Natural Gas Act: Is It Finally About To Pass?

| November 17, 2011 | 0 Comments

The energy sector rumor mill is running at full speed.

Now I’m not one for rumors, especially when it comes to investing.  But I’ll admit… this one has me excited.

What tidbit could possibly be so juicy?

The Nat Gas Act (H.R. 1380) is once again under serious consideration by lawmakers.  In case you don’t know, H.R. 1380 is a bill to push the US towards a natural gas transportation future.

The fact that it’s currently being debated in the Senate is promising.

And according to the rumor mill, the bill is days away from passing…

Now let me be clear, the rumor of it passing soon is just that- a big fat rumor.

Lawmakers may or may not be days away from giving this highly important bill the green light.  What’s more, the bill would still have to pass muster in the House of Representatives.  It would also have to cross President Obama’s desk for a final signature.

So the idea of this bill passing in the next few days is a long shot at best.

But if the rumor turns out to be true, hold onto your hats…

Passing of the Nat Gas Act means the world of energy is about to change… big time.

No longer will Middle Eastern countries hold the US over a barrel.  Once this movement gains traction, US dependence on overseas oil will diminish greatly.

Obviously, the switch to a natural gas future won’t happen overnight.  But a few years down the road it’s feasible the US can slash its $250 billion a year oil import bill in half.

That in itself would be an enormous stimulus for the US economy.

What’s more, the US trucking industry can go from relying on expensive overseas oil to running on homegrown natural gas.  Not only does natural gas burn cleaner, it’s currently around $2.00 per gallon cheaper than diesel.

Under the bill, trucking companies would get up to a $64,000 tax credit for each 26,000 lb. or heavier truck they convert to run on natural gas.  Converting the US trucking fleet to cleaner burning natural gas would be a no-brainer at that point.

How can you benefit from the Nat Gas Act?

This isn’t the first time I’ve talked about the profit potential in this piece of legislation.

I’ve mentioned stocks like Westport Innovations (WPRT) and Clean Energy Fuels (CLNE) numerous times in the past.  Both these companies will benefit directly if the Nat Gas Act passes.

It’s a speculative bet, but I bought these stocks months ago simply due to the possibility this bill may pass.

But be very careful if you’re thinking of buying them here…

Both stocks rallied heavily Tuesday on rumors H.R. 1380 will pass.  But if it doesn’t pass soon (the most likely scenario), these stocks will drop right back down to where they were trading before the rumor hit.

So if you’re buying here, you’re likely buying into a rumor-induced market head fake.

Regardless of the short-term gyrations in these two stocks, they’ll likely be much higher a few years down the road.  Trucking companies are already moving towards natural gas without government help.  In my opinion, it’s just a matter of time before these companies are highly profitable.

And if the government passes the Nat Gas Act, that day will come a little sooner.

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Category: Commodities

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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