Investing in Natural Gas as a Commodity
Natural gas makes for a good investment because it is an important source of energy both in the United States and around the world, accounting for approximately 25 percent of energy consumption.
Although natural gas is sometimes used as a transportation fuel, the gasoline you buy at the gas station and natural gas have nothing to do with each other. The gasoline your car consumes is a product of crude oil, while natural gas is an entirely different member of the fossil fuel family used primarily for heating, cooling, and cooking purposes.
Liquefied natural gas, or LNG, is nothing but natural gas in a liquid state. LNG is easy to transport — an important characteristic as meeting increasing demand requires transporting natural gas across vast distances, like continents and oceans.
The majority of natural gas in the United States is transported through pipelines in a gaseous state. LNG is usually transported in specially designed tankers to consumer markets. Some of the major operators of natural gas pipelines that transport both natural gas and LNG are entities known as master limited partnerships (MLPs). You can profit from moving natural gas across the United States by investing in MLPs.
Because it is particularly clean-burning fossil fuels, natural gas has become increasingly popular as an energy source. In the United States alone, natural gas accounts for nearly a quarter of total energy consumption, second only to petroleum when it comes to generating energy. The primary consumers of this commodity are the industrial sector, residences, commercial interests, electricity generators, and the transportation sector.