I think the best bet in the market today is natural gas. Even though the weather hasn't been cooperating and inventories of natural gas are overflowing, there seems to be a junk-bond rating for all US energy companies. Many natural gas companies are refinancing their debt in hopes that China will eliminate the 25% tariff on LNG.
There's more natural gas powered locomotives running in North America today than ever before, with plenty of announcements of new pilot projects and deployments. From large Class I locomotives to regional short-lines, railroads are making strategic investment decisions in the fuel and technology that can offer the lowest cost operations over a typical 40-year asset life of a modern freight locomotive.
The development of the natural gas market for locomotives is not limited to operations in Canada, the United States, and Mexico. International railroads are quickly moving forward with LNG and CNG projects of their own. This is spurred by different, and often simpler, regulatory requirements on the transport of natural gas by rail. In June of 2016, Russian Railways struck an agreement with Russian gas supplier Gazprom to develop LNG fueling infrastructure at locations approved by Russian Railways to test 40 gas turbine-powered locomotives.
Gas-to-liquid, GTL, emerged as a commercially-viable industry over the past thirty years offering market diversification to remote holders of natural gas. Several technologies are now available through a plethora of patented processes to provide liquid products that can be more simply transported than natural gas, and directed into high value transportation fuel and other petroleum and petrochemical products markets. Recent low natural gas prices prevailing in North America are stimulating high interest in GTL as a way to better monetize isolated shale gas resources.
Chinese natural gas consumption finally outpaced the rate of production. This led to China becoming a net importer of gas and petroleum at low prices. As an additional support line to shale production, the Central Command of China has announced economic incentives represented by both local subsidies and gas pricing reforms. Sure, price controls have been the norm in China, but with the most recent volatility this may no longer be a suitable approach to addressing modern day gas prices in China, especially as the country's priority is to spur domestic gas production.
Even though Iran recently made an effort to reach out to Saudi Arabia, the Saudis declined to get back to Iran because of their expenditures on US armanents. China feels that the Middle East may not be a reliable supplier in the future with respect to their targeted goals in achieving the economic benefits of the One Belt One Road project.
It seems like Soybean Donny is more concerned is more concerned about American farmers than American energy drillers. Why should this be the case? The American energy industry employs over 6.4 million Americans compared to the farming industry which employs 2.6 million Americans, The oil and natural gas industry employs good paying jobs with respect to consumption in the American economy. If the oil and natural gas industry is suffering, then these employees and their families are suffering, and that means Soybean Donny will not get their votes when Fall comes around.
Soybean Donny has indicated that the first trade deal with China that was ratified is a good deal. But Soybean Donny fails to understand the concept of the deal was to eliminate the 25% tariffs that China implemented with respect to natural gas. Natural gas holds the potential to provide a reliable, clean, and affordable energy supply that can complement China's rapidly growing economy, energy security, and environment. There's no doubt that the global clean energy transition and EU 2020 targets require a swift transition from coal and oil towards natural gas. The implicaitons of this are that the dependency on intercontinental LNG and pipeline imports will further increase and acccount for up to 80% of total gas supply by 2030.
The world's 20 leading central banks are partying amongst each other and easing through various mediums to prop global stock markets to record levels. The Fed Chairman, Jerome Powell, is losing his mind because of Trump's pursuit for negative interest rates similar to what Europe and Japan are doing in an effort to boost their economies. This of course may be unwise because the dark side holds up to the fact that banks can not offer any substance for individuals who want to save money into the banks.
Soybean Donny is not a great negotiator. He's going to have a Phase 2 trade deal with China, followed by a 2A deal, a 2B deal, then a 2C deal. Soybean Donny has to make sure that he gets rid of China's 25% LNG tariffs if he wants any chance of re-election.