US natural gas: a long-term bull market

US natural gas prices have hovered around the $4 per million British thermal units (mbtu) mark for the past few years now. They’ve slipped back in recent months – summer demand for air conditioning was lower than usual, while supply grew by 4% compared to last year, as producers pumped out more gas.

But in the long-term, expect prices to rise. Hydraulic fracturing (‘fracking’) technology has made it possible to extract gas from once-inaccessible rock formations, giving supplies a huge boost. But demand should gradually catch up.

Fossil fuels are set to dominate the energy market for years to come, accounting for 75% of global energy supply in 2035, according to the International Energy Agency. Gas should gain most from this trend.

It is the cleanest-burning fossil fuel, and today’s low prices should encourage households and industries to switch to it, spurred partly by more stringent environmental regulations. There is a growing market for natural gas-powered vehicles, which currently account for around 1% of cars in the US.

There is also plenty of scope for the US to export more natural gas to parts of the world where gas is more expensive. Capital Economics reckons prices will have risen to $6 per mbtu by the end of 2016.

66% off newsstand price

12 issues (and much more) for just £12

That’s right. We’ll give you 12 issues of MoneyWeek magazine, complete access to our exclusive web articles, our latest wealth building reports and videos as well as our subscriber-only email… for just £12.

That’s just £1 per week for Britain’s best-selling financial magazine.

Click here to take advantage of our offer

Britain is leaving the European Union. Donald Trump is reducing America’s role in global markets. Both will have profound consequences for you as an investor.

MoneyWeek analyses the critical issues facing British investors on a weekly basis. And, unlike other publications, we provide you with the solutions to help you turn a situation to your financial advantage.

Take up our offer today, and we’ll send you three of our most important investment reports:

All three of these reports are yours when you take up our 12 issues for £12 offer today.

MoneyWeek has been advising private British investors on what to do with their money since 2000. Our calls over that period have enabled our readers to both make and save a great deal of money – hence our position as the UK’s most-trusted investment publication.

Click here to subscribe for just £12