May 17, 2010

Post Reply
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

May 17, 2010

Post by dan_s »

Currently I'm "Short term bearish and long-term bullish" on natural gas. In my opinion, "Green Energy" is a pipe dream. Think how long the U.S. has been trying to make wind and solar energy a meaningful part of our energy supply with little to show for it.

NG is clean, abundant and cheap. Eventurally, even the idiots in Washington will get it and when that day arrives the demand will spike.

I'm bearish in the short term because our current natural gas supply is way above the demand. However, we are starting to see more industrial demand and a lot of gas may be burned for power generation this summer. I also believe the government willl shutdown drilling offshore as a result of the BP oil spill. We get a lot of our gas supply from the GOM so this will put pressure on supply but it will take several months to see it. 2011 could be a big year for the "gassers" and I'm adding some to my Watch List. - Dan
------------------------------------------------------------------------------------------------------------------------------------------------------

The Green Energy Bubble is About to Burst! by Elliott Gue of Personal Finance

Thousands of investors are going to get clobbered…

But you don't have to be one of them.

According to Greentech Media Research, venture capitalists spent $4.9 billion on a total of 356 alternative energy deals in 2009.

And during the first three weeks of 2010, they pumped in an additional $32 million.

Plus…last year's economic stimulus package included $79 billion for renewable energy.

But where are the results?

So far…the sum total of all renewable energy from solar, wind, biomass and geothermal sources accounts for only 3.4 percent of U.S. electricity generation.

"There are some companies that have raised hundreds of millions yet are not making products that are profitable. That is a very dangerous place to be."
–Steve Vassallo, Foundation Capital

And where is the affordable electric car…or the slew of new high-efficiency renewable energy resources for consumers?

It just hasn't happened.

No doubt about it – the United States needs to reduce its dependence on foreign oil.

But as investors begin to wake up to the reality that many "green" companies simply aren't delivering on their promises…

The fallout will be ugly.

Many of these stocks – companies that have been heavily touted as "leaders" in the clean energy sector – are going to crash and burn.

Some of them already have – like Akeena Solar. Akeena was once billed as a "rising star" in the solar energy business – and its shares reached a high of $16.80 back in January 2008.

But – as the chart below shows – Akeena's fortunes quickly turned…and that one-time $16 stock now trades for just over $1.

<http://kr.nlh1.com/images/contrdesignrs/chart3.jpg>

Or how about Raser Technologies?

This geothermal company once soared to more than $18 a share…but then quickly pulled back and is now just another $1 stock.

And what about Pacific Ethanol?

Back in the spring of 2006, this company reached a high of $42 – but as reality became apparent…it sunk like a stone, taking investors' money with it.

I could go on and on with examples of once-impressive renewable energy companies that have wiped out individual investors.

And it's going to happen again – in a big way.

So I want to make absolutely certain you're not among the victims.

The fact of the matter is that wind and solar energy are both extremely limited technologies over the next 10 to 15 years.

And we all know that the average American investor has a very short attention span.

So what should you do in order to prepare for this new reality?

First…you should stay far, far away from any renewable energy company that doesn't have an easy-to-understand business model and a strong likelihood of delivering on its promises over the next few years.

But aside from that…there's another way to play this new reality.

You see – the need for energy independence is very real. But until "green" energy companies are ready to make money – for both themselves and investors like you – you need to look toward more immediate solutions…

Like natural gas.

Here is why:

* Cleaner Than Coal! – Natural gas allows a 50-80 percent reduction in greenhouse gas emissions as compared to coal.

* Rising Production and Reserves – While U.S. oil production and reserves have declined steadily for nearly four decades, natural gas production and reserves have each risen dramatically in just the last few years.

* A Perfect Transition with Decades of Production – According to some estimates, gas may actually be more abundant than coal. That means U.S. gas production can continue to rise for decades to come – and it makes natural gas a perfect transition to those renewable sources that emerge after the bubble.

* An Immediate Alternative to Oil – Natural gas is the only fossil fuel that can help the U.S. immediately reduce its oil dependence using existing technologies.

* Natural gas can be used as a transportation fuel. With existing technology, cars and trucks actually run better on natural gas.
Dan Steffens
Energy Prospectus Group
Post Reply