NAT GAS Act: US Energy Policy Needs Action

| September 13, 2011 | 0 Comments

We’ve reached a defining moment in US history.

The global economy is on the brink of falling into another recession. Americans need jobs.  And the US government needs to cut spending and balance the budget.

It seems like a no-brainer for Congress to address our energy policy.

The amount of money we spend importing oil is simply staggering…

In July, the US imported 359 million barrels of oil and we paid nearly $42 billion.  At this rate, the US will spend $500 billion on imported oil in 2011.

Clearly, importing millions of barrels of oil and exporting billions of dollars of cash each month to foreign oil producers is a drag on our economy.

But on the flip side…

If we can reduce our dependence on foreign oil and encourage the use of domestic energy sources, it should provide a boost to our economy.

As you know, the NAT GAS Act is a piece of legislation stuck in Congress that’s intended to promote natural gas as a transportation fuel.

And the US happens to be sitting on about 2,543 trillion cubic feet of recoverable natural gas.  That’s enough to cover demand for 100 years! And there might even be more than that…

Simply put, the NAT GAS Act would provide tax credits.

The tax credits will be for converting gas powered engines to cleaner burning CNG (compressed natural gas) fueled engines.  As well as increasing the refueling property tax credit and those for setting up a home refueling station.

But here’s the thing…

Natural gas is on the verge of becoming a major player in transportation fuels even without the Nat Gas Act.

Just take a look around…

Lately I’ve seen commercials and advertisements all over TV and the web promoting natural gas as a transportation fuel.

And there’s virtually a new headline everyday about one company or another making the switch to natural gas.  Companies are using it to fuel trucks, boats, buses, and anything else running on diesel.

They’re not switching to natural gas because it’s better for the environment or to get a handout from the government.  No… They’re switching because they’ll save money by moving from expensive diesel to cheap natural gas.

What’s more, I’ve seen a united front from the major players in the industry.

They’re working together and creating partnerships to ensure the viability of their industry.  It’s a thing of capitalistic beauty…

The only problem is the NAT GAS Act is holding back progress.

As long as it remains on the table, it’s in a company’s best interest to wait.  Remember, the proposed tax credits could be worth up to $64,000 per vehicle.

A company operating 100 trucks could receive over $6 million in tax credits to convert their fleet to natural gas.  And that’s a big chunk of cash…

In short, companies are crazy to convert to natural gas until the fate of the NAT GAS Act is decided.

But here’s the key…

I don’t think it matters if the NAT GAS Act passes or fails!

At this point, companies don’t need tax incentives to make the switch.  It’s already economically viable!  Congress just needs to vote on the bill so the incentive to wait for a potential tax credit is removed.

Once Congress votes, I think demand for everything to do with natural gas as a transportation fuel is going to skyrocket.

What does that mean for you?

It’s time to buy natural gas stocks.

A good place to start is Chesapeake Energy (CHK).  They’re a major player in the exploration and production of natural gas in the US.  They’ll be a huge beneficiary of increased demand and rising prices.

Then, be patient… wait for government to get out of the way of private innovation.  And once they are, you’ll be locked and loaded to profit as natural gas transforms the landscape of energy usage in the US.

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Category: Commodities

About the Author ()

Corey Williams is the editor of Sector ETF Trader, an investment advisory service focused on profiting from ETFs and the economic cycle. Under Corey’s leadership, the Sector ETF Trader has become one of the most popular and successful ETF advisories around. In addition to his groundbreaking service, Corey is the lead contributor to ETF Trading Research, where he shares his insights about ETFs and financial markets on a daily basis. He’s also a regular contributor to the Dynamic Wealth Report and the editor of one the hottest option trading services around – Elite Option Trader.

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