Stocks to watch on Monday: EADSY, PCH, TSLA >>> READ MORE

Old Fuel Source Lighting Way for Long-Term Energy Investors

You'll have dinner (and then some) 'covered' with the gains from these buy-write trades

    View All  

The Growing Use of Natural Gas

Natural gas is the most appealing of the traditional energy sources because it is so much cleaner than coal and oil. Now that the supply is plentiful, it’s also cheaper, and that’s why it will be the dominant theme in energy in the coming years.

For one thing, natural gas is now the fuel of choice to generate electricity because it’s so much cleaner than coal and doesn’t have the safety stigma of nuclear power. Natural gas-fired electricity generation is expected to make up 80% of all additional capacity added between now and 2035.

As you would expect, alternative uses for natural gas are also being developed to take advantage of all this potential energy, especially in transportation. We won’t see a bunch of natural gas passenger vehicles on the road anytime soon — the manufacturers aren’t ready, and there is a lack of storage and distribution infrastructure — but there is tremendous potential in commercial vehicle fleets. One firm, Pike Research, estimates the total number of natural gas vehicles worldwide will grow nearly 70% from 1.9 million units in 2010 to 3.2 million in 2016.

President Barack Obama has pushed for fleets to move to natural gas — most recently in his State of the Union address last week. He said natural gas is the best way for the U.S. to reduce dependence on foreign energy, and he is pushing for a credit to encourage large trucking fleets to shift to natural gas engines.

Somebody seems to be listening. On Monday, AT&T (NYSE:T) ordered 1,200 natural gas-powered Chevy vans from General Motors (NYSE:GM), and according to reports, plans to spend $565 million on 15,000 alternative fuel vehicles in a 10-year period.

The Debate Over Fracking

Fracking is opening up a whole new world of natural gas supply but, as I mentioned, it is also very controversial. Many folks have health and environmental concerns, and I am one of them. For example, there appears to be some evidence that groundwater (drinking water) can become contaminated from the solutions used in fracking. Some scientists have also tried to link fracking as a contributing factor in some of the recent minor earthquakes in the U.S.

Even with these concerns, fracking will not stop anytime soon. It has provided jobs at a time when they are hard to come by, it helps lower costs for American manufacturers — which in turn results in cheaper goods for consumers — and the increased supply of natural gas means sharply lower prices that save us a lot of money in heating and utility bills.

In his State of the Union speech (a full transcript can be viewed here), President Obama said his administration will take “every possible action” to safely expand shale gas drilling efforts, and in an acknowledgment of the concerns, he proposed requiring gas drillers on public lands to disclose the chemicals they use in fracking.

What if there were a way to do fracking safely, without the environmental and health concerns? That would be a real opportunity, especially if companies are one day forced to disclose what chemicals they’re using.

This is why I recommend purchasing shares of Halliburton (NYSE:HAL), a company becoming more involved in natural gas by recently developing promising “green” technologies that may reduce or even eliminate some of the big controversies surrounding the fracking process.

More on my recommendation of HAL stock can be found here.

Article printed from InvestorPlace Media,

©2017 InvestorPlace Media, LLC