The Strait of Hormuz, off the coast of Iran, is the superhighway of energy resources. In fact, it just might be the most important stretch of water in the entire world.
At a mere 21 miles wide, the Strait floats hundreds of millions of barrels of crude oil every day.
So when a sea change (no pun intended) sweeps across such a vital region, investors should take note. And trust me, an event that big is happening right now.
You see, oil isn’t the only resource making its way through the Strait of Hormuz. There’s another commodity that travels the Strait – liquefied natural gas (LNG) – and it’s seeing profoundly increased traffic recently.
Now, increased traffic in the Strait of Hormuz is simply the canary in the coal mine. But this time, the hype is real. Every fundamental points to an LNG explosion in the months ahead. Research shows that global LNG demand will easily outstrip supply additions next year.
In fact, Barclays (BCS) predicts that global regasification capacity – a measure of demand – will grow by 2.8 billion cubic feet (bcf) per day in 2014.
That’s more than three times the amount expected to be added to the supply side. Best of all, says Kevin Lynch, the Vice-Chair of BMO Financial Group, is that “unambiguous demand” from Asia’s growing economies will keep prices high.
Right now, nobody is better positioned to take advantage of a potential LNG explosion than the United States.
In its annual energy report for 2012, the U.S. Energy Information Administration projected overall natural gas production to grow by a whopping 28% between 2010 and 2035.
And U.S. LNG suppliers are chomping at the bit…
Lately, they’ve been bombarding the Department of Energy with non-FTA (Free Trade Agreement) export authorization requests – typically only allowable by law when the DOE deems it to be “in the public interest.” And since the DOE has started approving non-FTAs, that can only mean one thing…
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Demand for LNG is skyrocketing.
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Less than a month ago, the DOE approved its third non-FTA export authorization – the Lake Charles project.
Bill Cooper, the President of the Center for Liquefied Natural Gas, welcomed the authorization, but emphasized that there are many more applications awaiting approval. In fact, the DOE has nearly 20 more non-FTA export applications pending. And that’s not even the best news.
“For 16 of the 19 pending applications, the comment periods have closed. Consequently, there should be no new information to consider,” Cooper said. That means many more applications should be approved in the very near future – and exports should greatly increase at the same time.
So let’s see… Increased traffic in the Strait of Hormuz. Dozens of non-FTA export requests. Lopsided demand on the horizon.
All of these factors point to one thing: an imminent LNG explosion. And that’s great news for both the U.S. economy and investors alike.
As Senator Lisa Murkowski (R-AK) says, “The United States has a historic opportunity to generate enormous geopolitical and economic benefits by expanding its role in the global gas trade.”
But the United States isn’t the only one with a historic opportunity. Perfectly positioned investors will also have an opportunity to generate enormous gains.
In Louisiana, Rep. Charles Boustany (R-LA) offered his support for LNG, saying, “Our nation should seize this opportunity and not let it pass by.”
And guess what? Neither should investors.
The world energy market is positioned in a way that informed investors could make historic gains in the coming months. The research backs it. Our congressmen are on board. All we have to do is position ourselves accordingly.
I promise to report back as new information comes forth.
Ahead of the tape,