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.
Morgan 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 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.
More from TheStreet.com
The US needs statesmen to make us energy independent. We could be, but the oil industry prefers a weak and dependent America.
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!!
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.
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
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.
Funny - it was ok for romney to interrupt,
Who sad that? Are you felling picked on?
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.
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.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
'We're not exactly in a uniformly strong market,' says the notably pessimistic newsletter publisher.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.