How Investors Can Bet on Rising Natural-Gas Prices

The demand for this energy source should rise and these stocks and funds should benefit.

While crude-oil prices have been rising since March, natural-gas prices have held steady. The well-known mathematical relationship between these two energy sources suggests that prices for one of them -- most likely natural gas -- are out of whack. If so, shares of companies that explore for and produce natural gas could be worth snapping up.

Here's how the math works: A barrel of oil produces 5.8 million British thermal units of energy. So, in theory, a barrel of oil should cost roughly six times as much as natural gas, which is priced in million-Btu increments. In reality, the price gap is usually wider because oil can be easily shipped all over the world, while natural gas is harder to transport. In futures trading, a barrel of oil, on average, fetches about nine times as much as a million Btu's of gas.

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Contributing Editor, Kiplinger's Personal Finance