Oil demand changes as a function of vehicle fuel use to natural gas
Any thoughts on how the oil demand curve (in the U.S. and for LINN particularly) will be affected upon a massive U.S.or global shift toward use of natural gas for vehicle transportation? Lots of variables and assumptions needed, I'm sure, but how would the oil producers be affected, say in five or ten years?
Whatever happens abroad won't have much of an effect here anyway. Limited exports of NG and lack of companies investing in infrastucture (fueling stations, for example) will keep the market for NG transportation minimal at best. The most demand will come from utilities, fertilizer and chemical manufacturers, whho have committed to investing billions of dollars over the next couple of years.
Natural gas remains an economically cyclical fuel. Electricity and chemical manufacturing.
With the re-election of Obama most economists including our Fed have lowered America's long term economic growth rate to 1.5% from our modern average of 3%
Obama is blocking export projects. Obama is defacto blocking ng as a surface fuel. Then there are the rules coming from Obama's EPA worshipers of their humanity hating earth goddess new fracturing laws purposefully delayed until after the election.
Positives in the net bleak four Obama years to come are continued switching of electrical generation to ng to meet environmental standards design to bankrupt coal rather than clean the environment.
Natural gas rig counts are way down and even the Marcellus/Utica activity is falling off. Producers show a general unwillingness to sell natural gas below $4. Current supply will continue to drop as the frac wells have high decline rates and the rigs are not there to keep production flowing.
The big pay off to making American energy independent has been delayed by our poor choice in the last election. Along with job growth and improving American living standards. The burst of food inflation is coming for dairy and meat is coming early in 2013 as the herds were cut way back.
Finally we add much higher taxes on investment and a tidal wave of billion dollar regulations not relate to energy delayed until after the election.
LINE is a good choice as the hedging takes us through what is most likely to be yet another very dismal four years. But I bet at some point we will see ng move into the $4 depending on weather in the next four years.