The Trading Floor

[mick]

part #1 04/20/04 ,,,here is some stuff for the shortages still that exist and going to get worst from changing wave,investor place. actually taipan stuff.
Dear Investor,

There are two words that Americans don't ever want to hear together again: energy crisis.

Those of us old enough to remember the last one--and how it slammed our economy--do not want to relive those days again, ever. But there are factors at work right now to bring those words back into the daily headlines.

This one will be different, however. There WON'T be long lines at the gas pump. The oil barons at OPEC WON'T be the culprits behind it. The numbers on your license plate WON'T have any influence on what day you get in line.

This coming crisis won't be about the price of gasoline.

This time it's natural gas.

Warren Buffett already recognizes the opportunities. Fed Chairman Alan Greenspan is talking about the problem. And rumblings about natural gas are starting to come from the Senate chambers as hearings on energy proposals begin.

Yes, if you are good at reading between the headlines, the story is slowly building. I've even run across a few investors who understand the problem.

But most investors have not yet (a) grasped what's happening, or (b) figured out where the really big money is going to be made as this crisis unfolds.

ASK THE EXPERTS

Natural gas utilities, with 64 million customers in the U.S. , provide 24% of all energy consumed. Their gas heats and cools millions of homes, and is increasingly used to generate electricity. Natural gas is both a fuel and a feedstock for the nation's $460 billion chemical industry and its 1 million employees.

Yet our research into the supply and demand balance of North American natural gas reserves and production vs. mandated and fixed consumption strongly disagrees with thoughts of natural gas as an abundant resource for energy supplies.

We are not alone in this perspective

One of the real experts in the industry is Andrew Weissman, a Harvard Law School grad who gave up practicing law and focused his 26-year career on the American energy sector. He has been uncannily correct in his forecasts about natural gas, and his views support our position as perhaps no other "expert" has.

At a recent energy seminar at the University of Maryland , Weissman cited a number of factors in his research that points to long term secular natural gas prices above $5 for the rest of this decade. He said natural gas-fired power plants are still the key gas consumer driving volatility, putting tremendous pressure on electricity prices as well as spot gas prices.

Weissman doesn't think these are short-term events, but early warning signs of things to come. He told the seminar that the pending natural gas shortage will present the biggest challenge facing energy providers and the U.S. economy for most of the next decade.

As evidence, Weissman pointed to a September 2003 study by the National Petroleum Council, which concluded that North America is fast approaching a time in which it will no longer be self-reliant in meeting its natural gas needs.

"I think we are heading towards an enormous problem," Weissman said. "More often than not in the next decade we will have severe shortages."

He blames the problem on two events. First, amendments to the federal Powerplant and Industrial Fuel Use Act in 1987 removed restrictions on the use of natural gas in power generation. But as the federal government was setting the stage for a deregulated natural gas market, most major gas fields in North America were rapidly aging. This led to a growth in natural gas demand of more than 40% between 1986 and 1997.

Then a fundamental shift (which we call a ChangeQuake) occurred in the market in the late ‘90s as the use of natural gas to generate electricity shot up by more than 500 billion cubic feet.

"That's a huge increase," Weissman said. "It went up again in 1999. It went up again in 2000."

YEP, IT'S A REAL CRISIS

As we've said for months, you can run but you cannot hide from the immutable truth about natural gas supply vs. consumption in the U.S. Mandated usage goes up 3%-4% each year while our production from existing reservoirs goes down 3%-4%. Eighty percent (80%) of our gas in 2004 will come from a base of reservoirs that has seen production decline at rates near 25% a year. The balance of gas comes from Canada (which will export at least 3% less gas to us in 2004) and liquefied natural gas (LNG) imports.

Today natural gas is the fuel used for about 19% of U.S. electric power generation. More than 80% of the new power generation facilities built in 2003 were gas powered, and most scheduled for construction from now through 2008 are gas fueled as well.

Yet many in the analyst community -- and Congress for that matter -- seem to think $2-$3 gas is right around the corner as the high prices of today somehow bring out massive new gas production. The facts clearly do not support this popular myth.

We at ChangeWave Investing know where the smart money is going. Let me be your guide.

Knowledge is power, my friends, and after you read this report, you'll understand why it is so vitally important for investors like you to grab a board and ride this building ChangeWave to monster profits that we may not see again for years. Let's get wet.

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