This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Moving Beyond Petroleum

NEW YORK ( TheStreet) -- ETF investors are moving beyond petroleum in the wake of the Gulf disaster, with natural gas funds such as First Trust ISE Revere Natural Gas (FCG) leading the way.

Before the disaster in the Gulf, BP (BP - Get Report) was using its initials in a "Beyond Petroleum" marketing campaign that played up its push into renewable energy.

Now, in addition to the disaster in the Gulf, the company and its competitors are suffering from a decline in oil prices and difficulty in the alternative energy space, where European budget problems have hurt the heavily subsidized sector.

While energy ETFs are broadly lower in the past month, one bright spot is natural gas. Investors are becoming more optimistic after a rise in prices has lifted gas ETFs such as U.S. Natural Gas (UNG) and U.S. 12 Month Natural Gas (UNL).

I advise investors not to invest in these ETFs, since they track futures prices and suffer from contango, but UNL is superior to UNG if that's the route you want to take.

The natural gas explorers and producers are also moving higher, with FCG showing a small gain in the past month, versus losses for a whole host of oil ETFs such as iShares Dow Jones U.S. Energy (IYE). One fund doing better than the oil group of ETFs, but behind FCG, is the natural gas heavy iShares Dow Jones U.S. Oil & Gas Exploration & Production (IEO).

Individual investors aren't the only ones bidding up natural gas assets. Royal Dutch Shell (RD) spent $4.7 billion at the end of May to purchase a private Pennsylvania firm with shale gas properties. One of the investors in that firm was KKR, and it's rolling over its profits into another shale gas play in southern Texas.

Producers are stepping up production as well, with Baker Hughes (BHI) reporting an increase in the rig count.

In addition to the improvement in natural gas prices and the value of assets in the sector, the political climate may also improve. Natural gas has a number of features that make it favorable as a political issue.

For environmentalists, it emits less carbon than oil and coal, and after the BP disaster, it's a plus that gas is mainly obtained via land drilling. There's some concern about potential ground water contamination from the fracking techniques used in shale gas drilling, but oil and coal extraction are not without their own problems.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BP $31.42 0.00%
FCG $22.85 0.00%
IEO $54.38 0.00%
TAN $22.47 0.00%
UNL $9.54 0.00%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs