What’s the best-performing commodity over the last 12 months?

Natural gas.

I asked natural gas bull Bill Powers, whose new book is Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth, to give OGIB readers his thoughts on the gas market ahead.

Bill’s book is something very different than what you read in analyst reports from the stockbrokers. It is exhaustively researched and rigorously documented. Here’s what Bill shared with us…

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While natural gas has been the best performing commodity so far in 2013, I believe we are only at the beginning of what is likely to be a long bull market for the fuel.

Unlike most market analysts, I believe the natural gas market is structurally imbalanced as demand will continue to outstrip supply and lead to significantly higher prices.

But what about the 100-year supply of natural gas that sits in numerous shale plays across North America just waiting to be brought to market?

Won’t a pick up in drilling brought on by higher prices squash any price recovery?

First, we do not have anywhere close to a 100-year supply of natural gas in North America. There is a substantial and growing body of evidence to support my thesis that the importance of shale gas has been vastly overstated.

Second, due to high decline rates of shale wells, the advanced maturity of the Gulf of Mexico and most conventional U.S. natural gas fields and declining production in the Barnett, Haynesville and Fayetteville shales, it will be several years before U.S. natural gas production stabilizes at a much lower level.

While the Marcellus shale is likely to how further production growth in 2013, it will not be enough to offset declines elsewhere.

In my upcoming book titled Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth, I take an in-depth look at today’s conventional wisdom about natural gas supply and use hundreds of well cited sources to show that much of it is wrong.

Additionally, I show who is responsible for the creation of the 100-year supply myth and their motivations.

More importantly, instead of using wild guesses as to the size of the U.S. shale gas prize, I use the significant production history of several shale plays to provide a realistic estimation of future recoveries.

While America’s future shale gas production will undoubtedly be an important part of the country’s energy mix, it will have far less impact than many believe.

I will discuss the specifics behind the 100-year natural gas supply myth and discuss what it means for prices in both the near and long term in our upcoming Oil & Gas Investments Bulletin subscribers-only conference call.

– Guest Editor Bill Powers
Author, Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth