Six reasons why natural gas is better investment than oil

Posted Jun 19th 2009 1:40PM by Todd Harrison
Filed under: Commodities, Oil

This post was written by Minyanville contributor Vitaliy Katsenelson,

1. Reserves deplete faster than oil (in general).

2. Oil/natural gas ratio: the price of oil divided by the price of natural gas is at an all-time high (or close). This ratio stands at 17 (historically it has been at about an 8 or so). Natural gas prices will go, oil will decline, or both.

3. At $4 a gallon, it is uneconomical to develop and look for new oil reserves.

4. No OPEC competition.

5. Politically more favorable than coal.

6. After emission caps are implemented natural gas will become a cheaper alternative than politically and environmentally unfriendly coal.

Tags: inthenews, lng, natural gas, oil, opec

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Reader Comments (Page 1 of 1)

6-19-2009 @ 2:37PM

Sheldon L said...

This is confusing???

"3. At $4 a gallon, it is uneconomical to develop and look for new oil reserves."

It is very economical to look for new oil reserves at $4 a gallon (way higher than it is now) --- you must mean $4 natural gas?

BTW, many companies are drilling wells at the currently depressed lower natural gas prices with anticipation of higher prices to come.

6-22-2009 @ 1:05AM

Gary Stemple said...

If the American Public discovers the financial impact on the price of everything we buy before "cap-and-trade" becomes law, the cheap Coal that provides about 50% of this country's electricity isn't going to look so dirty or so politiclly out of fashion.

There's potentially more oil in the Canadian Oil Sands than in Saudi Arabia.

Some of the new drilling techniques for natural gas, and the makeup of the rock strata that contain the gas have the potential for poluting our environment far worse than coal has done. Google "Marcelus Shale" and read ". . . radioactive . . .". What environmental safeguards are enforced to protect us from that serious hazard? Hint: State laws haven't been written to do it and some of the funds to support enforcement come from Coal Severence Taxes -- no coal coming out of the ground, no funding for environmental enforcement.