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 12, 2012 12:30PM
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"If Obama wins, the sector stands a chance." 

It should read if Obama wins, nobody stands a chance!!!!
Oct 12, 2012 12:23PM
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Know how you won the debate? You get your opponents goat via a bunch of thumbs down yet there is no logical rebuttal ,just insults that roll off a 65 year old like water off a duck's back. That's the best part of being 65 You are who you are and if anybody doesn't like it they can go screw themselves. Peer pressure? The need to fit in or get approval? LONG gone!
 What;s gone now is my confidence that the Middle Class of the US is capable of making sound decisions  . After all, the evidence shows they elected Bush twice, huh. Well, sort of the first time
Oct 12, 2012 12:12PM
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We should be driving natural gas cars and heating with our own natural gas! The oil industry pays lobbyists and congress big bucks to make sure we stay dependent on insane and insanely rich oil exporting countries.

The US needs statesmen to make us energy independent. We could be, but the oil industry prefers a weak and dependent America.

Oct 12, 2012 12:06PM
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 Oil discovered on US soil goes into a WORLD MARKET pool. THEN you get to pay WORLD MARKET prices instead of local ones driven by local supply and demand. Ain't free trade swell! Exxon sure as hell thinks so
Oct 12, 2012 11:59AM
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  Ryan lost ALL my respect when he said he ran a marathon in less than three hours when in reality it took over 4. And he will NEVER get it back. .I felt like SPITTING on him last night
Oct 12, 2012 11:56AM
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 Biden was lucid and forceful. A MAN against a BOY
Oct 12, 2012 11:55AM
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 They will deplete the oil fields in the Arctic and Gulf BEFORE we switch to natural gas. And they will buy off as many Senators as needed to ensure it
Oct 12, 2012 11:49AM
Oct 12, 2012 11:43AM
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Jim, get a life!  By his own admission, Obama is going to cause the price of our electricity to skyrocket so he can promote his wind and solar agenda. He doesn't want nat gas, coal or oil to succeed even though we could become energy independent in no time flat. Pretty weird stuff.
Oct 12, 2012 11:24AM
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antonia miraydari mentioned romney in her column yesterday and got hundred of comments so I guess cramer got a little jealous as he needs the clicks to help his newsletter.
Oct 12, 2012 11:13AM
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Cramer - what a hack! The sheep follow charisma and traveling salespersons that bark out tripe and meaningless scenarios'.

He knows the markets and the machinations no doubt - his opinions, on the other hand, are suspect.

Think long-term; coal will keep us going in the short-term, NG and NGL will, over time, take the place of coal. Wind and solar are not ready for effective production of energy yet.

Cramer knows how to play the system for money!!

 

Oct 12, 2012 11:08AM
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Rooting for Romney is like rooting for Bernie Madoff
Oct 12, 2012 10:48AM
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I have been working in the O&G industry for over 30 years.     If we can get this clown out of the White House this economy will take off immediately.  The demand for natural gas will follow.  On another note, I wish Jim would keep his subtle liberal political commentary out of the discussion.
Oct 12, 2012 10:20AM
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Wow, this dude does little research. Honda introduced the natural gas civic in 1998, not last year. Pilot truck stop is getting liquid natural gas filling stations installed in ALL 250 truck stops funded by Clean Energy. By the end of next year 150 will be completed. The other 100 will be up and running within 2 years after that. So in 3 years Pilot will have natural gas filling stations in all their truck stops. The pilot 10 miles from my house just completed 1 this month. The tucking industry cannot get rid of their diesel trucks fast enough. All this is happening with mostly private money. Ford has been selling pick-ups and cargo vans with a propane( propane mostly comes from natural gas) option now for 6 model years. I have a van on order right now. I will save $17,000 in fuel costs alone at todays prices. Where I live I can buy propane auto gas for $2.35 a gallon. Gasoline is $4.45. I don't need any incentive from the Government.
Oct 12, 2012 10:20AM
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Etch- a -Sketch and Mr Flip Flop came from Romney's own Rep challengers. They have seen it all from him over his 6yr run for power.  His 47% comment was the real Romney.

Let's keep our money here in America and rebuild America not Syria, Iran, China. Not more Wars.

Oct 12, 2012 9:53AM
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Jimmy is right in most of his commentary, but for the best possilbe rep he should stick to industry commentary and not be picking ind'l stocks. That's a loser's game even if you have a winning percentage, as one big loser always sticks in our minds far longer than a big winner does.
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