Skip to comments.Natural gas hike of 70% possible
Posted on 09/08/2005 3:30:52 PM PDT by Crackingham
As oil field workers report natural gas bubbling from broken pipelines in the Gulf of Mexico, the U.S. Department of Energy predicted Wednesday that tightening supplies this winter could increase household expenditures for natural gas by about 70 percent, compared to last winter.
The predictions were in the Short Term Energy Outlook for September, which was released Wednesday morning and contained the first official outlook reflecting Hurricane Katrina's damage to the Gulf's oil and gas infrastructure. Department of Energy officials did not return phone calls seeking comment.
John Davis, the president of local gas supplier Mobile Gas Service Corp., said the Energy Department's projections for home-delivered natural gas prices seemed to be significantly higher than what most energy traders were expecting. Davis said his company is expecting its prices for homeowners to increase between 20 to 25 percent compared to last winter -- though he said he couldn't rule out that things could be "a lot worse."
In the wake of Katrina, early assessments of the Gulf's rich petroleum fields focused on what was happening to the oil supply, as gasoline prices rose to all-time highs. But relatively little attention has been directed to the Gulf's role in supplying natural gas to homes, industries and power plants around the country.
The Department of Energy's Wednesday report predicts a nearly full recovery for oil production in the Gulf of Mexico by November, though the agency acknowledged that the actual speed of repairs could affect predictions significantly.
In the meantime, the 30 million barrels of oil sent to refineries from the federal Strategic Petroleum Reserve will likely ease the gasoline shortage that panicked much of nation for the last week, as will the arrival of multiple supertankers bringing fuel in from abroad.
But for the natural gas supply, there are no similar rescues from abroad. Natural gas from other continents must be shipped in through one of the county's four liquefied natural gas terminals, which account for little more than 1 percent of the nation's daily gas needs. Two days after Katrina's landfall, a Congressional Research Service policy paper stated, "There is no Strategic Petroleum Reserve for gas. A short-term problem could worsen if the shortage continues into the heating season."
By most estimates, Gulf of Mexico fields produce 20 to 25 percent of the nation's natural gas output. About 40 percent of Gulf natural gas production is still out of commission.
What's more, production still had not fully recovered from Hurricane Ivan in 2004, and gas prices have not dropped to their pre-Ivan levels.
Immediately after Katrina's landfall, "spot prices at Louisiana trading locations moved up an average of $3.23," according to the DOE. In the last two years, gas prices have hovered between 6 and 8 dollars per thousand cubic feet, and they've now moved up to about to nearly $12 per thousand cubic feet. The damage to Gulf refineries may also play a role in gas prices this year as 75 percent of the Gulf's production must be processed to remove impurities before it can be used by residential and industrial customers, the DOE reports.
No wonder my damn electric bill went up to $215 from $180 last month. Most of DFW area is gas..
I sure with they'd add on to Commanche Peak.
Whoa. Better stock up on the thermal unmentionables.
I sure hope this will help sell some gas drilling prospects.
Natural gas is at $11 or $12 now compared to $6 last year. An increase of 70% seems to be a done deal, and more.
My wife is the one who keeps our house hotter than a toaster oven all winter. I think my core body tempature is about 20 degrees higher than hers.
LOL. I like it warmer than Mr. Mew, but with an increase like this I may just end up dressing like the Michelin Man all winter.
Geez, it already costs a fortune to heat my place. I left work a little early today to meet with a guy who's installing a new furnace for me this fall. Should have ordered a woodburner instead.
I'm trying to remember the reasons that were adduced for switching to natural gas, but I am pretty sure that one of the ones was that it was inexpensive. It looks like that reason can be stricken from the list if we are going to see another 70% hike in natural gas prices.
No doubt - I have an airtight woodstove to repair and wood to cut. I have a feeling the NG heat bills are gonna hurt pretty bad this winter.
It's gonna hit low income folks pretty hard. But Dems never think about that, do they, when they scream bloody murder about drilling and pipelines. Bet those principled Dem pols don't have to worry about paying their heating bills.
Hundreds of Natural Gas wells all over the country that are either capped, or just un-used. NW Arkansas is just one example that I am familiar with. There is less excuse for a price jump of natural gas than there is for a gasoline price jump.
I'm thinking that helping to pay elderly parent's energy bills this winter would be a fantastic Christmas gift!!
Ive been trying to convince my grandmother to enclose her open staircase for years. This winter may change her mind.
I just KNEW buying a house that has 2 fireplaces and a woodburning stove was a good idea :)
Wada I do....Sell my 'gas fired' utes and buy more gas producers? Just plain torn here......;^)
It would indeed! :)
It cost us a lot upfront, but now I am SO GLAD we insulated our new house with closed cell spray-foam. Real Life tests show that it cuts energy bills by 40% over standard insulation.
My wise husband locked in our propane at last December's prices. It still cost over $500 to fill but it looks like we got a bargain.
At $12 mmbtu which is double the price last year and 4 times the price two years ago why would anybody have a producing gas well capped? It doesn't make sense. Gas wells don't need to be pumped you just open the valve and the gas comes flowing out. The only possible explanation I can think of would be the lack of a pipeline to put the gas into. If the wells are any good the cost of building a pipeline at these prices starts to look insignificant and they can build them unbelievably fast.
I'm in the gas business and we are drilling wells and building pipe here in the Powder River Basin of Wyoming as fast as we can. But they are coal bed methane wells which have marginal economics compared to traditional gas wells. The wells are cheaper because they are shallow but they produce a fraction of the gas of traditional wells and a lot of water needs to be pumped out of the wells with electricity unlike traditional wells that flow on their own pressure. The economics only work when gas prices are quite high. It makes me think we are scraping the bottom of the barrel for natural gas.
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