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Martin Tillier

Martin Tillier

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AGL Resources (GAS) is A Risk Worth Taking

When the price of oil was in freefall it understandably captured a lot of attention. The same fate befalling natural gas, however, was of less interest to most media outlets. In many ways that is understandable; the price of natural gas has a much less direct effect on the vast majority of consumers than that of oil, so stories about it don’t drive ratings. The fact is, though, that the decline in natural gas prices was, if anything, more spectacular.

When oil was in full decline from September to December of last year natural gas prices held up pretty well, supported by natural demand during a cold winter and the prospect of increasing usage as the current U.S. administration demanded a shift to “cleaner” fuels. Eventually, however, the oversupply that was part of the problem for oil and was, if anything worse for natural gas, caught up.

According to the EIA’s April Short Term Energy Outlook, U.S. gas consumption is set to cycle within the recent range, while supply is set on a steady upward path.


Given that natural gas, unlike oil, can be exported from the U.S., increased supply here is less of a problem than it is for crude, but a lack of infrastructure means that export volume is limited. With gas prices this low there is not much incentive to invest in that infrastructure, which could mean that midstream and downstream gas companies are moving into a period of increased pricing power.

Companies such as AGL resources (GAS)…




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