Rooting for Romney? Dump natural gas stocks

If Obama wins, the sector stands a chance. Without that, there would be no plans to encourage wider use of this abundant fuel.

By Jim Cramer Oct 12, 2012 8:55AM

thestreet.com logoRon Chapple, JupiterimagesMorgan Stanley's (MS) gutsy $5 natural gas call had all of the stocks in the patch flying. That would be a monumental move, one that would signify that the cuts have gotten things back into balance and that a new equilibrium has been set.

 

I just think it doesn't have any staying power. Many of the wells that are being drilled work at less than $2. They were closed because natural gas fell to those prices. We now have the lowest drill count in years, and the nat gas drilling industry has just been shut down for all but a handful of players

 

But there isn't one of them that doesn't start churning out the stuff at those prices, or prices well short of that.

 

The issue with natural gas, the thing that the bulls leave out, is that we still have no place to put the stuff and we have done next to nothing to use it. We have already almost totally switched off of oil heat, with only the least capitalized buildings still using it. The utility power plant switching from coal to nat gas has pretty much run its course, and at $5, all coal around the country is competitive with nat gas. We have gone pretty much nowhere in using it as a surface-vehicle fuel. I was embarrassed when I saw statistics saying Honda had sold 1,500 nat gas cars since introducing them last year. Fifteen hundred! Trucks aren't adopting nat gas engines very fast either. There's no impetus in Congress to help the conversion along. Rails, huge users of dirty diesel, have no plans to switch to new nat gas engines. 

 

Plus, the terminals to send it overseas are years from being complete, and the big plastic refineries of all of our nat gas liquids are just now getting off the drawing board.

 

Meanwhile, we have probably tripled the amount we have found in the past few years.

So while both presidential candidates, but particularly Republican Mitt Romney, advocate energy independence for North America by 2020, there is scant evidence that nat gas will play a substantial role in helping.

 

But there is one scenario in which we could get to $5: President Barack Obama gets re-elected, the EPA puts a temporary ban on nat gas fracking to study it and passes rules saying coal plants more than 20 years old have to be taken out of service.

 

That's bingo for the group. And it is increasingly getting more realistic. But if you believe Romney is going to win, you should be selling these stocks right now. He has no definitive plans to encourage its use as surface-vehicle fuel.

 

Yes, oddly the companies with the most existing wells are going to be winners under the Hard EPA standard. That's your hope if you own these stocks. That's how you get to $5. Frankly, it isn't that much of a stretch if you watch what is happening now with the EPA in Wyoming. It's being very aggressive in questioning fracking.

 

Ironic that the anti-fracking movement might very well be the best friend of the industry and of the shareholders who own stock in the big nat gas producing companies.

 

Jim Cramer. thestreet.com

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.

 

 

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43Comments
Oct 19, 2012 8:30AM
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If Romney wins he fires Ben Bernacke and the interest rates go up fast, as will inflation. It will kill the housing mkt. The extra 2$Trillion dollars for WARS in Syria, Iran and Russia will kill the economy and your kids. The stock market will buckle from the austherity programs and cuts from Romneyhood quick fix theories.

 

Dump your stocks as Romney will go backwards to start the Bush prgms to start losing 700k jobs per month as he lowers the 1% ers taxes while asking the 47% to pay more. It's the Bain forumula of management, Romneyhood.

Oct 16, 2012 12:58PM
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Romney should go Maverick go as Sarah says go Rogue !!!

 

He did it Mass as a gov'r. Romney had 800 Veto's because he was bi-partisan. He forced the commoners off his elevator and made them walk up the stairs while putting a sign on it Gov'r Only. He's  a real Bain man ie.  me, me, me, me, me, me, me, me, me, me, me, me......

 

I want to be King...opps I'm Prez....

Oct 15, 2012 11:58PM
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Jim Cramer wants to pay more for natural and regular gas at the pump! Why? Get the nonfunctional invasive EPA rules out of the way and pay less for gas. Less gas tax, better pump prices for the everyone! Natural gas usage would go up if EPA would promote it. Somebody tell Jim Cramer that gas consumption is a supply -v- demand market. For natural gas: more demand more $. For regular gas: less demand, less consumer cost. It is possible to have natural gas and regular gas compete for lower overall transportation costs. If you like the status quo on energy policy, you will pay more and more at the pump. Jobless rate will continue, health care costs will continue to rise. Romney is better looking and smarter than 'bama. Frank-Dodd housing/banking policy and EPA are to blame for the economic crash of '08.
Oct 15, 2012 12:12PM
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Dude - please keep posting it's comedy gold !

 

 

Duh, was meant to be,

 

 But obviously you are not up on all of Joe's miss speaks.

Oct 15, 2012 9:19AM
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If Romney wins he fires Ben Bernacke and the interest rates go up fast, as will inflation. It will kill the housing mkt. The extra 2$Trillion dollars for WARS in Syria, Iran and Russia will kill the economy and your kids. The stock market will buckle from the austherity programs and cuts from Romneyhood quick fix theories.

Dump your stocks as Romney will go backwards to start the Bush prgms to start losing 700k jobs per month as he lowers the 1% ers taxes while asking the 47% to pay more. It's the Bain forumula of management, Romneyhood.

Oct 12, 2012 7:26PM
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Dude - please keep posting it's comedy gold !

" Or maybe you are just one of those mean dems who like to laugh will other people are tiring to make a point. But want it quite when you talk. At least I know how many letters the word JOBS have in it. 3 little letters, Haaa, seams me and Joe have something in common"

JOBS = 3 letters !!!  I take back the can't spell crack --- let's go with can't count or spell 
Oct 12, 2012 6:15PM
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Who sad that?  Are you felling picked on?"

Change your name to can't spell ......
 

HA, a typical stereotype, perhaps there is another observation that you could make?

 

 Or maybe you are just one of those mean dems who like to laugh will other people are tiring to make a point. But want it quite when you talk. At least I know how many letters the word JOBS have in it. 3 little letters, Haaa, seams me and Joe have something in common

 

Oct 12, 2012 5:48PM
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Hey Cramer you sell your stocks - I'm keeping mine , even with a Romney win! Haven't  you ever heard of exporting?
Oct 12, 2012 5:04PM
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"Who sad that?  Are you felling picked on?"

Change your name to can't spell ......
Oct 12, 2012 4:08PM
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Funny - it was ok for romney to interrupt,

 

Who sad that?  Are you felling picked on?

Oct 12, 2012 2:56PM
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the debate was pretty much the same old rhetoric until she asked about religion

 

both catholics had very different answers

 

ryan wants to impose his beliefs

 

biden lets his belief define him but doesn't impose on others

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Watch the price of natural gas carefully for the next three months (that is how far ahead that I

think economic prodictions are good for.  If it's price has dropped  significantly, say 35 percent,

from its close on October 11th, then hail hail Jim Cramer as a hard worker with good foresight.

Oct 12, 2012 2:26PM
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The market is up over 60% with Obama and there`s been 31 straight months of job growth.

What are some of these Obama haters smoking.Those of us who were smart enough to put

money in the market are happy as a clam.I`m surprised these haters are smart enough to even

post comments.

Oct 12, 2012 1:38PM
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Sell maybe because you will not get a good return. Sell your coal stocks first. NG plants are dirt cheap to build vs. NG. And are giving the established coal a reason to double their NG feeder and use it for peaking.

 

Best of luck

Oct 12, 2012 1:37PM
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"My college professors would have ask me not to come back if I acted like that in a debate, there are rules to the art, opps he's a dem rules do not apply"

Funny - it was ok for romney to interrupt, smirk and leer like an old man at a strip show but now that is somehow "unfair" for Biden to question ryans bovine excrement....


Oct 12, 2012 1:31PM
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And another interesting nugget that I found in the BBC news --- romney was using the story about meeting the US Seal gentleman who was murdered in Libya ...and telling of how he met him at a party and was very impressed.

The Seals close friend tell us that Romney introduced himself 4 times in a couple of hours and clearly had no idea he had done so - 

Furthermore the Mother of the Seal told romneys camp to stop using the story to bash the President.

This is the kind of man romney is ...........PHONEY !!!!!!
Oct 12, 2012 1:26PM
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To add to Tumbleweeds ayn rand comments - she was also fascinated by serial killers because of their lack of empathy !

aRyan used to make her books REQUIRED reading for his interns before he realised it would be politically awkward.
Oct 12, 2012 1:19PM
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Biden was lucid and forceful. A MAN against a BOY

 

Lucid  --  that was probably a surprise

 

Forceful -  If that is what you want to call it.

 

It was pretty obvious that you could see the reason the Senate has done nothing for the last 4 years. Kinda reminded me of growing up, when my father would tell me it's my way or the highway.

 

My college professors would have ask me not to come back if I acted like that in a debate, there are rules to the art, opps he's a dem rules do not apply

 

So much for being the compassionate caring party, now the BITE Me party 

Oct 12, 2012 1:15PM
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they never manufactured a PROPER  and feasible all CNG automobile to begin with.

nobody purchases these duel fuel flops. not even the marijuana users who crabbed for them.

everything cramer said i told people more than 5 years ago. and i was then called being a p.o.s. and on meds.

right on Chesapeake reports clearly stated they would shut down natural gas drilling in favor of switching to oil...due to the low demand and the sinking prices of natural gas. in hopes that demand would raise the price while shrinking supply. its all supply and demand. and this report was in more than 4 years ago.

thank you for your time so i can be objective on this one.

Oct 12, 2012 12:36PM
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How's THIS for a non sequitur:
  Religious, pro life, Family Guy Ryan  ADORES Ayn Rand yet she was an Atheist who was rabidly pro abortion and famously said that the family unit was of little value to society, thus making Mom a good source of cheap labor
 I know EXACTLY why he ignores all that. Because Ayn rationalizes that greed is good --- it creates large, concentrated pools of money that can be benevolently trickled down on the little people who would be utterly lost without it. Makes a power trip seem like a good thing too. Such benefactors to us all! All they really want in return is to just think of them as swell guys
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