What Does A Double Look Like?

The unusually cold winter in New England has lit a fire under the price of natural gas, which was trading between US$3.00 and US$4.00 per million BTU (MMBTU) for much of last year. On February 10, 2014, the spot price rose to as much as US$8.15.

As it turns out, weather has everything to do with natural-gas prices. When the winters are abnormally cold, people crank up the heat—which, in turn, spikes up the demand of natural gas and therefore the price:

Another reason why the spot price of natural gas jumped is that inventories are at five-year lows. It's the old supply-and-demand issue—as supply has been dwindling due to low prices and uneconomic production, the price has inevitably risen. This helpful chart from the Energy Information Agency (EIA) shows just how low this year's inventory is compared to previous years:

Obviously, utilities and power plants are the losers of this massive price spike, as they have to purchase the more expensive natural gas to provide the extra power over the winter period.

What about natural-gas producers, though? While we'll be happy to invest in those producers again at some point, that time is not quite here yet.

Notice in the above chart how the spot price of natural gas is falling almost as fast as it has risen just in the past few days—it shows you how volatile the spot market can be.

And the price could just as easily fall again due to the presence of thousands of "shadow wells" across America—those wells that were drilled but not completed. The producers drilled these wells and held on to them, waiting for a better time to sell their gas at higher prices… a time like now.

The influx of this new gas supply could take the natural-gas price down toward the US$3.00/MMBTU mark once the weather settles down, a price where only the leanest companies will survive. So this recent price spike is no reason for natural-gas producers to breathe a sigh of relief just yet.

However, the volatility of the natural-gas price is good for another energy investment we've been writing about.

What a Double Looks Like

The United States requires a good source of "base-load power"—the type of workhorse power plant that can provide electricity day in and day out.

Traditionally, this has been coal—but with the Obama administration sounding the death knells on these power plants, nuclear seems to be a better alternative… the threat of a nuclear disaster such as Fukushima notwithstanding.

America will need more electricity, and as the winter this time around has demonstrated, natural gas is not the most dependable way to go. With nuclear once again being discussed as the best alternative for the USA, uranium will become a hot commodity over the next few years.

Obama has been seriously messing with the uranium market as well, something that we discussed in another Casey Daily Dispatch two weeks ago. While that meddling is bad for America's national energy security, it's great for energy investors—because it's one of several factors that are sure to drive up the shares of uranium producers.

In the past 24 months, we have done quite well with our uranium speculations, and our portfolio holding Fission (FCU.V) delivered a double for our subscribers in less than six months. The current issue of the Casey Energy Report details the facts every speculator must know to be successful in the uranium sector, and we expect more doubles in the coming years from our uranium speculations.

If you want to catch uranium's next upswing, I suggest you read the current issue of the Casey Energy Report. It details the entire uranium sector, its outlook, and the best ways for smart investors to profit. For those more interested in natural gas, our upcoming issue will focus on just that—along with our pick of companies that make the cut.

I'm also very excited about an upcoming Casey Energy Report where, let's just say, I've figured out a way to beat Goldman Sachs and all the flashy Wall Street bankers at their own game. It will be a must-read.

The good news is, you can get all three of these issues—our top uranium picks, our in-depth natural-gas sector analysis, and how you can beat Wall Street—if you take the Casey Energy Report for a risk-free spin today.

You have 3 full months to figure out if it's right for you; if not, simply cancel by email or phone within that time frame and receive a 100% refund of every penny you paid—plus, you can keep all the monthly issues and special reports you've received during that time, with no further obligation. It really is that easy—click here to get started and to get instant access to the current uranium issue.

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