How much will NG drop at the begining of the month?

[ajgiorgi]

With Oil dropping about 30 percent from last month what do you think will be the drop on Nat Gas prices? 20, 30, or maybe 40 cents?

[Steve]

Re: How much will NG drop at the begining of the month?

I thought that the majority of the natural gas that we use was not tied to the production of oil so wouldn't we have 'normal' natural gas prices?

[Curtis]

Re: How much will NG drop at the begining of the month?

Oil production is one of several methods of getting cng. Shale production has the capability of giving us a 118 yr supply based on what is identified today and recoverable with current technology. New shale discoveries are keeping pace with market growth. This should increase with new technologies making recovery of some types of shale deposit gas that are unattainable today, much like oil sands in past years. If restrictions on getting to some of these shale fields are lifted, and allow the developement of these resources, we're good to go.

Prices have historically trailed gasoline prices by 40% (I believe was the number) and hopefully will continue to do so into the forseeable future. We should see further drops in natural gas prices until winter sets in, as ng runs an opposite cycle from gasoline, which generally peaks in the summer.

[Beej]

Re: How much will NG drop at the begining of the month?

Here's a couple charts of crude and nat gas, the spot commodity prices. You'll see they move almost the same. From peak to bottom crude is off almost 53% and nat gas is off just over 55%.

Here in UT, Questar uses the spot price in it's calculation for it's case to the public service commission for rate changes, so it works right into our price at the pumps. The latest rate change is a drop of 5% on Nov 1, which should bring us down to the low .80's.

In Cali I guess CE just under cuts the price of gas by a set amount. Gas is going down. I have a friend in MO who paid 2.10 this week, here in UT we just crossed under 3 bucks this week. I imagine you guys are still higher than that but coming down due to the dropping price of crude.

Now the real question is how will prices move from here. Crude is where it was in June of '07. I think we're going to see $50 crude before we see $100 crude. I think the global demand has definitely shifted as economies are turning recessionary. But we have people who don't like us in control of production so w/ OPEC cutting supply we'll have to see how the price reacts to it. Again, my personal belief is that it will continue down thru the winter.

[Curtis]

Re: How much will NG drop at the begining of the month?

I think you're probably as right as anyone can be right now, but my concerns are more long range. Everyone gets caught up in the pump price rising, or dropping because that's what they have to live with on a daily basis.

I don't care if the economics of oil force the price back to $.99 a gallon. History will show that the next spike, be it in 6 months... or 2 years and 6 months, will be more painful than the last. Oil prices will continue to trend up in the long run. As far as I'm concerned, this downward spike is a band-aid on a gaping wound.

With peak oil production (arguably) past us, and global demand rising... it's simple economics. It can't, and won't stay down. The fact that people are breathing a sigh of relief at $3 makes me ill. If you look down the road 3-5 years, what do you see? Surely not $2.50 a gallon gas. I base every decision I make regarding cars as if gas were $5-$7 a gallon. I pray it never happens, but when and if it does... I'll probably be filling up with $4 a gge cng. I may have to move to Utah at that point though.

Don't get me wrong, I like the effect that cheaper oil will have on the economy in the short run, as it effects everything, but I'm not foolish enough to think it's more than temporary... and could change for the worse tomorrow.

[camryman]

Re: How much will NG drop at the begining of the month?

In LA CE will keep prices high since they want to show they are making $$$ for share holders. They report in Nov. CE price $2.80 to $2.40 Public Gov stations will drop dramatically to$1.50 Utilities to $1.85 in LA/OC

Natural gas only went up because oil went up and USD $ decrease vs CAD $. We buy a lot of NG from Canada. There was no other reason for price increase.

Global demand for oil is way down. Besides oil for fuel it is also used in many other petroleum based products and the global demand for these products has dried up. Sorry Curtis Oil is going to stay down for a long time. We won't be going up in prices after the election or even next summer.

Peak oil..Hurricanes... Middle east instability... Thats all news hype which drove the market up. What goes up must come down. Castro just found a ton of oil in his backyard and you don't hear much about that.

A lot of Investors were moving there money out of stock and gold and into Oil in the last few years driving up the price, Oil was looking like a good place to store your money vs gold, stock or currency, since the USD took a dump in the last few years.

The Dollar is rising now getting stronger, which also makes oil cheaper. Oil will stay down.... $1.98 gasoline is on the way. We were paying this in 2003.

Diesel will be priced lower than Gasoline for the first time in a few years. Curtis order up the new super clean 70 mpg diesels...They will sell fast

Everything in the economy will go back to pre 2000 pricing, including Home and Gas prices... Economic war will be the next buzz word in the political/financial world, and Super clean diesel will be the Auto MFG buzz.

To recap why Oil is going down

Stronger USD

World wide industry decrease in demand for oil products

Increase in MPG for autos decreasing demand on oil.

Investors fleeing from oil back into cash

Increased world wide competition to OPEC from non Opec UK USSR USA and Mexico
.
Massive Stock piles of oil (pumped during peak pricing)

Economic slow down in consumption.. Fewer goods shipped

Semi Stable middle east

Hurricane season is over

New oil finds all over the world during the peak crisis

And no News Hype on oil supply problems only excess.

If the middle east wanted to kill of the western world without a bullet or a bomb they could... by increasing the price of oil to kill off our western economies.

Draining our pocket books and then using our own $$$ against us... I bet there were some rogue traders buying oil driving up the price working for middle east interests. Remember they make over 400 billion dollars a year on gasoline and could easily use this $$$$ to drive up the price of oil.

By the way we are now starting the next world wide great depression. Especially if the Dow goes down big again and slips past 7800 and does not stop!!!! It will head to 4000!!!! Holding 7800 is critical.

Sorry for this long rant, but I thought everyone should be informed.

Curtis, Long Range oil will be cheap, but economic outlook is very bad.... 10 years plus of trouble... Remember the 87 crash this is 100X worse. The Great depression lasted 10 plus years until FDR came along with the new deal and WW2 started. This will be similar.

[rgliedt]

Re: How much will NG drop at the begining of the month?

I view the pull back in fuel prices as a opportunity to transfer more dollars into my conversion to natural gas for both fueling ability and vehicles. We have no fueling infastructure where I live so I have to use fuelmakers. I will very soon take delivery of the 08 Impala 3.9 by Natural Drive and the 09 Civic GX. My local Gas commpany advised that that their price for Natural will fall to about $1.00 - $1.05 gge in Nov. Present price is about $1.30.

[Beej]

Re: How much will NG drop at the begining of the month?

Curtis,
I agree with you completely. It's really sad that they've made us "happy" with $3 gas. That's ridiculous. And I believe within a couple years we'll be paying $5. Disgusting. All the more reason to explore alt sources and tap into every bit of domestic sources we've got. It is nice for now but it will be too short lived.

By the way we are now starting the next world wide great depression. Especially if the Dow goes down big again and slips past 7800 and does not stop!!!! It will head to 4000!!!! Holding 7800 is critical.

Sorry for this long rant, but I thought everyone should be informed.

... Remember the 87 crash this is 100X worse. The Great depression lasted 10 plus years until FDR came along with the new deal and WW2 started. This will be similar.

camryman,
I love having another knowledgeable market geek around here and appreciate your insights. While I'm not as doom and gloom about a 10 year depression ahead of us, you're right on the money. Since Feb I've had a target for the Dow at 7k. I'm not sure about your 7800 support. Based off the Oct 10th low? I see 7500 and 7250 as more critical levels since these were the lows that preceded the last bull market in '02 - '03. Those levels would give us a 100% retracement of the bull market. Just ugly, but within the realm of probabilities.

Now, if we're going to doom and gloom this, in the first great depression the market sold off 90% from it's highs. That would actually give us Dow 1400. Personally I don't think it could ever go that low but that would be the target if we think we're going to see the same economic conditions.

I attached a chart of the H&S reversal in '02 - '03. By the way, the market hit the EXACT price target from this pattern before putting in a short term correction in '04. The correction ended just after the election that year. We could get a nice short term bullish movement after next week's election that would take us into the end of the year. A "Santa Rally" is fairly common and the market is WAY over sold.

I have no crystal ball, just a professional designation in technical analysis.

[camryman]

Re: How much will NG drop at the begining of the month?

I have my crystal ball. It's called meta stock.

The thing that has me worried most.... this is not just a small localized market issue that can be easily corrected with a market bottom dead cat bounce.

Black monday 9/11 and the 02 market bottom is no where near the impact of this drop from 14K to 8K in such a short period of time. Almost a waterfall. Many companies are in deep trouble world wide. A month from now on the Monday after Black Friday (The day after Thanksgiving) will be a crucial day for the market. If consumer spending is really weak the market will go down. We may get a small X mas rally, but how low will the market goes after T day. The X mas ralley may not come this year. We will probably have a good day after the election rally, but the trading days are very erratic right now. Jan thru March will be a sluggish market littered in bad news.

This is a world wide global bank Liquidity problem. Financial warfare in currancy domination is now going to play out. The USD should gain more ground in currency value and go up some more.

[hoofnit]

Re: How much will NG drop at the begining of the month?

We can analyze markets and production capacity all day long, but what really matters is the final price at the pump (for those of us not in Utah). For users in Northern California, PG&E has a history of the at the pump CNG prices by month on their website. http://www.pge.com/tariffs/GNGV2_Current.xls

Date Per GGE
01/01/07 $1.96439
02/07/07 $1.94945
03/01/07 $2.00470
04/01/07 $1.89927
05/01/07 $2.01279
06/07/07 $2.18875
07/01/07 $2.15080
08/01/07 $1.94910
09/10/07 $1.85668
10/05/07 $1.92755
11/01/07 $2.03870
12/07/07 $2.12237
01/01/08 $2.23897
02/07/08 $2.28192
03/01/08 $2.31400
04/01/08 $2.41607
05/01/08 $2.45351
06/01/08 $2.63079
07/01/08 $2.98483
08/01/08 $2.66319
09/01/08 $2.24651
10/01/08 $2.08997