The following appeared on moneycentral.msn.com

6 reasons gas is better than oil
Posted Jun 19 2009, 05:20 PM by admin

By Vitaliy N. Katsenelson

Here are six reasons natural gas is a better investment than oil right now:

1. Gas reserves deplete faster than oil (in general)

2. The oil/natural gas ratio favors oil. The price of oil divided by the price of natural gas is at an all-time high, or close to it. This ratio stands at 17, while historically it has been at about an 8 or so. This suggests natural gas prices will go up, oil will decline, or both.

Gas gas lagged the the spectacular performance of oil of late partly because it is not a good hedge against the declining dollar -- it is for the most part a domestic commodity -- and storage capacity is more limited. Thus gas not as admired by speculators as oil.

3. At $4 per thousand cubic feet, natural gas is uneconomical to look for and develop new reserves.

4. There's no OPEC competition for domestic production. Liqufied natural gas imports are uneconomical at these prices.

5. Politically, the prospects for more natural gas use looks more favorable than for coal.

6. After emission caps are implemented, natural gas will become a cheap alternative to environmentally unfriendly coal.

Vitaliy N. Katsenelson, CFA, is director of research at Investment Management Associates in Denver, Colo., and he teaches a graduate investment class at the University of Colorado at Denver. He is the author of "Active Value Investing: Making Money in Range-Bound Markets" (Wiley 2007).