FYI, I found Jim Cramer's 8/06/08 Realmoney.com blog entry titled 'Wind Is The Future, but Nat Gas Is Here Now' to be both well-written and tremendously insightful..thus I'm including it below in its entirety for reference's sake.For the record (and just in case you haven't picked up on it by now), I'm a strong believer in the below Natural Gas investing thesis because research shows the fuel to be the U.S.'s most practical and feasible solution for replacing/reducing dependence on crude oil-derived gasoline. Relative to gasoline, natural gas fuel is cheaper, cleaner, domestic and more abundant...what ELSE could we, as a people, ask for ??
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Jim Cramer Blog
Wind Is the Future, but Nat Gas Is Here Now
RealMoney.com Columnist
8/6/2008 12:21 PM EDT
URL: http://www.thestreet.com/p/rmoney/jimcramerblog/10432123.html
" The attacks on T. Boone Pickens' plans -- everything from his integrity and self-interest to his quixotic nature -- just make no sense whatsoever. They hold no water at all. They are just wrong-headed. The people against him, the ones that call him a dreamer, are the ones who have done no homework and are deeply cynical. And if they don't keep their mouths shut, we will forever be addicted to foreign oil.
While much of what he has been saying is that wind power can be substituted for a lot of other power sources, the fundament of his plan is to get autos to be using natural gas. Put aside his interests -- believe me, he cares about them, but only so far as he has been the investor in alternative energy for years and thinks it can be profitable -- Pickens' true motivation is that the technology for what he wants to have happen is occurring right now. In fact, he reminds me of the visionaries at Intel (INTC) who saw that the power of a mainframe IBM (IBM) computer could be put in the size of a pen -- a legendary presentation by Intel founder Robert Noyce that was widely scoffed at but all came true.
Let's review the alleged pie-in-the-sky elements of Pickens' plan. First, wind power, which is clean and efficient and able to be integrated to the grid much more easily than the critics say -- ask Quanta (PWR) , which does it -- and can be used in far more than just Texas. We are blessed with windy areas that have no use otherwise, and you can build cheap towers, turbines and blades without much opposition. That's the opposite of the now darling technology -- nuclear -- which really has no hope in this country because of siting difficulties and NIMBY. We have the technology, we have the raw ingredients, we have the abilities, we could take wind to 20% of our power by 2030, as the Department of Energy says, but we could cut 10 years from that with subsidies.
It is natural gas, though, that is the great conundrum, the great game-changer that few politicians and most pundits just don't get at all. The critics, like this Holman Jenkins in The Wall Street Journal, simply haven't done any research. They are using data and facts from 2003 and the industry has changed, changed to the point that the information from five years ago is valueless.
This is where the Noyce analogy comes in.
Every nat gas oil engineer and exec in the world knows that we have had 100 years' worth of natural gas underground in this country domestically -- not off the coasts, but within our borders.
And it has been totally inaccessible until five years ago. That's when drillers basically invented a new way to drill that makes it easy to get this gas out. It gets easier to get at every day, which is why you keep hearing about all of these "shales" that have gigantic finds -- just go look at Devon's (DVN) numbers today if you don't believe me. Look at the drilling! Look at the drilling that Chesapeake (CHK) is doing. I believe 100 years of nat gas -- which is two-thirds cleaner than oil including on the CO2 side, which is the most toxic pollutant -- is conservative.
So when you look at this fuel, you realize it should be used instead of gasoline as soon as possible. It is abundant, cheap, there are pipelines everywhere, it doesn't need to be refined, and it burns clean. What's lacking? Filling stations and cars. But not the technology for either, just the infrastructure.
Because of its newfound abundance, nat gas would be about half of the price of gasoline, which means that the payback for these new cars is quick. The opposite of SUVs.
Now, consider this positive that isn't being talked about enough: In Argentina, one-seventh of the cars run on natural gas. GM (GM) developed nat gas-compatible cars years ago, but because there were no filling stations and questionable reserves, the cars didn't take off. Remember, reserve worries, before horizontal drilling, were so great that Alan Greenspan held hearings on nat gas availability not that long ago.
Since then, though, we have solved the "questionable reserves" issue in spades. We have the distribution capacity, just not the filling stations. If you were Exxon (XOM) or BP (BP) you would build in the filling stations anticipating the coming surge here. If you were one of these ridiculous automakers, you would quickly put these cars on the drawing board -- right now there are kits to do it, and fleets already use it for buses and taxis in cities -- to meet the anticipated demand.
Of course, the politicians don't even know we have the abundance, hence the frustrating appearance by Chesapeake's Aubrey McClendon on Capitol Hill last week, where most lawmakers were amazed about the newfound abundance, one that doesn't need government subsidies or divisive votes by Democrats and Republicans.
In fact, the only real opponents of this fuel are the chemical companies that fear nat gas price increases, something pretty ridiculous given the abundance and the ability to import the stuff. That's the least of the problems we should worry about.
Wind and nat gas are the ways of the future, with nat gas the important bridge fuel for the next 20 years. We are so much closer to energy independence with cleaner energy than we have any time ever, but nobody cares, except the visionaries, the Noyces of this business: Boone Pickens and Aubrey McClendon.
I think it is only a matter of time before the cynics understand this (and I am not even including the peak power possibilities of thin-filmed base solar energy from First Solar (FSLR) , which is also using an Intel model to drive down the cost of industrial panels).
This future is here. It is investible and here. We can buy the nat gas companies that are drilling like mad -- Devon, Cabot Oil & Gas (hence why they missed the quarter) and Chesapeake -- and the company that makes the rigs that will make more drilling possible: National Oilwell Varco (NOV).
This is the single best theme in the market I know. It is why I stick with natural gas even as they have plummeted severely. I stick with it because I believe that under a new, more intelligent administration, this will all become obvious and the stocks will reflect this long-term thesis. "
At the time of publication, Cramer was long Cabot, National Oilwell Varco, Chesapeake, Quanta and Devon.
Data Courtesy: RealMoney.com + Jim Cramer
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