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ETF Specialist

Natural Gas ETFs: A Futures Speculation, or an Investment in the Future?

Distinguishing between near-term price performance and long-term opportunity.

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Mounting concerns about energy independence, emissions reductions, and affordable power have heightened the demand for energy alternatives. While not all available options are economically viable, recent times have seen natural gas touted as the "fuel of the future" in the United States. The environmentally conscious look to natural gas as a "bridge fuel," predicting that it will replace its carbon-intense cousins, coal and oil, until technological advances allow carbon-neutral energy sources to supersede fossil fuels altogether.

While it has generally taken a back seat to petroleum in the energy mix, stratospheric oil prices leading into July 2008 sparked widespread interest in natural gas. Crude prices are well off their $145 high, but the buzz surrounding natural gas has been sustained by fears of aggressive emissions regulation and the recent discovery and proliferation of vast domestic shale reserves, which notably increased last year's production.

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Abraham S.H. Bailin does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.