Here in the US, proliferation of energy-hogging Artificial Intelligence (AI) applications ensures increased underlying demand for natural gas. That should benefit Kinder Morgan Inc. (KMI), suggests Elliott Gue, editor of Energy and Income Advisor.

During KMI’s recent earnings call, Chairman Richard Kinder projected incremental demand of 7 to 10 billion cubic feet per day if just 40 percent of expected AI demand is served by gas. And those numbers may prove to be quite conservative, as regulated utilities and regional grid managers continue to see rapid real-time demand growth.

Kinder Morgan Inc. (KMI)
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As Kinder says, the need for natural gas is “no knock on renewable energy.” Installed capacity of solar, wind, and battery storage in America continues to grow at a parabolic rate. And BNEF reports renewable energy power purchase agreements with corporations in 2024 are running more than 20 percent ahead of 2023’s record level.

But combine surging AI demand with electrification efforts for building and transportation – and the ongoing shutdown of aging and expensive coal power plants – and it’s easy to see the US power sector has only one choice: Use more natural gas. That’s not even including gas’ growing role as “shadow capacity” for renewable energy, which despite storage is still too intermittent to be a true “dispatchable” resource.

Bottom line: No matter who is president next year, the world will still be in a race to develop enough new energy supply to keep up with underlying demand. That means using more gas. And that’s good news for best-in-class energy stocks.

Recommended Action: Buy KMI.

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