How to invest in gas

A guide to buying, selling and investing in gas.

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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

Name Product Standard brokerage fee Inactivity fee Markets International
eToro (US, EU stock trading)
US$0
US$10 per month if there’s been no login for 12 months
Global shares, US shares, ETFs
Yes
Zero brokerage share trading on US stocks with trades as low as $50.
Join the world’s biggest social trading network when you trade stocks, commodities and currencies from the one account.
Superhero share trading
$5
No
ASX shares, ETFs
No
Pay zero brokerage on all Australian ETFs.
Trade ASX stocks with a flat $5 commission fee and a low minimum investment of just $100.
ThinkMarkets Share Trading
$8
No
ASX shares, ETFs
No
Limited offer: Get 5 free ASX trades when you open a new account with ThinkMarkets before June 30, 2021 (T&Cs apply).
Buy and sell CHESS sponsored ASX shares with $0 brokerage on your first 5 trades. Only $8 flat fee brokerage thereafter, plus enjoy free live stock price data on an easy to use mobile app.
Bell Direct Share Trading
$15
No
ASX shares, mFunds, ETFs
No
⭐ Finder Exclusive: Get 5 free stock trades and unlimited ETF trades until July 31, 2021 when you join Bell Direct.
Bell Direct offers a one-second placement guarantee on market-to-limit ASX orders or your trade is free, plus enjoy extensive free research reports from top financial experts.
IG Share Trading
Finder Award
IG Share Trading
$8
$50 per quarter if you make fewer than three trades in that period
ASX shares, Global shares
Yes
$0 brokerage for US and global shares plus get an active trader discount of $5 commission on Australian shares.
Enjoy some of the lowest brokerage fees on the market when trading Australian shares, international shares, plus get access to 24-hour customer support.
Saxo Capital Markets (Classic account)
$6.99
No
ASX shares, Global shares, Forex, CFDs, Margin trading, Options trading, ETFs
Yes
Acess 19,000+ stocks on 37 exchanges worldwide
Low fees for Australian and global share trading, no inactivity fees, low currency conversion fee and optimised for mobile.
CMC Markets Stockbroking
$11
No
ASX shares, Global shares, mFunds, ETFs
Yes
$0 brokerage on global shares including US, UK and Japan markets.
Trade up to 9,000 products, including shares, ETFs and managed funds, plus access up to 15 major global and Australian stock exchanges.
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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. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Name Product Minimum Opening Deposit Minimum Opening Deposit Commission - ASX 200 Shares Available markets Platforms
Vantage FX CFD
$200
$200
$8 AUD or 0.08%
Forex, CFD shares, Indices, Cryptocurrencies, Commodities
MetaTrader 4
MetaTrader 5
TradingView
Disclaimer: CFD Service. Your capital is at risk.
Vantage FX has some of the lowest CFD trading fees in Australia, plus you can place trades and find global trends through the new TradingView charts platform.
eToro CFD
US$200
US$200
No commission
Forex, Shares, Indices, Cryptocurrencies, Commodities, ETFs
eToro Trading Platform
Disclaimer: CFD Service. Your capital is at risk.
Join the largest social trading network in the world.
Plus500 CFD
$200
$200
No commission
CFD on Forex, Commodities, Cryptocurrency, Indices, Shares, Options and ETF's
Plus500 Trading Platform
Disclaimer: CFD Service. Your capital is at risk.
Trade CFDs on Australian and International shares, indices, cryptocurrencies, commodities and more.
IG CFD broker
$0
$0
0.08% with $7 minimum
Indices, FX, Shares, Commodities, Cryptocurrency, ETPs, Options, Interest Rates, Bonds
MetaTrader 4
ProReal Time
IG Trading Platform and Apps
L2
Disclaimer: CFD Service. Your capital is at risk.
Trade from over 15,000 markets with Australia's leading service for CFD trading and forex.
IC Markets CFD (True ECN Account)
US$200
US$200
0.1% per side
ASX shares, global shares, indices, commodities, forex, cryptocurrencies
MetaTrader 4
MetaTrader 5
cTrader
Disclaimer: CFD Service. Your capital is at risk.
Trade 230+ different products with fast execution under 40 milliseconds on average.
Saxo Capital Markets CFD
3,000
3,000
0.10% with $6 minimum
Indices, FX, Shares & ETFs, Commodities, Cryptocurrencies, Options, Bonds
SaxoTraderGO
SaxoTraderPRO
Disclaimer: CFD Service. Your capital is at risk.
Award-winning trading platfrom with extensive charting tools and reliable execution.
Blueberry Markets CFD Trading
US$100
US$100
$20 per month subscription plus 2% of trade size
Indices, ASX200 Shares, Commodities, Cryptocurrency
MetaTrader 5
Disclaimer: CFD Service. Your capital is at risk.
Bottom of the market fees on forex, CFDs and commodities with 24/7 quality customer service.
CMC Markets
$0
$0
0.09% with a $7 minimum
ASX shares, 25+ global exchanges, treasuries, indices
CMC Next Generation CFD, MetaTrader 4
Disclaimer: CFD Service. Your capital is at risk.
Share CFD and forex ideas with other traders and take your strategy to the next level with over 100 technical indicators and charts on CMC’s mobile-friendly Next Generation platform.
Pepperstone CFD
$200
$200
No commission
ASX shares, global shares, indices, cryptocurrencies, commodities
MetaTrader 4
MetaTrader 5
cTrader
Disclaimer: CFD Service. Your capital is at risk.
Trade stock indices on the global market, via Pepperstone's MetaTrader 4 and cTrader client terminals.
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Trading CFDs and forex on leverage is high-risk and you could lose more than your initial investment. It may not be suitable for every investor. Refer to the provider’s PDS and consider the risks before trading.

Name Product Monthly fee Options trading fee Standard brokerage fee
Bell Direct Share Trading
$0
$30
AUD $15
⭐ Finder Exclusive: Get 5 free stock trades and unlimited ETF trades until July 31, 2021 when you join Bell Direct.
Bell Direct offers a one-second placement guarantee on market-to-limit ASX orders or your trade is free, plus enjoy extensive free research reports from top financial experts.
CMC Markets Stockbroking
$0
$33
AUD $11 or 0.1%
$0 brokerage on global shares including US, UK and Japan markets.
Trade up to 9,000 products, including shares, ETFs and managed funds, plus access up to 15 major global and Australian stock exchanges.
Saxo Capital Markets (Classic account)
$0
$5
AUD $6.99
Acess 19,000+ stocks on 37 exchanges worldwide
Low fees for Australian and global share trading, no inactivity fees, low currency conversion fee and optimised for mobile.
loading

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. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

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.

FAQs

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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