And it isn't hard to see why...

That's a one-year chart of the Dow Jones versus the Market Vectors Solar Energy ETF (NYSE: KWT), which holds well-known names like First Solar (NASDAQ: FSLR), Suntech (NYSE: STP), and SunPower (NASDAQ: SPWR).

As you can see, the solar ETF has lost almost 80% of its value. 

Let's see if we can figure out why, draw some historical comparisons, and find a way to make some money from this still nascent market.

Economies of Scale

Put on your freshman econ hat for a second while I give you a textbook definition:

In economics, economies of scale refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased.

Just think about the computer industry, to which I like to compare the solar industry.

In 1946 the first ever general purpose computer weighed 27 tons and cost over $5 million to build.

No company was getting rich selling those. Economies of scale had to be created, whereby the cost of production decreases as more units are produced and more customers are attracted.

I think today is the 1946 of the solar industry.

Dismissing it now would be just as foolish as dismissing the computer industry back then.

Solar Cliff's Notes

The main argument against solar is that it's expensive. That's true — but so was the first computer.

The important thing to notice is that it's getting cheaper.

And at this stage in the game, that's actually detrimental.

When solar stormed on the scene in 2004 and 2005, it was touted as a panacea to rising oil prices and An Inconvenient Truth.

Actually, it's neither.

It's just one part of the energy industry. That said, it's susceptible to the same booms and busts as any other industry.

Back then the main ingredient was polysilicon. And it was expensive... exorbitantly expensive.

It sold for about $100/kilogram in 2006, but more than quadrupled to $400/kilogram by 2008.

Two things happened as a result:

1. Countries introduced subsidies to help consumers afford solar panels; and

2. Companies looked for other ways to make solar panels with less or no polysilicon.

The first gave us the feed-in tariff programs in Europe that led to widespread solar adoption in Germany, Spain, and a few others. But as the Great Recession ensued, governments began taking a knife to those subsidies.

The second spawned the development of other solar technologies, like cadmium telluride and copper indium gallium selenide (CIGS). Those are the technologies used by First Solar (NASDAQ: FSLR) and Solyndra, respectively.

As it turned out, the monumental spike in polysilicon prices leading up to 2008 was a red herring.

Between then and now, prices have plummeted from $400/kilogram all the way down to $23/kilogram last week.

~~solar_2~~

You've already seen the impact that's had on the market. Cheap silicon is killing competitive technologies.

Solyndra went bankrupt. So did Energy Conversion Devices. First Solar (NASDAQ: FSLR) has lost 90% of its value since last summer.

Makers of traditional crystalline solar panels have only fared moderately better...

When European nations started cutting subsidies, demand all but collapsed and took German and Chinese solar companies with it.

Q-Cells and SolarWorld were once the most dominant players in the industry. Now they're struggling to survive.

Chinese firms had it so bad, they were selling panels to the United States below market price, which led us to declare a 31% tariff on Chinese-imported panels last week.

The solar blood is in the streets.

Economics Again

Subsidy cuts and margin squeezes are part of an industry's maturation.

Those two hurdles, plus the current oversupply of polysilicon, will ebb.

Current lackluster demand and stiff competition from decade-low natural gas prices are forcing innovation and cost reduction.

There will also be consolidation.

This is all part of an industry's natural growth cycle.

The point here is that the industry is out of favor because prices are falling rapidly. That's what's supposed to happen.

And as prices fall, customers will once again be attracted. You know, all that supply and demand stuff.

In fact, it's already happening...

Solar attracted more than half of all clean energy investments last year, fetching $128 billion — up 44% from 2010. Installations were up 54% to 29.7 GW.

Once that hits the balance sheets, strong solar companies will start to rise once again. I'm looking at JA Solar (NASDAQ: JASO) on the module side and MEMC (NYSE: WFR) on the silicon side.

Apple (NASDAQ: AAPL) shares fell from $26 to $8 in 2000... That's where solar is now. 

~~nicks_signoff~~

Unable to swim against the rising tide of dirt-cheap natural gas, the coal industry is losing ground in the domestic power generation game.

And let's face it; without old King Coal, guys like Representative David McKinley (R-WV) and Senator Joe Manchin (D-WV) will be hard-pressed to come up with the kind of scratch they need to win elections.

But is the coal industry really heading towards life support?

I wouldn't be so sure.

Here in the United States, coal-fired power generation is getting about as much love as Rick Santorum at a gay pride rally.

In fact, in the first quarter of 2012, coal only made up 36 percent of U.S. electricity.

This is a far cry from the nearly 50% control the coal industry had as recently as 2008.

Also during this quarter we saw natural gas accounting for 28.7% of U.S. electricity — an 8% increase from Q1 2011.

There's no doubt about it; natural gas is well on its way to replacing coal as the dominant source of power generation in the U.S.

But that doesn't mean the coal industry will go the way of the typewriter...

The Most Bang for Your Buck

In the world of energy, I've seen pretty much every possible prediction scenario — from a world powered exclusively by solar and wind to claims that we have enough oil in the U.S. to end all imports for good.

These kinds of extreme predictions are nonsense.

They're about as reliable as Chinese drywall.

The fact is, here in the United States we are blessed with robust energy resources. Whether wind, coal, natural gas, solar, oil, or geothermal, we are so well-diversified there's absolutely no need to put all of our energy eggs in one basket.

And we don't.

That being said, the energy source that gives you the most bang for your buck will always take the lead.

This is why I predict that by 2020, natural gas will supply no less than 40 percent of our power generation.

Due primarily to increasing regulatory hurdles and cheaper natural gas, coal will supply about 20 percent, with nuclear maintaining around 20 percent and renewables picking up the rest.

Currently about 14 percent of total U.S. energy comes from renewables. Most of this is hydro, although wind and solar will experience the lion's share of growth over the next eight years.

While I do expect to see coal's contribution fall by more than 15 percent by 2020, I also expect to see massive growth in coal exports.

~~eac_alt_energy~~

Export This!

As I wrote last year, almost 15 percent of all globally-traded coal ends up in China. That figure is expected to rise even further.

Meanwhile, the U.S. has little interest in expanding its coal-fired power generation, but we're also the world leader in coal reserves.

It doesn't take a rocket scientist to see where I'm going with this...

We already know that a half-billion-dollar marine terminal in Bellingham, Washington, will soon be the destination for at least nine coal-filled freight trains that'll run back and forth daily from Wyoming and Montana.

And while there is certainly plenty of opposition, I fully expect to see this thing go through.

Interestingly, the EPA announced last month it wants the Army Corps of Engineers to do a review of the impacts of exporting U.S. coal through Northwest ports.

My guess is that this is just a formality. The EPA already has enough critics for enforcing regulations on coal-fired power plants. It's not going to seek out more opposition by putting the kibosh on port development for exports.

I suspect the EPA prefers to support shipping our coal bounty overseas to the highest bidder instead of burning it here, anyway...

With six planned coal export projects already being planned in the Northwest, it looks like the coal industry is simply adapting to a new domestic energy economy. It will be just fine.

Although I'd be more interested in picking up some rail plays on dips to take advantage of this opportunity: companies like CSX Corp. (NYSE: CSX), Norfolk Southern Corp (NYSE: NSC), and Union Pacific (NYSE: UNP).

And on the power generation front, I'm all over natural gas — particularly the picks-and-shovels companies that are facilitating the rise in natural gas power generation.

~~nat_gas2~~

~~jeffs_signoff~~

When news came out earlier this week that North Dakota supplanted Alaska as our second-largest oil producing state, we couldn't help but smile and pat ourselves on the back.

North Dakota has rocketed past our largest oil producers, California and Alaska, in just a few years by developing their shale resources.

We've witnessed oil fever overtake the Midwest since 2008.

Today there are 209 drilling rigs plugging away beneath North Dakota's soil.

But it's more than just the Bakken that has propelled North Dakota past the Last Frontier State in oil production...

On Alaska's North Slope — where 97% of the state's crude output is located — production has been in a veritable free fall:

When the Prudhoe Bay oil field peaked in 1979 at 1.5 million barrels/day, it was the beginning of the end.

Last year, the state pumped out an average of 562,000 barrels per day.

In March, more than 575,000 bbls per day flowed out of North Dakota's portion of the Bakken.

Unfortunately for North Dakota's oilmen, next up on the list is Texas. And don't expect Texas to fall easily — they're one of the few producers left in the country that's also expected to increase production.

Last year we touched on just a few of the reasons why Texas' oil future was brighter than most.

If you want a good idea of how important these two states are to our domestic supply, keep this in mind: The Bakken, the Eagle Ford in southern Texas, and the Permian Basin in west Texas make up 40% of our onshore production.

Of course, when you toss in the various capacity issues that come as a result of the rapid growth in the Bakken, we're looking at years — decades, even — before North Dakota ascends to the top spot.

But you don't have to pick a "winning" side in this fight...

According to the U.S. Department of Energy, our domestic production is expected to climb as high as 6.7 million barrels per day by 2020 — and stay above 6 million barrels per day through 2035.

In other words, we'll need an extra half million barrels per day over the next eight years.

And it's not hard to guess where we'll find that new supply...

North Dakota alone is projected to top one million barrels per day within the next five years, which would add at least 500,000 bbls/day to the mix. In 2011, Texas increased production by nearly 300,000 bbls per day.

For us, this is just the beginning.

Enjoy your weekend,

Keith Kohl
Editor, Energy and Capital

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Indie rock band Here We Go Magic was getting on Route 70 in eastern Ohio when they passed a hitchhiker.

Bass guitarist Jen Turner wanted to pick him up, but a sound guy convinced the band to turn back around.

And boy, are they glad they did.

Frackin' and Hitchin'

But it's the reason the band was on the road in this particular area that's most fascinating...

It was because of the major hydraulic fracturing operations now under way in southwestern Pennsylvania.

When you're on the road playing shows, you don't book accommodations ahead of time.

And the band learned the hard way that the fracking boom is so massive, workers have occupied all vacant motel rooms.

Having not booked ahead of time, the band had to keep driving until they reached Ohio, where they finally found a Days Inn with vacancy at four in the morning.

There are about 5,000 wells on top of the Marcellus Formation in that part of Pennsylvania.

Nearly 2,500 new ones are being added each year, with some estimates saying there will be more than 100,000 there in the next few decades.

There will be many more in the rest of the formation that spans from West Virginia to New York.

This one formation alone supplied 6% of our natural gas last year.

That figure will more than double by 2020.

Five years ago drilling companies started showing up, offering to lease the land below the homes of ordinary citizens...

People who, until then, had an average income of $18,285.

Now they're leasing their land for hundreds of thousands of dollars.

Bill Hartley, a 63-year-old cattle farmer, leased his farm for more than $110,000. He gets a 12.5% royalty on any gas produced there.

That's not why iconic cult film director John Waters of Pink Flamingo and Hairspray fame was thumbing down an I70 on-ramp when the band's van flew by.

But it's part of the reason he got picked up.

If it hadn't been for the fracking boom, that van wouldn't have been there.

More than Marcellus

Current fracking operations cover much more than just a corner of Pennsylvania.

There are pockets of shale formations spanning the entire continent.

Trillions in capital are being moved around — going to landowners, pipeline operators, drillers, truckers, water cleaners, and more.

We've come to call this outcropping of gas fields the 'Ring of Fire.'

But be careful when investing. It's easy to get burned.

With natural gas prices at decade lows, not all companies are making money...

~~nat_gas2~~

~~nicks_signoff~~

We know the song and dance all too well.

It begins with a few notes about eliminating U.S. dependence on foreign oil entirely, followed by a two-step over renewables alleviating a very serious decades-long addiction to crude.

It's been done eight times since Nixon took the oath of office in 1969 — and with every repeat performance, we nod our heads and clap along.

It should be noted that the presidential dedication to energy independence doesn't come without a bit of humor...

The 32 solar panels that Carter installed on the White House were promptly taken down as soon as Reagan took a seat in the Oval Office. In fact, it was one of his first executive decisions.

So where are we today, 36 years into listening to the same broken record?

It appears the next 25 won't be much different:

So what's the solution to our energy independence that the last eight U.S. leaders have missed?

It's so simple, it's complicated: access to cheap energy.

Granted, our move away from oil won't happen overnight (and I wouldn't pay much heed to anyone saying it will)... but it will happen.

Over the last year, investors have been successful banking on future LNG exports.

U.S. LNG is the bandwagon everyone's jumping on — and the same place they could end up getting burned.

So far, our Commander in Chief has been supportive of LNG exporting projects.

(Were you expecting anything different during an election year?)

I, for one, am not expecting our future flood of shale gas to hit foreign shores just yet. The uproar we talked about last week still hasn't been felt.

Here's the catch: Obama doesn't have to openly oppose it. Because buried deep in the government's archives is a particular piece of legislation that's been tucked away for decades...

The Export Administration Act of 1969 effectively gave the president the authority to limit or suspend exports of U.S. commodities (among other things) in the interest of national security, short supply, and foreign policy.

I can think of a few individuals who consider our domestic energy supplies — specifically, our cheap natural gas — an interest to national security.

Right now, natural gas costs roughly the same as a $15 barrel of oil.

A best-case scenario wouldn't collapse current oil prices that low.

When the first shipments of LNG depart from Gulf Coast facilities, the inevitable outcome would be rising domestic natural gas prices.

When that happens, how long until political pressure reaches a boiling point for the current president?

More importantly, is there a way for us to properly prepare for the upcoming shift to natural gas?

On the one hand, low prices have been crushing North American gas producers; on the other, future LNG exports could be nipped in the bud by pushing the right political buttons.

~~eac_nat_gas~~

Prepare Your Portfolio for the Flood

There's a better way to invest in natural gas — and it isn't from potential exporters whose shipments could be cut with the snap of presidential fingers.

Just as we saw in the early days of the U.S. petroleum industry, the real investment potential lies with infrastructure. 

According to EIA data, there are more than 210 natural gas pipeline systems and over 300,000 miles of transmission pipelines across the United States:

Add to that 1,400 compressor stations, 11,000 delivery points, 24 market hubs, and over 400 underground storage facilities... and we're still not prepared for the transition from oil.

Though we've covered several of these infrastructure plays recently, the real money here is in supplanting oil's domination in the transportation sector.

When millionaires are filling up their trucks for $1 a gallon, it's a no-brainer to hop aboard.

That's the direction we're headed.

~~keiths_signoff~~

“Communities that once struggled to keep people at all are now struggling to absorb all the newcomers as workers from across the country arrive to seek their fortunes in oil.”

Those aren't the words of an oil state politician, nor are they the words of a pro-oil organization's PR specialist...

That's how NPR introduced a story about the Williston Basin during morning rush hour this week — the second full week of May 2012.

“That's funny,” I thought to myself.

"We've been writing about that area for years, and nearly everything we've said has been spot-on."

Why are they struggling if we saw it coming?

Whose Reality?

I've come to realize there are two realities.

One is that of a newsletter writer (and those who read them), who digests tens of thousands of words each day in the form of essays, editorials, news stories, reports, and white papers.

The other reality is everyone else's.

What I mean by that is we see, discuss, and evaluate ideas long before they enter the mainstream.

The news I see on CNN on Wednesday is usually something I read on an obscure website the week before.

Take that Georgia woman with the flesh-eating bacteria you undoubtedly heard about this week (May 13th-19th)...

We were discussing it in the office last Tuesday, May 8th, when the story started breaking on local Georgia affiliates.

Not knowing about some inconsequential human interest story for a few days may not mean that much to you, and it probably won't affect your bottom line.

But that's not true of the biggest domestic energy boom of the last half-century.

Not knowing about that in time means the difference between a financial windfall and just making small talk about it. And I hate small talk.

That's why we're here — to bring you worthwhile information before anyone else.

~~oil-sign-up~~

Which Do You Want?

I was curious, so when I got into the office I started searching Energy and Capital to find our first mention of "Williston."

Not surprisingly, it was from Keith Kohl — all the way back in March 2008.

Here's what he said about the area:

Oil companies are going to develop the Bakken formation in the Williston Basin. And according to the United States Geological Survey (USGS), the entire Bakken play could hold a potential 400 billion barrels of oil.

The best part is that this area is just starting to heat up.

“Just starting to heat up.” In 2008.

When did the rest of the world — that other reality — start learning about the Williston Basin?

It's easy to see, because I have a chart of the volume of Google searches for “Williston” since 2004.

It's plain to see that “everyone else” didn't learn about the area until late 2011, when acquisitions were already happening and related stocks were flying.

By then, Keith — and anyone who was following his advice — had closed dozens of oil winners because of the Bakken, including some well over 550%.

Now, would you rather have read about the Bakken from Keith in 2008...

Or heard about it from a well-manicured talking head who hadn't heard of XTO Energy before the name came across her teleprompter the day Exxon bought its Bakken resources for almost $2 billion last May?

If you have a pulse, you'd choose Keith.

His new Bakken report is out now.

I'd check it out now — before you hear about the stocks it recommends buying four years later on the radio.

~~nicks_signoff~~

That's how I was greeted by an old friend as I stepped onto the rig last week.

I've heard these same words time and again since my first visit to the Bakken. And I can't blame my friend for his rosy outlook...

The rig he runs happens to be in one of the hottest oil fields in the United States.

Two Reasons to Remain Bullish

As well as things are going for my buddy up in the Bakken, things are about to get even bigger there.

Growth is coming — and all we have to do is look to the United States Geological Survey for affirmation.

Last May, Secretary of the Interior Ken Salazar announced the USGS will be updating their 2008 Bakken assessment.

Just how important is this update and these new oil fields?

Remember that not every well is a gusher.

In fact, the opposite is true more often than not when it comes to our domestic production...

These "non-gusher" wells are known as stripper wells — and most people don't realize how much we count on them.

click chart to enlarge

Simply put, a stripper well is an oil well that produces fewer than 10 bbls/day — or a natural gas well that produces fewer than 60 Mcf/d.

Together, they account for nearly 15% of our oil supply and 8% of our gas production.

As you can see above, approximately 80% of our producing wells in the United States are classified as stripper wells, giving new meaning to the phrase "scraping the bottom of the barrel."

Good thing there's one sure way we can stay ahead of the game...

~~oil-sign-up~~

Mass Migration

The exodus to these shale plays has already begun, and North Dakota is just one example to follow.

That much should be evident from the mass of people heading to the state in droves — tens of thousands making their way there, each one looking to cash in.

There's a reason unemployment is under 1% in the heart of the formation...

According to the Bureau of Economic Analysis, per capita personal incomes in Billings County, North Dakota, jumped by 46.8% between 2009 and 2010.

But you don't need to pitch a tent in North Dakota to grab your own piece of the Bakken pie...

20 Billion Reasons to Invest in the Bakken

There's something for everyone in the Bakken.

Over the last few weeks, we've seen infrastructure investments that are building the pipes and railways that will carry the high-quality crude to market, some of which are offering the safest annual dividends available.

And no matter how bullish we are on these long-term plays, there's one group in particular that will always have a place in our portfolio...

Those companies that are driving the unconventional oil boom taking place today. They're responsible for running the 2,000 drilling rigs across North America, increasing production every quarter.

When the USGS announced they're going back to Bakken to reassess the amount of undiscovered, technically-recoverable oil and gas available, the opportunity was clear...

Remember, their 2008 survey propelled the shale play into the national spotlight.

Just imagine the profits the next round of USGS projections will bring.

Back in 2008, the USGS was calling for 4.3 billion barrels in the area — but some oilmen have projected that number to be closer to 20 billion.

Five years ago, I told my readers the Bakken play was just beginning.

After we banked our first triple-digit winners a year later, many newer investors felt as if they'd missed the boat...

To that, I say prepare for Act Two.

~~keiths_signoff~~

Just a motorized paraglider and an anti-nuclear activist with a serious set of stones.

It all went down a couple of weeks ago, when an unnamed activist flew over the 3 GW power station, threw a smoke bomb, and landed safely inside the facility.

He said he wanted to illustrate the external dangers of nuclear power. He accomplished much more.

You see, the timing couldn't have been better for the anti-nuclear crowd in France. Because just four days after security flaws were exposed at the Bugey nuclear power station, Francois Hollande of France's socialist party won the French presidential election.

My friends, Hollande may end up doing more damage to France's nuclear industry than an actual meltdown...

Au Revoir, Nuclear?

It doesn't take a rocket scientist to figure this one out.

France, a country that's more than 75% powered by nuclear, just elected a new president who has clearly stated his intentions of reducing the nation's dependence on nuclear to 50%.

And while there are opponents to his agenda, they are a vocal minority in a country that happily elected this anti-nuclear socialist to initiate some major energy policy changes.

Now, whether or not you agree with this guy's agenda or his politics doesn't change the fact that France's nuclear industry is under attack.

Hollande's nuclear reduction plan calls for a transition to be completed in about 13 years. In terms of energy transitions, this is a very aggressive goal.

Is it possible? Absolutely.

Is it going to happen? I'm doubtful.

Despite the fact that the French seem to be showing signs of interest in moving away from nuclear and towards renewables, the French economy is directly tied to its nuclear power dominance — particularly today, when the Germans, the Swiss, and the Italians are giving nuclear the cold shoulder.

It should also be noted that France is the world's largest exporter of electricity, an accomplishment that can be traced to its 63 gigawatts of nuclear power.

All this being said, the last place I'd pony up a few bucks for nuclear in the near term is France...

~~eac_nuclear1~~

Make a Dent, Make Some Money

I'm not saying nuclear is dead in France. Strictly from an economic stance, the country simply cannot survive without its robust supply of nuclear power.

However, over the next few years, this new government is going to go full force on its attempt to integrate more solar and wind into its energy mix.

In fact, over the course of the next five years, I expect to see France at least double its solar and wind capacity.

From an energy transition standpoint, it's not quite as big of a deal as you might think.

Today France's installed wind power capacity is around 6.8 gigawatts; its installed solar capacity is at around 2.5 gigawatts.

Combined, this contributes about 3.8% of the electricity consumed by the nation.

If solar and wind capacity do double within five years, this will still contribute less than 8% of the nation's electricity needs — barely making a noticeable dent in nuclear's dominance.

But from an investment standpoint, a doubling of installed capacity inside of five years is actually pretty enticing.

In fact, the wheels on France's new energy transition actually started to turn last month after the country approved bids for 3 gigawatts' worth of offshore wind projects.

State-owned utility EDF, in partnership with Alstom (PINK SHEETS: AOMFF), won three of the deals — and a fourth was picked up by Iberdrola (PINK SHEETS: IBDRY) of Spain.

My friends, these bid approvals alone represent $13.3 billion in wind energy investments.

Profits, Not Progress

Now I don't know how successful Hollande will be during his five-year term. Certainly his inability to understand how a real free market works makes me believe that France could be in for a not-so-pleasant ride in the very near future...

Last week, a senior advisor told reporters Hollande aims to make it financially painful for healthy firms to fire workers and will “arm wrestle” big employers like General Motors to force them to take a more “moral” approach.

The French president-elect told reporters he would seek to impose financial penalties on profitable companies that announce layoffs only in order to improve their share price.

Not surprisingly, GM announced it is now considering closing its factory in eastern France, and PSA Peugeot Citroen is expected to shut down a production site just north of Paris later this year.

Of course, my criticisms of this administration (while accurate) are irrelevant. Because they're not going to make us any money...

But if Hollande does get his way on energy policy, I won't think twice about capitalizing on a rush of solar and wind projects coming into France.

~~jeffs_signoff~~

But you knew that.

All it should be doing is providing defense and emergency services and maintaining infrastructure. Instead, it's found ways to inefficiently infiltrate every corner of our lives.

Term limits and ending the revolving door of corporate/government payola and employment would do much to fix it.

But what politician would do such a thing when they have it so good already?

Anyway, that's an essay for another day.

Today, just two quick examples of the great progress your public officials are making.

When Did Logic Leave the Room?

The Postal Service lost $5.1 billion dollars last year. That's $16 for every man, woman, and child in this country.

It lost another $3.2 billion in the first three months of this year.

I need the post office for nothing. In the free market, it would wither and die.

Here's how it works in Washington...

The USPS asks Congress to end a retiree health payment requirement, pull its employees out of federal health programs, end Saturday mail delivery, and raise rates beyond inflation.

The Senate says the USPS can take longer make those health payments and can end Saturday mail delivery in two years while ignoring everything else.

The House of Representatives does nothing: No bill is passed. Nothing is resolved.

They'll get reelected in November and we'll all be shocked next January when the USPS reports a $10 billion loss.

Go government!

Fracking Idiotic

Maybe you've heard Vermont is going to be the first state to outlaw fracking.

I hope they spent a good deal of time and taxpayer money to research, draft, and debate the law, because it's going to have a monumental effect on the nonexistent fracking industry in Vermont...

That's right, no fracking going on there.

The state doesn't even have any notable gas reserves. This was simply a time-wasting token gesture.

States that do have frackable reserves and that are undergoing a jobs- and energy-producing fracking boom — like Wyoming, Texas, and Michigan — are encouraging responsible growth by requiring companies to disclose the specific chemicals they use in the process.

So hats off to you, Vermont state legislators. You banned something that didn't even exist. Let me know how the unicorn moratorium goes.

I don't know what's going on, but there has been a serious deterioration of logic and common sense over the past few years.

As always, my advice remains the same: Be observant enough to recognize the idiocy and hypocrisy that's fed to us every day in the form of 'news.'

And be smart enough to stay above it, sift through it, and cull the nuggets of information that add to your bottom line.

We do that for you here every week. This week's examples below.

Call it like you see it,

Nick Hodge
Editor, Energy and Capital

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When a friend asked me last week where I thought natural gas was headed, my answer wasn't what he expected...

It doesn't matter.

I'll get to why in just a moment, but first let me say I can understand my friend's concern when it comes to the price of natural gas.

After all, we saw prices take a 44% nosedive within the last six months:

If you stretch that chart to cover the last four years, you'll see just how sharply prices fell off a cliff.

In fact, it was only in April that we started to see the beginnings of a comeback...

Making right now the perfect time to buy.

Obama Green Lights Natural Gas

He may not have the best track record when it comes to energy investments, but at least the president's moving in the right direction — and this time around, he isn't focusing on bankrupt solar companies...

We're talking about Obama moving forward with developing our country's cheap natural gas resources.

In the Energy Information Administration's early release of its Annual Energy Outlook 2012, natural gas and renewables will take on a stronger role in our electricity generation.

And that's exactly what the president wants.

That much was evident on Tuesday, when Secretary of the Interior Ken Salazar approved 3,675 new gas wells to be drilled in Uintah County, Utah.

According to the press release:

"The president is focused on expanding safe and responsible production of natural gas as part of an all-of-the-above energy strategy that’s cleaner, cheaper, and full of new jobs," said Secretary Salazar.

"This agreement is a great example of how collaboration can allow us to uphold America’s conservation values, while bringing growth to Utah’s economy and further reducing our dependence on foreign oil by developing our resources here at home."

Perhaps our Commander in Chief is finally catching on to the fact that developing our domestic energy resources is a surefire way to create jobs...

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In North Dakota, for example, unemployment in some counties is less than 1%.

This new drilling program will take a decade to complete and is projected to support up to 4,300 jobs.

This news comes on the heels of Obama's plans to form an interagency task force, the sole purpose of which is to coordinate the development of our natural gas supplies.

Cheap Energy Means New Opportunities

Cheap natural gas is opening new doors for us. 

A single rig in the Bakken uses more than three thousand gallons of diesel a day. Overall, the North Dakota Petroleum Marketers Association estimates that up to three million gallons of diesel are used throughout the play on a given day.

Maybe they can take a lesson from the largest natural gas producer in North America, Encana, who has cut company costs in half by running its drilling rigs on LNG instead of diesel...

That's just one example of how we might take advantage of our oversupply.

Invest Bigger, Invest Better

When it comes to natural gas, there's money to be made across the Pacific — nobody will argue that fact.

However, I know there are some serious obstacles in the way of ramping up U.S. LNG exports...

Energy Secretary Stephen Chu being grilled recently on Capitol Hill over the matter gave us a little taste of the opposition.

How do you think the industrial sector here in the States will take it when we're shipping our inexpensive natural gas to Europe, China, and Japan?

When that starts to happen in three years, you can bet domestic prices won't be at $2/Mcf — or even $4/Mcf.

It's simple economics: Less supply at home will inevitably give prices a boost.

The bottom line is exporters will be fighting tooth and nail over every tanker that sails.

And that's just one reason there are ways to invest bigger and better when it comes to U.S. natural gas...

Those opportunities are right here at home — but they don't lie with the producers drilling into the various shale formations dominating the media's attention...

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