September 7, 2011

Russian and German Natural Gas Deal

Natural Gas coming from Russia is now being transported to Germany under the Baltic Sea through the Nord Stream pipeline. A formal ceremony celebrating the success of this deal, will happen sometime in the fall of 2012. The Pipeline had been under construction for for sometime and was finally completed in August 2011. The New York time reported in an article published today, that was titled, Natural Gas Starts Flowing from Russia to Germany, that the Pipeline is 760 miles long and is one of the costliest pieces of underwater infrastructure through all of Europe. Shipping the Natural Gas via an on land Pipeline in Ukraine would be

considered more cost effective than the expenses to build the Under water pipeline which was estimated to have cost 12.4 billion dollars. Locking in high natural gas prices with long-term contracts, German consumers will ultimately face higher utility bills as a result. Disputes between Ukraine and Gazprom, a Russian Utility Company, have led to Russia looking for alternative ways to ship its Natural Gas to Europe. The Underwater Pipeline was said by Russian Prime Minister Vladimir Putin, to provide more energy security for both Russia and Germany, since it was less likely a political dispute between nations would lead to a disruption of supplies as was the case at times between Ukraine and Russia in recent years.

Gaining Exposure to Natural Gas

Natural Gas in Europe has been rising in demand over the past several years. The Prices of this commodity could increase in the future as more people and factories turn to it as a fuel source. More and more vehicles are also showing up on the roads which are natural-gas powered. To gain exposure to Natural Gas without opening a Futures Account, Investors should consider an Investment Product known as an Exchange Traded Fund (ETF). These investment securities track an underlying index or commodity, and the ETF Shares trade on an Exchange just like the Shares of a company. Investors can purchase these shares through a traditional brokerage account such as Scottrade or Etrade Financial. To learn more about the ETF for Natural Gas, I linked to a page on my website Investing for Beginners where more detail is provided, including live updating charts for the ETF itself.

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