As the world watches and tries to make sense of delusional rants by Gaddafi, the Middle East is still clouded by uncertainty and in some cases absolute chaos.
The present situation should leave one impression in the minds of investors and politicians alike – energy security.
It doesn’t matter if you are a Republican or Democrat, rich or middle class, but our current oil addiction makes America vulnerable to such external shocks.
I commend the people of Tunisia, Egypt and the other Middle Eastern countries for seeking political and economic reforms, but why should it be at the expense of good Americans?
The revolutions taking place across the Middle East could be the spark that finally gets America hot for natural gas, especially if this contagion spreads any further.
BHP Billiton’s (BHP ) move to purchase the Arkansas’s Fayetteville Shale (approximately 487,000 acres) from Chesapeake Energy (CHK) indicates this growing concern. If people are actually buying into Nomura’s speculation and are sold on Oil reaching $220 usd, then Nat Gas plays makes all the more sense. Oil at an unviable price has to open the door for more ventures in Natural Gas development. I’m not saying this going to happen overnight, but if you have a long term investor mentality, it’s a good idea to look into mutual funds and ETFs that correlate to Nat Gas. We can’t guess who is going to win that race, but we can find the plays most correlated with the economic trend itself? Here we see how two Nat Gas plays have peformed against Nat Gas prices over the long term – the iPath Natural Gas ETF GAZ (etf) and the Goldman Sachs Commodity Strategy Mutual Fund (GCCIX):
If Natural Gas begins to fuel America’s engine, these funds should do well.
DISCLOSURE: no positions held.