In April 1999 the local Raymond James & Associates energy guru Marshall Adkins outlined a scenario where a supply shock and other factors would more than quadruple prices. His Raymond James & Associates report 20 months ago said natural gas would likely surge to $10 last winter.
"I've just been a little bit early," Adkins reflects.
Although premature, his gutsy call for double-digit natural gas proved dead-on.
Last year Adkins, managing director of energy research at Raymond James, was anticipating $10 gas when most commodity watchers had trouble envisioning natural gas at even a third of that price.
"Back then, people couldn't believe $3 gas because they had lost their confidence from the low price environment," Marko says.
For his part, Adkins remained confident.
"He's known as an optimist," says a local investment firm insider and oilpatch veteran.
At the same time, she points out Adkins is listened to and "very widely followed" in the industry.
Along with investment banker Steve Grant, Adkins and "a rather harried secretary" opened the Houston office for St. Petersburg, Fla.-based Raymond James four years ago. The local office has mushroomed to 25 people.
In April 1999, when Adkins published equity research trumpeting "substantial potential" for natural gas prices to reach double digits by early 2000, the clean-burning fuel was fighting to stay at $2. In an industry known for its herd instinct, Adkins parted from the crowd and raised the prospect of $10.
Peers couldn't believe it. Adkins was "the lone wolf," suggests a Houston oil and gas industry insider.
"They were like, `Are you out of your mind?'," Adkins recalls.
GROWING PACK
Today, Adkins has been joined by a pack of other energy analysts. John Herrlin, a veteran exploration and production stock analyst at Merrill Lynch, on Tuesday published a report that raised "the potential" for natural gas prices to spike to double digits. At the time, natural gas was sizzling around $9 or $9.20.
"Give more normal, or cooler, weather in December, prices have skyrocketed," Herrlin says.
And he points out low U.S. storage inventories of natural gas are pressuring prices upward. A year ago natural gas traded below $3. And until late this year, "$5 was sort of the gas ceiling," says Marko, the Houston oil and gas consultant.
"It went through that and kept on going," Marko adds. "I had never heard anybody talk about $10 gas."
So, what's next, $100 oil?
"You cannot rule it out," says local money manager Leader.
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Full article:
Energy industry regains steam - Natural gas prices turn hotter in wake of cold winter weather
Houston Business Journal, December 25
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