As Obama Flounders On Energy, You Can Get Rich…
Whelp, that was quick.
This morning oil flashed on our screen above $99. Benchmark $100 oil, as we’ve talked about before, is soon to be the norm.
In fact, when it comes to higher oil prices you’ll likely have one man to thank: our president. I’ll share the full story with you in a moment — including a few ways that you can turn a profit in the face of rising future oil prices.
But first there are a few important dots to connect…
The “B” section in today’s Wall Street Journal reminds us that the U.S. government has its far-reaching hands in all sorts of energy projects. We’re talking big bucks here. Indeed, Uncle Sam could have a lot of say in which energy companies turn a profit and which don’t.
As resource investors it’s important to keep score in this big-picture game.
“EPA Orders Deep Cuts in Emissions” a headline reads from page B3.
The first stop on our hit parade shows the EPA working its magic to heavily hamper the future of coal burning power plants. By requiring bigger cuts in emissions the EPA is forcing the hand of power plant owners.
Spend lots of money to upgrade old (fully functioning) coal fired plants, or use that money towards making the switch to cleaner burning natural gas?
Luckily for us, this isn’t game-changing news. In fact, we’ve covered the idea of a switchover to natgas power in these pages before. But with less than a year till the 2012 elections these regulations could come hard and heavy. Giving us even more reason to look at shale gas players in the sweet spot of the natgas market.
“Gas Exports Ignite a Feud” shouts another WSJ headline from B7.
With an increased supply of cheap natural gas many people, including your editor, are thinking that exporting the stuff could become a reality over the next few years.
The feud was sparked between producers and end users of natural gas. The producers want access to international markets where gas prices are triple what they are here, while the end users, euphoric on the idea of a cheap energy future, want to corral that cheap gas domestically.
“The Battle” the articled says, “shows how the boom in U.S. fossil-fuel production is upending markets and forcing policy makers into decisions they didn’t imagine facing just a few years ago.”
Although we’re better off without Washington number crunchers, they’re here to stay. And the government’s interaction in the natgas market could create a windfall situation for either producers or end users.
Imagine, a decision to strategically limit natgas exports could singlehandedly crush natgas prices. But in the same sense a pro-export government decision could spike prices here at home.
Only time will tell. For now though, plan on seeing a hybrid situation where some companies work towards exporting natgas. I’d just be weary of going “all in” on a company that depends on natgas exports.
After all, as the prolific oilman T. Boone Pickens said in front of me earlier this year: “We’ll be the dumbest people in town if we ship clean natgas and import oil.”
Pickens knows a thing or two about big picture oil and gas trends, so if he thinks exporting is a “dumb” idea U.S. government policy may follow suit. At least that’s the outcome I’m leaning towards.
The last stop on the hit parade is a new update on the previously discussed Keystone XL Pipeline. (Click here for a refresher.)
If you lend Byron King a few minutes, you’ll surely be ahead of the curve on U.S. energy policy regarding the pipeline decision. Plus, as you’ll see, Byron has a few ways that savvy readers can turn a profit… Click here to read on.
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