A push towards more electric vehicles (EVs) has a closer correlation to strength in natural gas than what investors might think.

According to a S&P Global Market Intelligence report, a rise in EVs on the road could also spur a move for higher natural gas demand. This opens up the arena to ETF trading opportunities that aren’t just related to energy or automotive sector-based funds.

“The surging popularity of electric vehicles stands to rattle fossil fuel markets, with energy experts anticipating an erosion of oil demand for transportation around the globe,” the report said. “At the same time, the electric vehicle revolution has the potential to generate additional demand for natural gas as a power source for plug in cars.”

The push towards electric vehicles could largely depend on what governmental policies dictate. Right now, the trillion-dollar infrastructure plan calls for more funding to add power stations for electric vehicles, which could help prop up natural gas.

“The outcomes for both oil and gas depend heavily on government policies and EV incentive schemes, according to observers,” the report added. “That uncertainty around the pace of electric vehicle adoption is reflected in the wide-ranging estimates from researchers and market participants.”

IHS Market research suggests that oil demand could reach a zenith by the year 2050. After that, demand would start to experience a gradual decline.

“We see that as a potential outcome depending on how strong policies are to decarbonize,” said Jim Burkhard, IHS’s head of research for oil markets, energy, and mobility. “It’s all policies.”

One ETF Opportunity to Trade Natural Gas

This rise in EVs should bode well for the bulls who can go long with ETFs like the  Direxion Daily Natural Gas Related Bull 3X ETF (GASL). GASL seeks daily investment results equal to 300% of the daily performance of the ISE-Revere Natural Gas Index, which is designed to take advantage of both event-driven news and long-term trends in the natural gas industry.

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