North American natural gas prices will triple within five years as the current glut conditions are replaced by long-term shortage. This is the forecast of famed contrarian investor Jeremy Grantham, as reported recently by the Globe and Mail.
Speaking in Toronto at a conference on value investing organized by the Richard Ivey School of Business, Grantham, said that investing in natural gas at today’s low prices is a no-brainer because the fuel, now in a glut because of surging supply, will eventually flip to a shortage, bringing large gains for properly positioned portfolios, the newspaper reported.
This is terrible news for customers who are converting from oil heat to gas heat in order to take advantage of lower prices. Grantham said natural gas prices will triple because prices in the United States are just too low, at half or even less of levels in other major economies. He is founder and principal at Boston-based money manager GMO.
“The differential will drive a flood of demand in North America from plastics manufacturers, petrochemical companies, fertilizer makers and other consumers of the commodity, that will eventually eliminate the surplus, in his view,” the article states
To read the Globe and Mail article, click here.