Do natural gas prices lie?
http://finance.yahoo.com/news/Natural-gas-surges-on-record-apf-2278066234.html?x=0&sec=topStories&pos=4&asset=&ccode=
Natural gas prices are up because supply is down. Supply declines at this time of year because the fuel is used as a heating fuel.
Supply is still higher than the 5-year average – because it was so high in Fall, causing prices to then be quite low. Supply during the Fall is a function of how hot the Summer was – because natural gas is used to generate peak power (i.e., when air conditioning demand is high).
Natural gas production is very stable on a per-day basis. Thus changes in supply reflect the amount used for variable purposes – for Summer air conditioning and Winter heating.
Natural gas price and supply data is telling us that it was a cool Summer and it has been a cold Winter thus far.
And that’s consistent with what people are actually experiencing.
Should we believe that? Or UEA’s data?
Hi Peter – well other than supply disruptions (e.g., hurricanes and other reasons pipelines or refineries might be shut down) supply is pretty steady while demand shifts because of hot vs mild Summer and cold vs mild Winter. There are other demand factors but these actually are offsetting – demand for natural gas and its byproducts as a chemical feedstock declines when prices spike – chemical firms switch to other, cheaper, feedstocks. That’s more of an issue with propane but it’s an issue with natural gas.
Bubba your interpretation and understanding are pretty far off – oil is not a generating fuel in the US.
Sanford the middle east has nothing to do with natural gas – 90% of our natural gas is domestic, with 9% coming from Canada.
dearest beren i don’t think that there has been an increase in occupied mcmansions this year.
that housing bubble burst ya know
December 22nd, 2009 at 5:59 am
It’s better than tree-rings.
There are many factors effecting the long-term price of the fuel, and long term they’ll probably be relatively steady. We’ll be using more, but production methods are improving, and reserves are increasing.
December 22nd, 2009 at 5:59 am
Like the price you pay at the pump for gasoline, the price of natural gas moves up and down based on many factors, including weather conditions, global conflicts in the Middle East and basic supply and demand
It is not shaping up as a good week for the UEA and radical left. The "global warming" movement continues to unravel as "Climategate" gains traction. What many of us have been saying all along has turned out to be true. The whole "climate change" industry, which has made Al Gore a multi-millionaire, is a scam based on a hoax built on a lie.
December 22nd, 2009 at 5:59 am
Our gas company dropped our prices here in Pa by 28% this year.
December 22nd, 2009 at 5:59 am
US natural gas consumption always peaks in the winter months. There is a secondary summer peak, but it is always much lower than the winter peak.
Price, however, does not follow such a neat pattern. If you expect pull-it-out-of-your-ass analysis like this to be taken seriously, you can start by showing us first that there is a correlation between natural gas prices in the US (3% of earth’s surface) and surface temperatures globally. Only then can we talk about causation.
December 22nd, 2009 at 5:59 am
Is the supply down because of cold weather or because in the past 10 years people have been building 4000+ sq. ft. McMansions?
December 22nd, 2009 at 5:59 am
Could it be that the economy is starting to get better?
Before the crisis natural gas was very expensive, then it dropped down to very cheap as demand dropped due to the economic crisis, would it really be a big surprise if demand were to increase as the crisis passed?
December 22nd, 2009 at 5:59 am
I agree with Peter.
While there are many factors which affect the cost of fuel, there are also many factors that affect tree rign growth. We know on average that the price a natural gas tends to follow the demand. While I am not sure I would replace natural gas prices with temps, I would also not replace temps with tree ring data. Tree ring data is a very poor surrogate as illustrated by the "hide the decline" email. Also I do not tend to look at the very minor temp changes as something that we need to panic over.
December 22nd, 2009 at 5:59 am
Prices don’t lie, but you "interpretation" leaves a lot to be desired. I agree that supply and demand is in part driven by weather conditions on the ground. However, that is only a part of it
A few years back, the petroleum market was opened up so that speculative buyers could "bet" on oil prices. Now the market includes not only airlines and refineries that actually use the products, but those who are trying to make a quick buck on daily price fluctuations. This caused market instability that resulted, in part, in the wildly high oil prices we saw.
Natural gas is a direct competitor to oil for heating and electric generation as is coal. When oil prices went up, so did gas and oil, partially because of the speculation but also because of the fairly inelastic demand for such products – it is hard to switch for some users once the hardware is installed. Right now, we have a situation where natural gas is preferred over oil and there is talk about using LNG as a mobile fuel source. That is why Exxon just purchased a very large natural gas producer. Natural gas is a cleaner alternative than gasoline or oil. That is also the biggest part of the price increase – speculation.
http://www.foxbusiness.com/story/markets/industries/energy/exxon-mobil-buy-xto-energy–billion/?loomia_ow=t0:s0:a46:g33:r2:c7.000000:b29392754:z7
December 22nd, 2009 at 5:59 am
I am sorry to say that the "warmists" are right on the Natural Gas price. Bubba is actually spot on!
Most of the recent price increases are due to speculation in the market. Supplies are at record high points and although the cold winter so far is also driving up prices, Natural Gas storage is at an all time high and drilling in the US Shale Gas plays is still glutting the markets.
The Natural Gas Market has bee so skewed since 2005, that you cannot read anything into it at all. The Energy Equivalent price for gas is 6 Mcf/bbl oil equiv. and the historical is about 10 Mcf/barrel equiv. and lately the conversion is about 16 Mcf/barrel equiv. If "warmers" were really serious about CO2 emissions, they would be considerably more vocal about Natural Gas usage instead of oil or coal. Ironically, this would put the "warmists" in the same camp as Exxon and T Boone Pickens!
Selling Gas at 270% below its energy value, when it also produces 40% lower CO2 emissions, shows you just how badly Copenhagen is going to flop! There is absolutely NO serious desire on anybody’s part to reduce emissions…its about money and as long as consumers are forced to pay the cost and told "its good for you", then nobody really cares about emissions at all!