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Jim Letourneau's Blog

Investing, Technology, Travel, Geology, Music, Golf. I think that covers it.

The Natural Gas Black Swan

I will tell anyone who will listen that the sudden natural gas supply glut is an energy Black Swan. Not all Black Swans are negative events. I don't see any too many people talking about Peak Natural Gas these days.

I've had people tell me that the price of natural gas will go up because of environmental concerns, that shale gas wells decline quickly and that low prices will slow down drilling. While these arguments have some merit, the big picture for natural gas is that large (ie GIANT)  "discoveries" can be made in almost every petroleum bearing sedimentary basin on the planet. This is ultimately a short to intermediate term negative most natural gas exporters (either by long pipelines or LNG). George Soros is buying

Dave Forest's You Need to Know This about Natural Gas does a great job of explaining some of the game-changing shifts in the natural gas business. Click here.

Before you decide to load up on natural gas stocks (or the ETF) because they are cheap, don't forget to check the natural gas storage reports. Storage volumes are currently at a 5 year high so low prices haven't been much of a factor in lowering supply... so far.