Friday Haymaker
In The Ring - October 20th, 2023
Gas: America's Natural Solution To the Latest Energy Crisis?
“We will never frack. We don’t need to develop shale oil at all… we have enough oil we can get from the Arctic shelf… (Fracking) is terrible for the environment.” -Vladimir Putin, obviously oblivious to the irony of criticizing fracking’s environmental impact while being willing to explore for oil in the Arctic shelf.
Could it be that U.S. natural gas is the world's greatest energy bargain? Not only could it be, but in the opinion of a firm that I consider to be among the investment community’s foremost experts on commodities, it most definitely is.
Goehring & Rozencwajg (G&R) regularly publishes some of the most in-depth research on hard assets that hits my inbox. A recent report they put out was titled Natural Gas Markets on the Verge. The “verge”, in this case, is of an upside price explosion, at least in G&R’s view.
A critical part of their ultra-bullish view is that they believe U.S. natural gas is the cheapest unit of energy on the planet by a whopping 75%. If you think that sounds excessive, consider these charts showing the price of natural gas in Europe compared to where it trades in the States.
Natural Gas Prices in Europe (Click chart to expand)
U.S. Natural Gas Spot (Current Month) Price Chart (Click chart to expand)
Clearly, natural gas prices have plunged precipitously both on the Continent and America from their vertiginous heights last year in the wake of Russia’s invasion of Ukraine. In Europe, they briefly touched $90 per million British Thermal units (MMBtu’s). In very loose terms, a MMBtu is equivalent to the cost of a gallon of gas.