Breitling Oil and Gas Morning Podcast #161 10-1-12

Overall, the U.S. Energy Information Administration reports this month that natural gas prices are up significantly for the year, but so are inventories.

U.S. natural gas stockpiles are up 28 billion cubic feet and natural gas inventories are 13% higher in 2012 than in 2011.

So it seems to me the natural gas market has a unique niche opportunity for investors: the U.S. transportation fuel market.

The sheer volume of U.S. recoverable gas resources relative to expected demand suggests that benchmark Henry Hub gas prices will remain deeply discounted relative to oil prices beyond this decade.

But it’s the transportation sector that should really leverage decade-long low natural gas prices, PIRA says. In particular, future fuel demand for natural gas vehicles (NGV) and liquefied natural gas vehicles (LNG) has enormous upside potential, led by private-sector initiatives with or without federal government assistance.

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