-Price Forecasting: What Sam the Gas Station Owner Knows That We Don't

By , Global Energy Strategist, Oil & Energy Investor • @KentMoors_OEI -

What started out as a routine fill-up at the service station that I frequent has turned into a solid gasoline-price-forecasting model that should spotlight the most-imminent profit opportunities.

Of course, it wouldn't have happened without Sam.

Sam runs a gasoline station 12 miles from my house, in a little, out-of-the-way, suburban town. We have formed a friendship, of sorts, through the years. He's one of the few people I run into on a regular basis who does not ask me where gasoline prices are headed.

He already knows.

To find out how Sam's pricing prescience can mean profits for you, please read on...

Oil Prices Set to Soar in the Second-Half of 2010

By , Contributing Writer, Money Morning -

Oil prices hit a wall this spring. But don't be fooled. The spring retreat simply set the stage for a second-half rally. Despite lingering fears over the global economy, demand for oil isn't slowing down at all. In fact, it's rising... and oil prices will rise right along with it. Read this report to find out why oil is poised to take off in the next six months... and how you can profit.

Read More…

Shell Grabs Crucial Shale Gas Deposits With $4.7 Billion Deal

By , Associate Editor, Money Morning -

Royal Dutch Shell PLC (NYSE ADR: RDS.A, RDS.B) announced Friday it would pay $4.7 billion in cash for U.S.-based East Resources, Inc. to obtain a sizeable stake of "high-potential" North American shale gas acreage.

Shell, Europe's largest energy producer, gets 1.05 million acres of gas properties in the northeastern United States and Texas. About 650,000 acres gained in the acquisition are part of the crucial Marcellus Shale, a tight gas property with shale formations estimated to hold up to 262 trillion cubic feet of recoverable gas.

The remaining acres are part of the Eagle Ford Shale area in South Texas. The deal brings Shell's total U.S. tight gas acreage up to 3.6 million acres.

"The opportunity now is to consolidate our tight gas portfolio, divest from non-core positions across North America, and to invest for profitable growth," Peter Voser, chief executive of Shell, told The New York Times.

Read More…

Oil Prices On a Tear and Headed Higher

By , Managing Editor, Money Morning -

Oil prices are at their highest level in more than a year and a half and are likely to head even higher as the global economy bounces back from recession.

Benchmark crude for May delivery rose $1.75 to settle at $86.62 a barrel on the New York Mercantile Exchange (NYMEX) Monday. That followed gains of $1.11 a barrel on Thursday and $1.39 a barrel last Wednesday.

In all, prices are up over 5% since last week and over 70% since April 2009. And right now oil is trading at its highest level since Oct. 8, 2008, when crude settled at $88.95.

Read More…

SandRidge Energy Buys Oil Developer to Reduce Its Reliance on Suffering Natural Gas

By , Associate Editor, Money Morning -

SandRidge Energy, Inc. (NYSE: SD) on Sunday announced it would pay $1.6 billion for Arena Resources, Inc. (NYSE: ARD) to develop a more oil-focused business, as natural gas prices remain low.

SandRidge will pay $2.50 in cash and 4.78 SandRidge shares for each Arena share - a 17% premium to Arena's $34.26 Thursday closing price. The combined company will be valued at around $6.2 billion.

This purchase makes SandRidge one of the largest producers of conventional oil and gas in West Texas. It's the second acquisition for the company since November, when it paid $800 million for Forest Oil Corp. (NYSE: FST) properties.

Read More…

High Gas Prices Got You Down? Beat the Oil Industry at its Own Game…

By , Global Energy Strategist, Oil & Energy Investor • @KentMoors_OEI -

As the price of crude oil moves above $80 a barrel, consumers are wondering just how high gas prices can go.

Now is the time for such questions.

It's during the month of March that the market begins to readjust inventory and production in advance of the summer driving season. This usually means that production shifts from heating oil to gasoline.

Actually, the real issue is what refined products will be emphasized in the production process. To put it bluntly, U.S. refineries have insufficient capacity to handle all needs.

And that could make you some serious money.

To find out how you can profit from the oil market, read on...

To find out how you can profit from the oil market, read on...