One of the smartest, loudest, richest oilmen in America is T. Boone Pickens.
Since graduating college with a geology degree in 1951, Pickens has
spent the last 60 years building a billion-dollar fortune by finding
oil, putting together giant deals, and managing energy investment funds.
He's the "rock star" of the U.S. hydrocarbon industry.
Pickens is now 82 years old. He doesn't need to focus on money
anymore. These days, he's focused on the "Pickens Plan"... a giant push
to convert a portion of the American truck-and-car fleet to burning
natural gas instead of oil.
As I showed you yesterday, the government is going to crazy lengths
to push the country in a "green" direction – including forcing every
American taxpayer to pay for his neighbor's electric car
Part of the green movement will mean using more natural gas. But the
government won't be the only driver for natty consumption... and
eventually higher prices.
As I'll show you today, all roads lead to higher natural gas consumption.
If you've read my DailyWealth
essays over the past few years, you know new drilling technologies have recently unlocked vast natural gas supplies
in the United States. From 2003 to 2008, natural gas spent most of the
time trading in between $6 and $8 per million BTUs (British thermal
units)... and occasionally spiking past $13. The new drilling
technologies have unleashed so much new supply, natural gas prices have
plunged into the $3-$4 range.
Pickens thinks we're crazy not to burn our vast supplies of natural
gas... rather than buy hundreds of billions of dollars of oil from the
likes of Saudi Arabia, Mexico, and Venezuela. As he recently told Futures magazine...
We have more natural gas than any other country in the world.
You are sitting here with 4,000 trillion [cubic feet of] natural gas,
which is equivalent to 700 billion barrels of oil, which is three times
what the Saudis have. You are honestly going to look like a fool if you
sit here and ignore what you have available to you and you don't use it.
The Pickens Plan has problems. It calls for massive federal
subsidies. And while natural gas engines do work... they aren't as
powerful as traditional diesel engines. We'd have to build a lot of new
Regardless, Pickens' main point is a good one: We have a tremendous amount of natural gas we aren't using right now.
I can't tell you if the government will get fully behind the
Pickens Plan. But I can tell you it's serious about burning less oil and
coal. These two are the "dirty" fuels.
And as we've seen with the Nissan Leaf
– and the Obama administration pushing various carbon taxes – the
government is starting to move America in the direction of increased
natural gas use over coal and oil. This will be a major tailwind for
natural gas consumption.
Adding to the tailwind on a global scale is a familiar tale in the
resource business: The growing consumption by the giant nations of China
and India (or "Chindia"). A couple months back, we ran this chart in Market Notes
As you can see, Chindia's natural gas consumption is in a giant
uptrend. And it's accelerating. The Chinese government just reported its
natural gas imports were 30% higher in the first 11 months of 2010 than
the same period in 2009. That's an incredible increase.
"Chindia" generates most of its electricity with coal... But it
knows coal produces horrible pollution. It badly wants to increase its
percentage of electricity generated from clean natural gas (and
uranium). This is driving more gas consumption and more gas imports.
It's a big tailwind for natural gas prices over the long term.
Huge forces are escalating natural gas consumption: It's cheap...
It's clean... It's abundant... The U.S. government loves it... And
"Chindia" is consuming more and more of the stuff.
While this demand tailwind won't cause a short-term explosion in
natural gas prices, it's a no-brainer to start hoarding the stuff right
now... in advance of the coming consumption boom.
Fortunately, it's not that hard to find safe, North American gas
hoards on the cheap. In tomorrow's essay, I'll give you a list of
natural gas hoarders I've been looking into. If the price of natural gas
heads from $4 to $6 or $8 in the coming years, these stocks will
skyrocket in value.
P.S. One of my favorite ways to play natural gas is through old wells.
It's the same technique former President Bill Clinton uses to rake in
thousands of dollars every month. It's an easy way to collect checks,
while we wait for prices to rise. To get the details,