- Reserves deplete faster than oil (in general)
- Oil/natural gas ratio: the price of oil divided by the price of natural gas is at an all-time high (or close). This ratio stands at 17 (historically it has been at about an 8 or so), Natural gas prices will go up, oil will decline, or both. Also, natural gas is not a good hedge against the declining dollar (it is for the most part a domestic commodity) and storage capacity is more limited, thus not as admired by speculators as oil. This explains in part why it lagged the the spectacular performance of oil of late.
- At $4, natural gas it is uneconomical to develop and look for new reserves.
- No OPEC competition, LNG (liquid natural gas) imports are uneconomical at these prices.
- Politically more favorable than coal.
- After emission caps are implemented natural gas will become a cheaper alternative than politically and environmentally unfriendly coal.
Please read the following important disclosure here.
Enjoyed this read?
Share it with someone who’d love it too!
New to investing?
Explore these valuable guides to get started.
Value Investing
Student
Curriculum
The 6
Commandments
of Value
Investing
Letter to
a Young
Investor
Related Articles

Current thoughts on Tesla
Tesla market value of $780 billion mostly reflects Elon's future dreams, not car sales. The reality? Only $100-180 billion tied to the actual vehicle business.

Europe Can’t Hide Behind America Anymore
Americans have always outspent Europe on defense, but to be fair, we have a currency advantage. Our military might elevated our currency to reserve status.

IMA’s March 2025 Client Dinner Video
Once a year, my company, IMA, hosts a dinner for our clients. Most of them live outside of Denver—and many outside the U.S.—so this event gives us a rare and meaningful chance to meet face-to-face, often for the first time, and really get to know each other.

The Reputational Bankruptcy of the American Dollar
The US dollar will likely continue to get weaker, which is inflationary for the US. Let me start with some easily identifiable reasons.
0 comments