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Norman: Ukraine Means More Natural Gas Exports

They say the only certainties in life are death and taxes. Now you can add a new one to that list: higher natural gas prices.

On several occasions I have written about the misguided trend developing in the U.S. toward exporting away our natural gas bounty. America has been blessed with huge amounts of natural gas, making that critical energy source very abundant and cheap. This has translated into major benefits for American industry and consumers.

World prices for natural gas are anywhere from 3x to 4x as high as our domestic prices. I have explained in the past how exporting our gas can only mean that over time our domestic price will trend toward the world price.

The export trend is being driven by giant energy producers here in the U.S., who have spent millions lobbying Congress and the Obama Administration to approve more export markets. Thankfully the trend has been going slowly.

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Only a few nations, such as China, Japan, Canada and Mexico, have been approved for U.S. natural gas exports (and some others approved for "re-export"). So the rising price trend, which is already happening, is developing slowly.

Expect all that to change for one simple reason: Ukraine. The U.S. is looking to punish Russia for its actions in Crimea. Congress and the Obama Administration want to target Russia's gas exports Europe to try and inflict damage on the Russian economy. Congressional pressure is building on the Energy Department to expedite gas sales to Europe.

Ironically, Russia should never even be in a position to succumb to pressure on its energy sector, primarily because it should not be exporting a single barrel of oil or natural gas. No country should. Energy is a precious resource: Once it's burned, it's gone forever. Cheap energy provides huge advantages to any nation lucky enough to possess it. Selling it to the rest of the world for foreign exchange is just plain dumb. It's much better held as a nation's inheritance and used accordingly.

If I were Putin, or if I were advising him (neither applies), I would tell him to keep his energy and use it for the benefit of his own citizens for now and for future generations. Why give it away? To earn dollars? That makes no sense. It's only a benefit for the energy companies themselves, not for the country as a whole.

The U.S. will ultimately do the same dumb thing and export away its energy advantage. You already see it happening. This trend will only accelerate now that Congress has found a way to use America's oil and natural gas bounty as a geopolitical "weapon" in a new cold war.

Who wins in this? As always, it's not the American consumer, who probably doesn't give a hoot about what's happening in Ukraine. Americans will now enjoy higher electricity and heating prices and the manufacturing sector of the U.S. economy. The economy has been undergoing a renaissance largely because of cheap energy, and now we will see that advantage erode.

Who is in charge of our policies here? Whoever it is has one goal in mind, and that goal is seeing to it that the large corporate interests are continually enriched at the expense of everyone else. Get ready for a steadily rising trend of natural gas prices. Once the market gets wind of this, you'll be shocked at how fast that "discounting mechanism" will bring prices more in line with the world price for gas.

Get long natural gas somehow: futures, options or producers such as Conoco Philips (COP - Get Report), Apache (APA - Get Report) or Marathon (MRO - Get Report), to name a few.

Editor's Note: This article was originally published at 1:30 p.m. on Real Money on March 20.

At the time of publication, Norman had no positions in stocks mentioned.

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