There have been many articles on this site that have been bullish on oil and natural gas stocks such as Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), BP (NYSE: BP), and others. The United States Department of Energy just released a report that proves why this has been correct. In the decades ahead, the Department of Energy expects natural gas to replace coal as the main source of power in this country.
That is very bullish for oil and natural gas stocks.
The Department of Energy expects this due to improving technology. The reason this can even be expected is from the advent of fracking. This allowed for more oil and natural gas to be produced from existing lands. As a result, oil and natural gas production has increased to where North America is the biggest producer in the world, according to a recent article in The Wall Street Journal.
The greater production of natural gas has made it a more attractive fuel source than coal. Natural gas does less damage to the environment. It is now cheaper than coal. Most important of all, the United States has the pipe network that makes natural gas a viable energy source.
For investors, the recent report furthers the appeal of oil and natural gas stocks as long term holdings.
Energy demand will increase in the United States and around the world. The is especially so for emerging market nations such as China and India. China, the world’s most populous country, has made it a priority to use less coal. That is inevitable for other countries, too, due to the damage that coal does to the environment.
Companies like BP, Exxon Mobil, and Chevron are well situated to prosper from the increasing demand for oil and natural gas. Each also has a global presence, which will allow for profiting from growth in emerging markets. The dividend income will also reward the shareholders.