Natural Gas as a Bridge Fuel to Reduce Trade Deficit

The United States' trade deficit, largely fueled by a significant oil deficit, is a pressing economic concern. As highlighted in the Zacks Equity Research blog, a shift towards natural gas as a primary energy source could be a viable solution to alleviate this issue. The post discusses the benefits of natural gas, including its relatively low cost, environmental advantages, and abundant domestic supply.

Key Takeaways:

• The US trade deficit's oil component accounts for 45.7% of the total deficit in goods and 57.7% of the overall trade deficit.
• Reducing oil consumption could be achieved through the increased use of natural gas, which is approximately 4 times cheaper than oil on an energy-equivalent basis.
• Natural gas is a cleaner-burning fuel, producing significantly less CO2 and other pollutants compared to oil.
• The new shale plays and offshore areas opened for exploration in the US could potentially provide a substantial increase in domestic natural gas supplies.
• Companies like EnCana (NYSE: ECA), Chesapeake (NYSE: CHK), and Kinder Morgan (NYSE: KMP) would benefit from a natural gas-focused energy policy, while countries relying heavily on oil exports, such as Saudi Arabia, might incur significant economic losses.
• Gilead Sciences (Nasdaq: GILD) has initiated late-stage trials for a fixed-dose combination of four drugs to treat HIV, including Quad, a potential new therapy.

Statistics:

• The oil deficit accounts for 45.7% of the US trade deficit in goods.
• Natural gas is approximately 4 times cheaper than oil on an energy-equivalent basis ($4.00 for natural gas vs. $24.00 for oil).
• Natural gas produces about half as much CO2 as coal and significantly less than oil per BTU.
• The new shale plays could potentially provide a substantial increase in domestic natural gas supplies.

Sources:

• Zacks Equity Research blog
• EnCana (NYSE: ECA)
• Chesapeake (NYSE: CHK)
• Kinder Morgan (NYSE: KMP)
• Gilead Sciences (Nasdaq: GILD)