Finally – encouraging news for beaten down natural gas stocks.
The fossil fuel welcomed words from the International Energy Agency (IEA) Tuesday that gushed about the boom in unconventional natural gas over the next two decades. The agency said the incoming supply increase would let the United States and other countries enjoy cheaper energy and shift the export reliance away from the Middle East.
IEA Chief Economist Faith Birol told Reuters that growth in shale gas and other new available forms of natural gas could mirror gains made in conventional gas in Russia, the Middle East and North Africa combined.
“Unconventional natural gas will fracture the status quo and will be a complete game changer with major geopolitical implications,” Birol said.
Over the past years, high natural gas prices were a driving force behind new ventures into previously unavailable, unconventional gas reserves including tight-gas, shale gas and coal-bed methane resources.
But recently, ample stores and waning demand have weighed on natural gas prices, taking the commodity down to record low levels.
However, things are about to change.
Forecasts differ as for when the natural gas price channels will start churning and push domestic prices higher, but the tide will turn as the fuel becomes more widely used.
Jim Brick, macro-energy analyst at research consultant Wood Mackenzie, told Forbes he believes the U.S. could start exporting 3.2 billion cubic feet of LNG a day by 2030, as America moves away from its reliance on foreign energy sources and takes on a more advanced role as a worldwide energy supplier.
And as surplus domestic supplies begin to dwindle, natural gas prices will take off.
Mike Breard of Hodges Capital deems the chance of natural gas doubling in five years is better than the odds of oil doubling over the same period. The jump, according to Breard, could be sudden.
Contributing Writer, Money Morning
Publisher’s Note: This is an edited version of an article that originally appeared in Money Morning USA
From the Archives…
Free of the Dragon: Why the Energy Market Doesn’t Need China
2012-05-25 – Kris Sayce
China Stirs Up Troubled Waters in the South China Sea
2012-05-24 – Dan Denning
How Chinese Stocks Are Fading Fast
2012-05-23 – Lars Henriksson
LNG: Why Australia Will Be a New Global Gas Leader
2012-05-22 – Dr. Kent Moors
A Shocking Week for China’s Economy
2012-04-21 – Dr. Alex Cowie