* In the interest of full disclosure, I own shares of CEP (a natural gas company), so this blog post could possibly be partial.

You've heard of peak oil? Well, I'm starting a new theory called peak natural gas. It's based on the fact that natural gas is formed in associated with fossil fuels and according to wikipedia is also "created by methanogenic organisms in marshes, bogs, and landfills."

Now as you know, urban sprawl has been transforming our marshes and bogs into shopping mall parking lots and such. And for the sake of the peak natural gas theory, we're just going to go ahead and ignore landfills. I mean, who has ever heard of drilling for natural gas amongst heaps of old newspapers, rubbish, and fast food containers?

So as the price of oil increases without triggering an increase to the price of natural gas, more demand for natural gas will be seen in the future, especially as peak oil sets in at $400 a barrel. The destruction of marshes & bogs will further increase the strain on natural gas supplies sending natural gas upwards of $30 per natural gas traded units (and you don't even want to know what it will be trading for once the big trading houses catch wind of this theory).

As a side note, in the interest of capitalism, pressure needs to be put on ecologists vs. economists, so the further paving of marshes and bogs can take place. I mean really, have you been to Florida lately? Do we really want more alligators & water moccasins when we can have alligator skin purses and moccasin boots? I like to subscribe to the theory "that which doesn't kill us makes for an excellent fashion statement".

So who's with me? It's time to spread the gospel and use up all those fossil fuels and pseudo-fossil fuels while we have the chance. I mean, in the end, once they're gone, won't it be good for the environment anyway? I call this zero sum environmentalism, and hopefully it'll make both sides of the global warming debate happy in the end. And if it doesn't, at least we won't have to deal with that pesky season of the year called "winter" anymore.

*In the sake of like total disclosure, I'll probably be shorting the snow shovel sector as well. 

6 Comments – Post Your Own

#1) On August 12, 2009 at 1:31 PM, IBDvalueinvestin (95.24) wrote:

if you believe what you wrote then BEXP, ATPG, &  SGY are better plays for Natural Gas as well as oil.

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#2) On August 12, 2009 at 1:44 PM, mikecart1 (95.89) wrote:

Natural Gas will rise but not anytime soon.  It's all about that there black gold. ;)

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#3) On August 12, 2009 at 2:01 PM, ReadEmAnWeep (23.18) wrote:

What are some good ways to get in on oil?

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#4) On August 12, 2009 at 2:03 PM, catoismymotor (84.63) wrote:

 "I call this zero sum environmentalism..."

Well written! You made me laugh out loud. Good job. :)

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#5) On August 12, 2009 at 2:29 PM, StopLaughing (< 20) wrote:

How did you arrive at a $400 figure for oil?

Roubini is suggesting that $100 oil would be as damaging to this current economy as $140 was last peak. I tend to agree with him that $100 oil would choke off the recovery. 

There is no shortage of Nat Gas and there are some switching costs from oil to gas. I would expect some switching as oil rises.  It would take a decade and government policy to switch half of US oil consumption to Nat Gas. It is more likely that hybrids will create the switch over a decade thru market forces. The Hybrids will use electricty generated by gas and mostly coal.

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#6) On August 12, 2009 at 3:11 PM, mode7 (91.91) wrote:

Not many Swift fans among the fool crowd, eh?

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