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How to invest in gas

A guide to buying, selling and investing in gas.

Updated

Fact checked

Natural gas has been a reliable source of energy since the mid-19th century and currently makes up around 16% of Australia's annual electricity production. Australia is also one of the world's largest liquid natural gas producers (LNG). Thanks to its availability and necessity it has become a mainstream commodity on the investment market.

This guide discusses the four main ways that you can invest in natural gas, as well as any risks that may come with those options:

  • Buy gas stocks
  • Buy gas ETF units
  • Trade gas futures
  • Invest in MLPs

If you're looking to invest in gas oil (i.e. crude oil), you might find our guide to investing in oil helpful.

Investing in gas ETFs

Exchange-traded funds (ETFs) are a way of investing your money in a selection of assets rather than buying shares in a couple of specific companies. Find out more about ETFs.

ETFs are fairly simple and accessible, and trading them works in a similar way to regular stocks. As well as being relatively straightforward, ETFs are also seen as less risky. By investing in a basket of assets you leave yourself less vulnerable to the fluctuations of the market.

If you are new to the world of investment then ETFs may be the best choice for you. Gas is an incredibly popular commodity, with a range of companies and ETFs to choose from.

There are not any gas specific ETFs on the ASX however there are several energy and commodity theme funds that include gas companies:

  • BetaShares Commodities Basket ETF-Currency Hedged (Synthetic) (QCB)
  • VanEck Vectors Australian Resources ETF (MVR)
  • SPDR S&P/ASX 200 Resource Fund (OZR)
  • BetaShares S&P/ASX 200 Resources Sector ETF (QRE)
  • BetaShares Global Energy Companies ETF - Currency Hedged (FUEL)
Pros

  • ETFs give you widespread access to the natural gas industry at a competitive price.
  • In comparison to some of the other options ETFs are seen as a safer, more reliable choice for investors.
Cons

  • There is less control over your investment due to the diverse range of assets in an ETF.

Trading gas futures

Futures are a direct but risky investment which are subject to both the fluctuations of the market and the knowledge of the buyer. A high-risk, high-reward system, newcomers may want to gain some experience in the field before purchasing futures.

Futures, as the name suggests, are a way of buying gas at a later date at an agreed price. Depending on market movements you may end up making a solid return on your investment, or just as easily losing money.

In Australia, one of the most common methods for trading gas and other commodity futures is through CFD brokers. This way you'll never actually own the underlying commodity but you can still profit from gas price fluctuations. You can check out the table below for more info.

Some of the most commonly traded 'gas' commodities in the futures markets include:

  • Liquid Natural Gas
  • Low Sulphur gasoline
  • Gasoline
Pros

  • With a good knowledge of the market and some good fortune gas futures could bring you large returns on your investment.
  • A very direct way of owning a share of a commodity.
Cons

  • The market is unpredictable and constantly fluctuating - futures are vulnerable to these movements and making the wrong investment can lose you money.
  • If you don’t act on futures within the specified period they expire and are worth nothing.

Buying shares in gas companies

Stocks are one of the more conventional ways to invest in a commodity. Gas is a popular investment and a necessary form of energy for many households around the world, so there are multiple gas-producing companies to choose from: ranging from Chevron to BHP to Beach Energy. Stocks are simple to buy through brokers and advisors, but the decision on what shares to buy is up to you!

Buying stocks takes some knowledge of the market and its fluctuations, but this can be safer than investing in futures as you buy stock at the current price that is displayed. However, ETFs may still be a safer option as you aren’t relying on the performance of just one or two companies.

Pros

  • One of the most conventional and accessible ways of entering the market.
  • Choose from a variety of stock from different companies.
  • Exit the market at any time.
Cons

  • Interference from businesses involved in the refining process can curb a company’s stock value, so share prices don't always grow at the same rate as the price of the commodity itself.
  • As with all shares on the stock market, their value can go down as well as up.

Investing in MLPs

It is also possible to buy stocks in Master Limited Partnerships (MLPs). These are structured to offer certain tax advantages that mean profits are only taxed when they are distributed to the general and limited partners of a company. This type of set-up is appealing to some investors, as MLP returns are not taxed in the same way as dividend-paying shares.

MLPs also tend to be seen as a lower risk, but longer term, investment option. There are some risks that come with MLPs however, including demand, market volatility and the fluctuation of prices, as well as new legislation, environmental disasters/hazards and political and social shifts.

Pros

  • Some of the dividend payments offered can bring strong returns on your investment.
  • MLPs are easy to access through brokers and advisors.
Cons

  • As with shares, businesses with an interest in the manufacturing process of gas can influence market value, meaning stock prices may not be in line with commodity prices.
  • Demand and market risk can have an impact on MLPs, and companies may choose to withdraw their dividends.

Compare brokers to invest in gas

Data indicated here is updated regularly
Name Product Standard brokerage fee Inactivity fee Markets International
IG Share Trading
Finder Award
IG Share Trading
AUD 8
AUD 50 per quarter if you make fewer than three trades in that period
ASX shares, Global shares, Forex, CFDs, Margin trading
Yes
Brokerage discount: $5 on Australian shares for active traders & $0 commission on US and global shares
Enjoy some of the lowest brokerage fees on the market when trading Australian shares, international shares, forex and CFDs, plus get access to 24-hour customer support.
eToro Share Trading (US stocks)
USD 0
USD 10 per month if there’s been no login for 12 months
Forex, CFDs, US shares
Yes
Zero brokerage share trading on US stocks with trades as low as $50.
Note: This broker offers CFDs which are volatile investment products and most clients lose money trading CFDs with this provider.
Join the world’s biggest social trading network when you trade stocks, commodities and forex from the one account.
CMC Markets Stockbroking
AUD 11
No
ASX shares, Global shares, Forex, CFDs, Margin trading, Options trading, mFunds
Yes
$0 brokerage on global shares including US, UK and Japan markets.
Trade up to 9,000 products, including shares, managed funds, forex, commodities and cryptocurrencies, plus access up to 15 major global and Australian stock exchanges.
ThinkMarkets Share Trading
AUD 8
No
ASX shares, ETFs
No
Fast sign-up: Start trading in just a few minutes
Switch between your ASX share trading account and your forex account on your mobile and access some of the lowest brokerage fees on the market with a flat $8 commission (until $200,000).
ANZ Share Investing
AUD 19.95
No
ASX shares, Global shares, Margin trading, Options trading
Yes
Earn 1 Qantas Point per AU$3 spent on brokerage fees on certain instruments.
Access Morningstar reports, company announcements and and live pricing via ANZ’s share investing platform. Available for desktop and mobile.
Westpac Online Investing Account
AUD 19.95
AUD 63.50 per year on the global markets account
ASX shares, Global shares, Options trading, US shares
Yes
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Compare up to 4 providers

Data indicated here is updated regularly
Name Product Minimum Opening Deposit Minimum Opening Deposit Commission - ASX 200 Shares Available markets Platforms
Plus500 CFD
AUD 100
100
No commission
CFDs on ASX shares, global shares, indices, options, ETFs
Plus500 Web Trader
Disclaimer: Volatile investment product. Most clients lose money trading with this provider.
Finder exclusive offer: Open a new trading account and receive a welcome bonus of AU$110 when you deposit your first $370 and enter the bonus code “Special200”. T&C’s apply.
Trade CFDs on Australian and International shares, indices, cryptocurrencies, commodities and more.
IG Markets CFD
AUD 0
0
0.08% with $7 minimum
Indices, FX, Shares, Commodities, Cryptocurrency, ETPs
MetaTrader 4
ProReal Time
Disclaimer: Volatile investment product. Most clients lose money trading with this provider.
Introductory offer: Build confidence by trading at lower minimum trade sizes for the first six weeks. Plus, receive a reduced commission on Australian shares CFDs. T&C's apply.
Trade from over 15,000 markets with Australia's leading service for CFD trading and forex.
eToro CFD
USD 50
USD 50
No commission
ASX shares, global shares, indices, cryptocurrencies, commodities, ETFs
eToro Trading Platform
Disclaimer: Volatile investment product. Most clients lose money trading with this provider.
Join the largest social trading network in the world.
IC Markets CFD (True ECN Account)
$200
$200
0.1% per side
ASX shares, global shares, indices, commodities, forex, cryptocurrencies
MetaTrader 4
MetaTrader 5
cTrader
Disclaimer: Volatile investment product. Most clients lose money trading with this provider.
Trade 230+ different products with fast execution under 40 milliseconds on average.
City Index CFD
AUD 0
0
0.08% with $5 minimum
ASX shares, 4,500 global shares, indices
MetaTrader 4
At Pro
Advantage Web
Disclaimer: Volatile investment product. Most clients lose money trading with this provider.
Trade CFDs on indices, FX, global & Australian shares and commodities, plus access other markets such as metals, bonds and interest rates.
Blueberry Markets CFD Trading
$100
$100
$20 per month subscription plus 2% of trade size
Indices, ASX200 Shares, Commodities, Cryptocurrency
MetaTrader 5
Disclaimer: Volatile investment product. Most clients lose money trading with this provider.
Bottom of the market fees on forex, CFDs and commodities with 24/7 quality customer service.
Pepperstone CFD
USD 200
200
No commission
ASX shares, global shares, indices, cryptocurrencies, commodities
MetaTrader 4
MetaTrader 5
cTrader
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade stock indices on the global market, via Pepperstone's MetaTrader 4 and cTrader client terminals.
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Compare up to 4 providers

Data indicated here is updated regularly
Name Product Monthly fee Options trading fee Standard brokerage fee
CMC Markets Options Trading
$0
$33 up to $10,000, 0.33% above $10,000
AUD 11 or 0.1% for first 10 trades up to AUD 10,000
Bell Direct Options Trading
$0
$30
AUD 15 for first 10 trades
ANZ Share Investing
$0
$34.95
AUD 19.95
Earn 1 Qantas Point per AU$3 spent on brokerage fees on certain instruments.
Access Morningstar reports, company announcements and and live pricing via ANZ’s share investing platform. Available for desktop and mobile.
Westpac Online Investing Account
$38.95 or 0.35% of trade value, whichever is greater
AUD 19.95 or 0.11%
CommSec Options Trading
$0
$34.95 up to $10,000, 0.35% above $10,000
AUD 10
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Compare up to 4 providers

Important: Share trading can be financially risky and the value of your investment can go down as well as up. Standard brokerage fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares.

Is gas a safe investment?

The world relies on gas for energy, and its abundance makes it a quite a reliable commodity on the stock market. However, the market is never completely safe, and gas is no exception:

  • Pipeline incidents: A risk for the environment as well as your profits, a burst pipeline can have disastrous effects on both your investments and the ecosystem at large.
  • Dividend cuts: Gas companies often distribute dividends to shareholders, which allows their investments to make a regular income. If a company cannot make enough money however, dividends can be cut. This can lead to stock prices plummeting.
  • Price volatility: Prices for gas have fluctuated violently over the years, usually as a result of shifts in supply. Gas is also seasonal, with people using more during the winter, which can also affect prices.

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