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2good2betrue (< 20)

Could natural gas benefit from government backing in the same way solar energy did?

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February 01, 2012 – Comments (3) | RELATED TICKERS: GSXN

In late 2006, the US govenment passed legislation (Empowering America Act of 2006) provided US residents tax credits for solar installations through 2015. This bill was followed by other insentives passed by states that launched the beaten down solar industry skyward.

While the bill provided the shot in the arm that solar needed, the problem with solar is it takes a lot of it to make a dent into the US energy consuption. Beyond these measures, it really didn't help curb consumption of electricty, nor increase generation in line with increasing demand, nor take anything away from addressing the climate issues associated with burning coal to generate electricity. For less than the cost of these insentives, the US could have just sent everyone a set of 10 energy saving light bulbs and they would have made a bigger dent in the US energy consumption than a handfull of solar cells were going to generate on a bright sunny day.

That said, natural gas, while also a foscal fuel, burns far cleaner than coal and in some respects oil. There is a lot of good information about the comparison here: http://www.naturalgas.org/environment/naturalgas.asp

I'm very encouraged by the president's recent speech and endorcement in natural gas as well as his very to the point acknowledgement as to the size of the reserves (over 100 years worth). All that seems to be missing is the federal legislation needed to bring natural gas fired power plans online and for states to the follow on with extended measures to make this even more attractive for consumers.

A scary fact, but in my city, they actually had an insentive for home owners to go "all electric". If you turned in your gas appliances, you could get up to 15% off your monthly bill (indefinitely). In fact, it took quite a lot of complaining and negotiating to get the "all electric" rate if you also had a gas burning fireplace - only much later was this added in as an exception. Today, electric rates are through the roof, and these "all electric" households are seriously considering giving up the rate savings in favor of cheap natural gas.

This would be low hanging fruit for the govenement and states to come in and help these folks turn back on the natural gas through a new round of insentives and would start a very nice up trend for the natural gas industry. I'm a very big natural gas supporter. It is the best heat source for cooking, great for heating homes and water, and hopefully someday energy companies will be using it as one of their primary sources of fuel for firing power plants.

When gas get going, I believe you will start to see these smaller companies who own drilling rights to some of the best fields get snapped up. They are not pure play natural gas stocks, but when the industry gets going, they will be hot property for sure. Many are around a dollar or less a share, but still hanging around - waiting for their time in the sun. Some have diversified into oil which is good, but ultimately, their value lies in the future of natural gas.

Now, will we see government do something about pushing natural gas into the mainstream? Time will tell, but its looking pretty good - like they will. 

3 Comments – Post Your Own

#1) On February 02, 2012 at 7:10 PM, chk999 (99.95) wrote:

Given how well Solyndra worked out, I'd be worried if the government got too involved.

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#2) On March 20, 2012 at 6:39 AM, madav1138 (< 20) wrote:

Learn how to proof read.

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#3) On March 20, 2012 at 7:37 AM, devoish (58.57) wrote:

You mean Federal incentives like these which are equal to the 30% credit for truly green renewable energy sources?

Alternative Fuel Infrastructure Tax Credit

A tax credit is available for the cost of hydrogen fueling equipment placed into service after December 31, 2005. The credit amount is up to 30% of the cost, not to exceed $30,000. Fueling station owners who install qualified equipment at multiple sites are allowed to use the credit towards each location. Consumers who purchase qualified residential fueling equipment may receive a tax credit of up to $1,000. Under current law, this credit expires December 31, 2014. Unused credits that qualify as general business tax credits, as defined by the Internal Revenue Service (IRS), may be carried backward one year and carried forward 20 years.

Fueling equipment for natural gas, liquefied petroleum gas (propane), electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel installed through December 31, 2011, is eligible for a tax credit of 30% of the cost, not to exceed $30,000. Consumers who purchased qualified residential fueling equipment prior to December 31, 2011, may receive a tax credit of up to $1,000. For more information, see IRS Form 8911, which is available via the IRS website. (Reference Public Law 111-312, Section 711; and 26 U.S. Code 30C and 38B)

http://www.afdc.energy.gov/afdc/laws/laws/US/tech/3253

There are many more Federal incentives listed at the link.

Best wishes,

Steven 

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