Natural Gas Still Too Volatile
David Serchuk, 09.21.09, 06:00 PM EDT
Its price has skyrocketed in the past few weeks, but supply still outweighs demand.


Natural gas prices have recently become lighter than air, as the commodity finally gets some love after a year-long slide. Yet even though it has gained traction, our team of investment advisors is cautious about the fuel, unconvinced demand is set to take off.

After hitting a seven-year low of $2.41 per million British thermal units in early September, it's risen 54.4% to $3.72. Despite this recent rise, the commodity is still down 50.4% from a year ago.



Yahoo! BuzzThe U.S. Energy Information Administration says improved retail sales and industrial production were likely factors in the upswing for natural gas.

Still, natural gas' long-term prospects look good. It is clean burning, large quantities of it are produced domestically and the government has interest in making it more popular. One measure of this is the New Alternative Transportation to Give Americans Solutions Act, introduced this past July, which would increase and extend tax credits for natural gas vehicles and refueling stations. Among other benefits, this bill would allow a 100% deduction for the cost of a natural gas vehicle manufacturing facility, provided said facility is in service before 2015. The bill was co-sponsored by Senators Orrin Hatch, R-Utah, Robert Menendez, D-N.J., and Lisa Murkowski, R-Alaska. Currently the bill sits before the Senate Finance Committee.


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