Posted on 11/28/2011 10:24:40 PM PST by Razzz42
...A supply glut has pressured natural gas futures for most of 2011, as production from dense rock formations (shale) – through novel techniques of horizontal drilling and hydraulic fracturing – remain robust, thereby overwhelming demand. As a matter of fact, natural gas prices have dropped more than 25% from this year’s peak of about $5.00 per million Btu (MMBtu) in June to the current level of around $3.70 (referring to spot prices at the Henry Hub, the benchmark supply point in Louisiana).
Of late, a mild autumn weather has driven a string of above-average inventory builds, indicating a grossly oversupplied market. Natural gas demand is currently going through a lean period – with the end of the peak cooling loads for summer and ahead of the winter heating season, coupled with tepid industrial demand in a weak economy. As a result, commodity prices continue to be under pressure against the backdrop of sustained strong production.[End]
(Excerpt) Read more at finance.yahoo.com ...
Fracking awesome news.
Sweet. My home natural gas bill has been in credit mode for at least three months while we bake pizzas and deep fry potatoes. Electric not so much.
This too shall pass. Wait until the coal fired plants shut down and the only acceptable alternative is gas turbines. It will take awhile but this glut will eventually end.
Couple growing demand created by obastard and steep decline curves for the shale gas wells and the glut will end soon enough.
Some of us don’t believe all the hype. The resources are there the rate is not. It will take a long time to get the resources out of the ground even with Fracing which has been around a LONG time.
We do have the resources, we don't have the infrastructure, or people to make massive energy increases. A good plan might help.
Why don’t we build new/adapt our cars to run on BOTH gasoline AND natural gas, too?
We would save $$.
We would NOT be financing our Muzzie enemies.
I dunno what the problem is.
It has been done with trucks and certain states are in the process of changing their fleets of cars over to NG. Infrastructure is an issue along with some conversion problems, but in time I’d like to see the same thing.
Cost of Gasoline vs. Natural Gas 4 comments
Feb 28, 2011
I just wanted to share a quick back of the envelope calculation with the SeekingAlpha community. I did not realize the price difference was this great, but it turns out that gasoline is about 5 to 6 times as expensive as natural gas on a per unit energy basis.
In November, Boone Pickens told CNBC that gasoline was about 4 times as expensive as natural gas, but it appears that he either underestimated the true difference in price or the price has diverged even further since his testimony. Those of you in the energy industry can just ignore this blog post, as I imagine you monitor this price differential on a daily basis and I won’t be saying anything you don’t already know, but I would appreciate any commentary you might have to offer.
Here in California I paid $4.80 last month for each block of 1,000 cubic feet of nat gas that I consumed from my local utility company. 1,000 cubic feet of natural gas has about 1 million BTUs of energy although it can vary slightly depending on where the gas came from. From this logic I paid $4.80 for each 1 million BTUs of energy that I consumed from natural gas.
Refined gasoline has about 120,000 BTUs per gallon, but again it depends on where the oil came from, the precise refining process, and how much ethanol and other additives the gasoline contains. Thus, it takes about 8 gallons of gasoline to produce 1,000,000 BTUs of energy. According to Gasbuddy.com the average price today in the USA for a gallon of gasoline is $3.35. Thus, it costs about $27.92 to produce 1 million BTUs of energy from refined gasoline.
Thus, gasoline is almost 6 times as expensive as natural gas on a per unit energy basis.
Ethanol is even more expensive than gasoline. Wholesale ethanol is currently trading at $2.59 per gallon. Ethanol has about 80,000 BTUs per gallon, which means it presently costs about $32.38 to produce 1 million BTUs from ethanol. This is the wholesale trading price and does not consider any mark up or taxes passed on to consumers at the pump.
I thought some of you who don’t pay attention to this type of thing might find this interesting. I think it shows that we really need to begin switching to natural gas automobiles soon. Ethanol is a complete waste of time in my opinion because it causes the price of corn and sugar to rise since it is made from those agricultural commodities.
The size and weight of the high pressure containers needed to handle the NG and the infrastucture to refill or replace. Given enough demand those problems will be dealt with.
At the end of 2007 coal had risen to a price of $36.07 per ton or $1.82 per million btu. So natural gas is 2.64 times more expensive than coal.
Now a coal car, is a real pain in the butt, because you need a coal tender, and it is hot and dirty and there are not many coal stations along the highways, so travel by coal car may not be practical.
Nothing cheaper than coal per BTU, that’s for sure.
Great post.
Question: has anyone else noticed that for the last month or so, pump prices have gone down while the price of crude has gone up? Crude went from the high 80’s to the high 90’s per barrel, while the price at the pump has been coming down. We’re buying regular here for $3.19 per gallon, and the price of crude now would justify at least 50 to 70 cents more, based on recent history.
Could the lowered price of NG be putting downward pressure on gasoline? Or perhaps this has something to do with refining?
When I built my house in 2000 propane was $.99/gal now 11 years later it is almost $4.00/gal. Why can natural gas be so cheap and propane so high? Cant somebody invent a liquid NG tank for home use?
Could the lowered price of NG be putting downward pressure on gasoline? Or perhaps this has something to do with refining?
The price on NG would have no effect on gas.
If I were to guess the reason for the lower price at the pump would have to do with the ammount of oil in storage, there’s lots of it. The futures market has less to do with abundance than it does with political fears.
The Middle East is very shaky, but we have a glut on hand.
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