Tweet
We like to blame the "Evil Empire" or some other untoward entity for the current run-up in natural gas prices at every opportunity. So what's the real culprit?
Here is the DOE's short term energy outlook for this week (5/6/08). There are a number of reasons, but I think I'll chalk this one up to ethanol subsidies... Rising food prices... and unnutural weather patterns.
Natural Gas Consumption. Total natural gas consumption is expected to increase by 1.0 percent in 2008 and by 0.8 percent in 2009 (U.S. Total Natural Gas Consumption). The assumption of normal weather is expected to lead to limited growth in residential and commercial demand in 2008, while economic conditions are expected to limit industrial sector growth for the year. In 2009, consumption is projected to decrease slightly in the residential and commercial sectors, with a small increase expected in the industrial sector. Finally, milder summer temperatures are expected to leave natural gas consumption for electricity generation unchanged in 2008, after an increase of more than 10 percent in 2007. Consumption growth of 2.9 percent is expected in the electric power sector in 2009.
Production and Imports. Total U.S. marketed natural gas production is expected to increase by 2.9 percent in 2008 and by 0.2 percent in 2009. In 2008, the development of deepwater supplies is expected to drive production growth of 4.8 percent in the Gulf of Mexico. Production from the Lower-48 onshore region is expected to continue the upward trend of recent years, increasing by 2.7 percent, led by growth in unconventional production basins. In 2009, production growth will be offset partially by the absence of further increases in rigs drilling natural gas prospects; the natural decline in production from current wells, particularly in the offshore fields; and rising production costs. In 2009, natural gas production in the Gulf of Mexico is projected to decline by 0.7 percent while production in the Lower-48 onshore region is expected to increase by 0.3 percent.
Imports of liquefied natural gas (LNG) are projected to reach about 680 billion cubic feet (Bcf) for 2008, representing a 12-percent decline from the record volume received in 2007. Strong demand in Asia and Western Europe, which compete with the United States for LNG supplies, has greatly reduced the number of U.S.-bound LNG cargoes so far this year. Although current import volumes are low, EIA expects U.S. LNG imports to rebound slightly this summer as global demand wanes. An increase in global LNG supplies, particularly expansions in Nigeria and Norway, are expected to boost shipments of LNG to the United States in 2009, when import volumes are projected to total about 950 Bcf.
Inventories. On March 28, 2008, working natural gas in storage was 1,248 Bcf (U.S. Working Natural Gas in Storage). Current inventories are now 6 Bcf above the 5-year average (2003-2007) and 304 Bcf below the level during the corresponding week last year.
Prices. The Henry Hub spot price averaged $9.74 Mcf in March, nearly $1.00 per Mcf more than the average spot price in February. This was the first month since December 2005 that Henry Hub spot prices averaged more than $9 per Mcf. The recent upward price shift reflects a number of factors, including the dropoff in LNG imports compared to year-ago levels, high oil prices, and the drawdown in storage to the lowest levels in 4 years. As seasonal demand wanes, spot prices are expected to decline before they begin to rise again toward a winter peak. On an annual basis, the Henry Hub spot price is expected to average about $8.59 per Mcf in 2008 and $8.32 per Mcf in 2009.
There you have it Camryman. I would have posted it in the "Get together" forum, where you posted the question... but it was off topic.
Here is the DOE's short term energy outlook for this week (5/6/08). There are a number of reasons, but I think I'll chalk this one up to ethanol subsidies... Rising food prices... and unnutural weather patterns.
Natural Gas Consumption. Total natural gas consumption is expected to increase by 1.0 percent in 2008 and by 0.8 percent in 2009 (U.S. Total Natural Gas Consumption). The assumption of normal weather is expected to lead to limited growth in residential and commercial demand in 2008, while economic conditions are expected to limit industrial sector growth for the year. In 2009, consumption is projected to decrease slightly in the residential and commercial sectors, with a small increase expected in the industrial sector. Finally, milder summer temperatures are expected to leave natural gas consumption for electricity generation unchanged in 2008, after an increase of more than 10 percent in 2007. Consumption growth of 2.9 percent is expected in the electric power sector in 2009.
Production and Imports. Total U.S. marketed natural gas production is expected to increase by 2.9 percent in 2008 and by 0.2 percent in 2009. In 2008, the development of deepwater supplies is expected to drive production growth of 4.8 percent in the Gulf of Mexico. Production from the Lower-48 onshore region is expected to continue the upward trend of recent years, increasing by 2.7 percent, led by growth in unconventional production basins. In 2009, production growth will be offset partially by the absence of further increases in rigs drilling natural gas prospects; the natural decline in production from current wells, particularly in the offshore fields; and rising production costs. In 2009, natural gas production in the Gulf of Mexico is projected to decline by 0.7 percent while production in the Lower-48 onshore region is expected to increase by 0.3 percent.
Imports of liquefied natural gas (LNG) are projected to reach about 680 billion cubic feet (Bcf) for 2008, representing a 12-percent decline from the record volume received in 2007. Strong demand in Asia and Western Europe, which compete with the United States for LNG supplies, has greatly reduced the number of U.S.-bound LNG cargoes so far this year. Although current import volumes are low, EIA expects U.S. LNG imports to rebound slightly this summer as global demand wanes. An increase in global LNG supplies, particularly expansions in Nigeria and Norway, are expected to boost shipments of LNG to the United States in 2009, when import volumes are projected to total about 950 Bcf.
Inventories. On March 28, 2008, working natural gas in storage was 1,248 Bcf (U.S. Working Natural Gas in Storage). Current inventories are now 6 Bcf above the 5-year average (2003-2007) and 304 Bcf below the level during the corresponding week last year.
Prices. The Henry Hub spot price averaged $9.74 Mcf in March, nearly $1.00 per Mcf more than the average spot price in February. This was the first month since December 2005 that Henry Hub spot prices averaged more than $9 per Mcf. The recent upward price shift reflects a number of factors, including the dropoff in LNG imports compared to year-ago levels, high oil prices, and the drawdown in storage to the lowest levels in 4 years. As seasonal demand wanes, spot prices are expected to decline before they begin to rise again toward a winter peak. On an annual basis, the Henry Hub spot price is expected to average about $8.59 per Mcf in 2008 and $8.32 per Mcf in 2009.
There you have it Camryman. I would have posted it in the "Get together" forum, where you posted the question... but it was off topic.
Comment