Oil tycoon T. Boone Pickens says natural gas prices have hit bottom and will rise to $3 (U.S.) or more by next summer.
The forecast did little to halt the slide of natural gas, which fell as much as 2 per cent on Wednesday on forecasts of cooler weather this summer than first expected. Natural gas for July delivery traded recently at $2.218 per million British thermal units.
Speaking on CNBC television today ( courtesy of Pragmatic Capitalism), Mr. Pickens said supply has been significantly curtailed, with the number of gas rigs in operation cut recently from 800 to 500.
Of course, Mr. Pickens has been a cheerleader for natural gas for some time. He owns a big stake of Clean Energy Fuels and runs an energy fund. Prices of both could use a boost. The Toronto Stock Exchange-listed T. Boone Pickens Energy Fund was sold to the public in early 2010 for $10 (Canadian) a unit. It traded Wednesday at $7.36, and is again getting close to its all time low of $6.91.
Famed for his high-profile corporate battles in the oil industry, Mr. Pickens has turned to natural gas and renewable energy and has lobbied for a U.S. strategy that would reduce U.S. dependence on imported oil.
The strategy is commendable. But I would rather rely on the weatherman at this stage than Mr. Pickens for forecasting natural gas prices. There is no sign of a national infrastructure program to support Mr. Pickens' vision, and North America's shale gas boom has increased the resource base to the point where it can sustain current global consumption levels for the next 250 years.