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How to Invest in Natural Gas - The Energy of the Future

By Edited Sep 2, 2016 0 0

Invest in the Future With Natural Gas

One common question I get from people is "why do you think natural gas is the energy of the future and how can I get invested in it?" There are plenty of reasons why I personally feel that Natural Gas is poised to replace oil as the primary means of energy in our world. My main goals for this article is to convince you that investing in natural gas is easy and will pay off huge in the future, and also warn you that our current consumption of oil is unsustainable. I will show you several ways to get invested in natural gas today, easily, and also explain to you why this energy is clean and good for our environment. 

What is Natural Gas Exactly? 

Natty Gas

Natural gas is "a naturally occurring hydrocarbon gas mixture consisting primarily of methane, with other hydrocarbons, carbon dioxide, nitrogen and hydrogen sulfide," according to Wikipedia. The EPA describes it as "a fossil fuel formed when layers of buried plants and animals are exposed to intense heat and pressure over thousands of years." It isan energy source that provides heating and electricity, and also works as fuel (more on this later). It's clean and it's cheap.

In the United States, it is becoming more and more common for people to get their homes powered by natural gas. 

Why Do We Need Natural Gas for the Future? 

To put it simply, the world is running out of oil. Peak oil is a popular theory that says that we've already reached our maximum point of production of oil. From here, production levels will dip every year. That energy needs to be replaced with another form of energy - this is where natural gas and other forms of energy such as solar, wind and nuclear power come in. 

So, why exactly do we need stuff like oil? Well, oil is everywhere, used in almost every basic thing in our society. Our economy needs oil to run and grow. For the United States to just keep it's current levels of employment, our economy or Gross Domestic Product (GDP) needs to grow at about 2 percent per year. And we need oil to grow, plain and simple. 

Why This is the Biggest Problem Facing the World Today 

Our monetary system functions based on the belief that we will always grow. We need to grow to create more jobs and be prosperous. It's an infinite proposition. However, the big problem with this is that the resources we use to grow (oil) are NOT infinite, they are finite. They will run out one day, and we are approaching that day very fast. 

What is Exponential Growth and Why It's Very Frightening

This chart below explains our growth predicament very well. Remember, our economy needs to grow, but our energy sources can only be obtained for so long. 

So my major point here is that the world's reserves of oil are running out very quick. Which leads me to what I think will be the next big energy source of the world - natural gas. 

Why Natural Gas? 

One of the best things about it is that it can be used in many applications. According to NaturalGas.org, "there are so many different applications for this fossil fuel that it is hard to provide an exhaustive list of everything it is used for. And no doubt, new uses are being discovered all the time." Today, natural gas is used 32 percent in industrial applications, 24 percent in electrical generation,  22 percent in residential homes and 14 percent in commerical.

It's being used so much more today because it is very affordable - the Department of Energy (DOE) estimates that in 2011, natural gas is the lowest cost conventional energy source available for residential use. NaturalGas.org also says that the best known uses for natural gas around the home are natural gas heating and cooking. Cooking with a natural gas range or oven can provide many benefits, including easy temperature control, self ignition and self cleaning, as well as being approximately one-half the cost of cooking with an electric range, the website says. 

According to the American Gas Association, 62 million homes in the U.S are heated using natural gas. 

Natural Gas
How to Invest in Natural Gas in the Stock Market

The first way a person can get invested in natural gas is through the stock market. There are two ways you can go about this:

1) Purchasing a Natural Gas Exchange-Traded Fund (ETF) - There are a couple out there but first I will use the United States Natural Gas Fund (Quote: UNG) as an example. This exchange-traded security is designed to track the movements of the price of natural gas. The expense ratio is .99 percent, which is somewhat decent. It currently trades around $23 per share. 

If you're really bullish on natural gas like I am, you may want to take it a step further and check out the Direxion Daily Natural Gas Related Bull 3x ETF (Quote: GASL). This exchange traded fund seeks daily investment results, before fees and expenses, of 300% of the performance of the ISE Revere Natural Gas Index. So you are getting the upside in the price of natural gas, mutliplied times three. 

2) Purchasing a Stock that Produces and Sells Natural Gas - There are plenty of natural gas stocks out there. Some that come to mind are Chesapeake Energy (CHK), EnCana (ECA) and Devon Energy (DVN). Please make sure you do your own due dilligence when making any investments. 

Another Way to Invest in Natural Gas - How to Convert Your Home Heating System to Natural Gas!

So now you should know that Natural Gas is cleaner, more efficient and longer laster than other forms of energy such as oil. The next step is to convert your home heating system to natural gas.

How much does it cost to convert your heating system to gas? According to esaheatac.com,  the cost could be anywhere between $400 to $2000, which "depends upon the cost to run the gas lines to your home, the cost to install the piping inside your home, and the cost of gas-fueled equipment." 

How do you do this? The first step is to find a contractor in your area which can help you decide if this is right for you. It's hard for me to tell you, because there are a lot of companies which can do this for you, so it depends on what state you live in. Where I live in New York, Con Edison is the company that does oil to gas conversions. Find out a company in your area which does conversions and you can find out how much it will cost you and if it's worth it.

I hope you enjoyed this article on how to invest in natural gas, the energy of the future. With oil supplies dwindling, we need to find another major source of energy for the world. It should be a safe, clean source of energy. I believe natural gas is the answer!

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