Cheniere Energy, Inc. (LNG), Dominion Resources, Inc. (D), C&J Energy Services Inc (CJES): This Could Destroy Your Wealth or Make You Rich

Page 1 of 2

A Deeper Look At China’s Commodity IndustryWhile the media is filled with loud reporting of the newly available abundant supplies of natural gas within the borders of the United States, very little coverage is given to the efforts to restrict access to supply through restrictive regulations on hydraulic fracturing (fracking), or the political efforts just getting underway to restrict the export of natural gas into the world market where prices are as much as 3 to 4 times higher than they are domestically.

Only one approved export facility

While there are numerous companies that have applied for approvals to build or convert facilities to be able to handle liquefying natural gas for export, only one company, Cheniere Energy, Inc. (NYSEMKT:LNG) , actually has the approvals to do so in place. Strangely, the other applications that have been made to do so seem to be making very little progress towards approval.

While this would seem to guarantee a booming business for Cheniere Energy, Inc. (NYSEMKT:LNG), that is not necessarily true. There are moves afoot to hamper the ability of natural gas producers and exporters from being able to do so at a price that would make it competitive in the global market.

But, even though there is nothing to stop Cheniere Energy, Inc. (NYSEMKT:LNG) from exporting liquefied natural gas (LNG), there is also nothing that prevents the federal government from taxing the exported gas at a level that would remove the economic incentive to do so.

Given the lobbying pressure from certain manufacturing segments that utilize massive amounts of natural gas and the desire of government to create more tax revenue, it should come as no surprise to anyone when a massive tax on LNG exports is proposed and cloaked as “protecting American jobs”; but many will be surprised.

As with any misguided policy, there will be winners and losers; Cheniere Energy, Inc. (NYSEMKT:LNG) could well be a massive loser as their entire business is based around exporting LNG. Investors need to consider this risk seriously before investing here. If no government action is forthcoming, Cheniere Energy, Inc. (NYSEMKT:LNG) will become an enormously valuable business, tax and regulatory changes could crush its prospects as a viable business.

There are always going to be winners

If moves underway by some environmental groups are successful in creating a high enough level of fear within the voting populace, the government will be incentivized to altogether ban the practice within the boundaries of the U.S. or to create such a harsh regulatory environment that will achieve the same effective result. Given the thirst of the government for revenue, the imposition of a high tax rate upon the process or product would seem to be the most likely approach foreseeable. While that would be a huge negative for the consumers of natural gas; there are always going to be winners.

Regardless of the outcome in the battle over exporting LNG, our country still consumes huge amounts and that gas must be moved from the well to the source of use; it must also be stored while waiting to be used and large amounts will be consumed in the production of electricity.

One of the big winners in every step of this process is Dominion Resources, Inc. (NYSE:D) . Dominion Resources, Inc. (NYSE:D) is in the business of operating natural gas pipelines, generating electricity and natural gas storage. No matter the fate of fracking or the outcome of discussions regarding restricting or taxing the export of liquefied natural gas, we will still need to transport and store our supplies of natural gas and turn a significant part of that gas into electricity, and Dominion Resources, Inc. (NYSE:D) will be there to profit from it.

Investors considering the allocation of capital here should look closely as this is not an inexpensive stock based upon fundamentals, but the business is very well positioned to prosper and has a current dividend yield of 3.65%.

Cheaper than Dominion and free to go anywhere

It might be very difficult to find anyone who has followed energy policy and practice in this country for very long who would doubt that the United States is capable of throwing away the prospects to become a global energy powerhouse through the implementation of misguided policies and practices. Therefore, it is wise to look for businesses that can take advantage of natural gas exploration and production anywhere in the world. C&J Energy Services Inc (NYSE:CJES) is a good place to start looking for such an opportunity.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!