BruneGoodsell954

One of my favorite magazines is Forbes, and one of my favorite columnists is Ken Fisher. In the July 19, 2010 issue, Ken makes some comments about the changing nature of gas and oil exploration. To summarize his comments (forgive me if I misquote), the world of energy exploration and production is changing radically by something called 'fracking'. This involves relatively newer techniques using an older technology whereby fluid at very high pressure is injected into a well, usually a natural gas well, thereby dramatically increasing output.

Ken's thought is that this advancement of technology will keep natural gas prices cheap for a very long time. He thinks $2 per thousand cubic feet is a logical result which is about 40% of today's price.

Ken recommends that you buy the service companies providing these technologies to the energy industry and recommends several names.

The Price of Natural Gas

AmeraTex Energy - He could be right. Major gas fields that were formerly unproductive are now providing massive amounts of gas. New fields that were previously ignored are now bonanzas. The price of gas has fallen dramatically and now rests around $5, and stubbornly refuses to move upward.

Some very famous people have said that the price increase is coming and will be dramatic. They cite all kinds of reasons including economic recovery increasing demand. They cite rapid decline rates for the new technology. They cite historical records. They cite a dramatic shift in North America from scarce oil to plentiful natural gas. Famous speakers appear on 'Larry King Live' to promote the use of natural gas. Etc.

What to Invest In? Resources.

AmeraTex Energy Inc - We certainly agree that resources are the place to invest, and we also agree that service companies are good bets. But look at all of the companies servicing the industry. Several drillers have given up the business because oil and gas explorers couldn't raise the financing necessary for new wells. The stock price of numerous service companies are within the range that they were in before the great fall in October 2008, especially the juniors and smaller companies where the Cymorfund specializes..

The alternate way to look at this, is that these companies will not likely jump in price. If they sustain profits over a long period, or appear to be earning super profits, then the price of their stock will increase, and sometimes nicely.

The problem is that no-one guesses correctly all the time as to what stocks to buy. If you are satisfied with a modest return on the winners, how will you offset the losses on the losers?

Alternate Energy - Windmills

Ken also makes the point that environmentalists are against using fossil fuels as they all contribute to global warming. The major contributors to greenhouse gases are coal-fired energy plants. Switching to natural gas provides a significant reduction in emissions, although costs are higher. All of this is undeniable.

Yet as time passes, wind powered energy is proving to be illusive cost wise, NIMBY complaints are being heard frequently, naturalists complain about noise damaging the environment and the effects on birds, and taxpayers are starting to resent the obscene amount of subsidies necessary. So wind does not seem the answer.

Solar Cells

It seems hardly a day goes by without some announcement of a major advance in this technology, yet costs remain stubbornly high, great amounts of real estate are needed for the installations, and without massive subsidies, they just aren't economic, nor does that day seem to be approaching.

AmeraTex Energy Ltd - The total contribution of all alternate energy sources to energy needs of industry and consumers remains at less than 1%. Reality is starting to set in. Alternate fuels cost too much, have too many drawbacks, and we simply need the next great discovery to make any impact whatsoever.

Buy Junior Resource Stocks

The fact remains that the greatest 'bang for the buck' is with the shares of companies that have the potential to develop the next great oil field, or natural gas field, and it doesn't matter that these fields are in North America. It does matter that management is very good, that the political environment is stable and welcoming, and that it is a place that welcomes this type of investment and exploration.

A basket of junior energy stocks developing natural gas wells, oil deposits, and uranium fields is a good place to invest.