Use access key #2 to skip to page content.

Huzzah! shale has totally screwed up the energy industry!

Recs

10

January 17, 2012 – Comments (7)

Well, OK, I am finally convinced. I read an article today on Bloomberg about the crash in the price of electricity, caused by the crash in the price of natural gas. This makes great sense to me, since here in Calif. we get almost 40% of our electricity from natural gas fired power plants. They are cheap and easy to build, and have no environmental problems. Thanks to oil shale and fracking, the US is about to become the natural gas king of the  world, with enough supply to make ourselves self sufficient for centuries, Malthusians take note. 
Therefore, I am closing my picks for energy companies and giving thumbs-down on every solar and wind stock I can find. Sorry, those of you who thought that these were the wave of the future for US energy. I always thought that the eventual solution would be something that snuck up on us inconspicuously. The future is here. 

7 Comments – Post Your Own

#1) On January 17, 2012 at 7:47 PM, motleyanimal (48.86) wrote:

We have a problem here in California. We are already committed to building and buying solar and wind energy even though it will cost 150% more than natural gas.

California Governor Jerry Brown has signed into law, an Act that gives the state of California 9 years within which to obtain a third of its energy from renewable sources. This is in keeping with former Governor Schwarzenegger’s 2008 executive order “requiring that California utilities reach the 33 percent renewables goal by 2020” (http://www.energy.ca.gov/renewables/).

Report this comment
#2) On January 17, 2012 at 10:01 PM, SultanOfSwing (96.22) wrote:

Last time I heard "Huzzah", I was in Colonial Williamsburg!  :)

Do you have the link to the Bloomberg article, I couldn't find it.

Thanks

Report this comment
#3) On January 18, 2012 at 1:57 AM, Indiscr33t (< 20) wrote:

Capstone Microturbine (CPST)

I own a lot...

Report this comment
#4) On January 18, 2012 at 10:43 AM, jerryguru69 (95.32) wrote:

sorry: here is the link:

http://www.bloomberg.com/news/2012-01-17/electricity-declines-50-in-u-s-as-shale-brings-natural-gas-glut-energy.html

 I also should have said: it also makes investments in natural gas companies a bad bet, since the low price has destroyed their margins. 

Report this comment
#5) On January 18, 2012 at 10:44 AM, jerryguru69 (95.32) wrote:

CPST? uh oh...

Report this comment
#6) On January 18, 2012 at 11:14 AM, NumbersDontLie (33.69) wrote:

I also should have said: it also makes investments in natural gas companies a bad bet, since the low price has destroyed their margins.

You're right; low nat gas prices hurts their margins. However, the main push of the linked article seemed to suggest that electricity was getting cheaper because of increased nat gas usage (vs. coal) to generate it. Doesn't that equate to more nat gas consumption - which will soon equate to higher nat gas prices - which equates to better margins for nat gas companies which are currently trading at substantial discounts to "average" prices?

In short: increased production drives prices down, increased consumption drives prices up; current production levels are high, and consumption is low, but increasing as compatible power plants are built.

Report this comment
#7) On January 18, 2012 at 1:17 PM, ajm101 (32.96) wrote:

Natural gas costs $15mmcf in Asia.  If you believe in capitalism, then that market inefficiency will not persist for long.

Report this comment

Featured Broker Partners


Advertisement