Tags: Kilduff | Natural | Gas | cheap

Again Capital's John Kilduff: We May Have to 'Give' Natural Gas Away

Friday, 30 March 2012 07:38 AM

Natural gas will reshape the U.S. energy and transportation industries, fueling more power plants and even more of our cars but until then, it's so cheap, we may have to give it away, says John Kilduff of Again Capital.

Robust supply and a warm winter have sent natural gas prices to rock-bottom levels, with prices currently at $2.165 per million British thermal units.

Expect prices to fall even more.

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"We saw a substantial injection, or increase in inventories. It's going to hasten the move below $2 and puts even $1.50 right now within the realm of possibility of being broken before Memorial Day," Kilduff tells CNBC.

"We may run out of available storage for production. They'll have to take extreme measures to shut in, or flare it, or practically give it away to get it moving and manage the production," Kilduff adds.

Supply for natural gas has boomed thanks to shale drilling, and talk of the fuel replacing gasoline in cars is growing not just in a technological capacity but in terms of economic feasibility as well.

"The economics seem to work," says Mark Hanson, an analyst at investment research firm Morningstar, according to the Associated Press.

Issues facing the use of natural gas as transportation fuel now surround how quickly the industry can develop infrastructure.

Big automakers are already designing and rolling out trucks and cars that run on natural gas, and some experts predict the trend to grow as the market demands it.

"We are definitely in a pull market, we've been pushing for a long time but I think a tipping point has been reached," says Jim Harger, chief marketing officer for Clean Energy Fuels, according to AOL Energy.

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