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So we have a little situation here. By early June, the price of natural gas futures in the US had spiked to over $9.50 per million Btu, roughly triple the price from a year earlier, and quadruple the price in 2020. This spike was caused by US exports of LNG, which are booming, with new LNG terminals coming online one after the other since 2016. Exports added to demand for US natural gas and increasingly linked US natural prices to global LNG prices.
And then, on June 8, a fire shut down the huge Freeport LNG natural gas liquefaction plant in Texas, which cut LNG export capacity by 17%. Over the following four weeks, US natural gas futures plunged by over 40% into the $5.50 range. And it was cited as one of the reasons why inflation already peaked again.
So here we go again. This morning, natural gas futures jumped to $8.29 per million Btu, adding to the jumps over the past week. The price has regained much of the lost spike, and is up about 30% from a month ago, and has more than doubled from a year ago. So this isn’t going to help CPI readings at all:
The Freeport LNG plant remains shut over safety concerns. The Federal Energy Regulatory Commission (FERC) said on Tuesday that it would inspect the plant in September. So maybe, the plant will start loading LNG tankers again later this year.
In the summer in the US, power consumption spikes due to increased use of air conditioning. This summer, there has been a deadly heatwave with blistering triple-digit temperatures over much of the US, and power consumption strained electric grids, and demand for natural gas by power generators spiked.
So maybe it was a good thing that LNG exports got cut just ahead of the heatwave and left some extra gas for US consumption to power air conditioners and keep the price in the US from spiking from the stratosphere into the ionosphere.
This is the development of LNG exports from the US to the rest of the world. The US also exports natural gas via pipeline to Mexico mostly, but also to Canada, and those exports of pipeline natural gas are not included here. This chart shows just LNG exports, though April, the latest data available from the EIA and doesn’t yet show the decline in exports due to fire at the LNG terminal:
Historically, the price of natural gas in the US, even at today’s level, is not all that extraordinary.
Before a large-scale boom in fracking turned the US into the largest natural gas producer in the world, and created a glut in the US that caused the price to collapse, there was the squeeze, when LNG terminals were being built to import natural gas (now converted to export terminals), and prices were very high for years.
Today’s price is right back in the range where it had been between 2004 and 2008:
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NG prices are a large driver of nitrogen fertilizer prices. This is going to continue putting pressure on future food prices. Smartphones we can live without. Food, not so much. Continuing signs of much more inflation in the pipeline!
Smartphones do not even taste very good without some spices.;)
They’re best tossed into crock pots for stewing. Just be sure you have a temperature app running on them!
An “Apple” a day keeps the doctor away.
You would think so but Wheat, Corn, Soybeans have been dropping the past 2 months. Corn and Soybean prices lower than a year ago when nat gas prices were $3 and not $8
And what is crazy, we have a big heatwave and grains are still crashing. Wheat is down 7% today, Oats are down big today.
With rising prices this spring, farmers must have planted a lot of extra crops. That or heatwaves are good for crops. LOL
Probably due to Ukraine export reopening.
There is a lot of speculation in commodites, that may cause coupling between production cost and price of commodity to be lost.
Untill the commodity is sold, then the purchasing set the price limit.
An observation done when there have been famines previus, the price of food do not rise if there is no purchasing power. People go hungy and die because they can not afford food.
Farmers on the other hand may not be able to sell their crop.
Everything finance can have distorted prizing that bad that prices are low with little supply comming as there was a lot of unbacked futures sold.
When little supply arrive, there will be a brief spike in prices before purchasing power run out and prices drop that low that few invest in future supply.
That’s not actually helpful. If the farmer’s inputs are rising (diesel, fertilizer, etc) and the price being paid for their end product is going down. Exactly how is the farmer going to stay in business?
How would we be able to post food porn pictures of our gruel and weiner water soup? Gotta keep the friends on social media envious!
If Wolf’s NatGas price chart were adjusted for inflation, it would be even more obvious that the economy is perfectly capable of functioning and delivering affordable food now, or even with NatGas prices 2x what they are today.
Everyone seems to be pushing an agenda, trying to push “fear”, journalistic terrorism.
The reality is that This Too Shall Pass, because People Figure Stuff Out.
Natural gas futures are called “widow maker” for a good reason :-)
Yep. A Widow maker. Once this heatwave passes, Nat gas will drop.
Oil is dropping Grains are dropping Lumber is dropping metals are dropping
Inflation will drop soon as these are inputs into goods and services
Housing is dropping unemployment claims is slowing increasing
FED is doing its job in decreasing demand.
I am reading a lot of articles from the so called “Pros”, that FED will pause this fall. I guess time will tell.
Natural gas in underground storage was usually depleted during the winter and replenished in the summer. It’s main use is for home heating fuel in the northern states. It is also used to generate electricity and for cooking.
And with bad luck there will be a lot of unemployed, homeless and hungry people with no purchasing power. CPI «inflation» may then even go negative as economy outside finance contracts.
There will for a while be cheap petrol, food, housing and the lot untill inventory is consumed by the remaining purchasing power. Afterwards the price will be academic as there is not much available.
Boom and bust, a few civilsations have ended that way.
Where would we be without NG? Most other energy sources have more serious issues like nuclear, oil, and coal; and the cost per unit of energy for “green” energy would bankrupt the lower income people. NG is the greatest fuel available during the long transition period to more earth friendly energy.
implicit – I agree with your assessment completely. You didn’t mention hydrogen but it is basically just a battery (storage device) that converts natural gas using renewable energy.
Russell Thanks for mentioning this
Suncor is getting into this a a big way Bob
“You didn’t mention hydrogen but it is basically just a battery (storage device) that converts natural gas using renewable energy.”
Hydrogen is easily produced by electrolysis, and has been since the 19th century.
Natural gas is not involved.
A tank of hydrogen is not a battery.
unamused – You can create hydrogen in many ways. All of them are energy intensive and use more energy to create than the hydrogen provides. Hydrogen is a storage vehicle for energy. It can be used to flatten the curve created by intermittant renewables such as solar and wind. By definition, it is working as a battery.
“By definition, it is working as a battery.”
There’s nothing galvanic or voltaic about a tank of hydrogen and you cannot apply the Nernst equation to it, therefore it is not a battery. Which is to say, you don’t know what you’re talking about.
“You can create hydrogen in many ways. All of them are energy intensive and use more energy to create than the hydrogen provides.”
Which is true of any source of energy. Your argument constitutes the ignoratio elenchi fallacy. Minus ten.
Unamused, Russel is absolutely right on this one. Hydrogen is not a source. It’s a storage medium. In all forms of hydrogen production, it takes way more energy to produce than it can deliver.
We can burn hydrogen as a fuel, or we can have it react in a fuel cell to make electricity which is typically more thermally efficient and thus is the preferred method. What is else is an energy storage device that relies on chemical reactions to store and release electricity? Right, a battery.
Hydrogen’s utility is not in energy production, it’s in storage. And it’s actually very inefficient, but it’s fairly flexible and has reasonably high energy density. Electrolysis is extremely inefficient, so the vast majority of hydrogen is produced by partially oxidizing methane (natural gas). Though it may make sense to use a clean-ish intermittent source like solar for hydrogen electrolysis and just eat the large inefficiencies in return for hydrogen’s fossil-fuel-like flexibility. We may find that Japan really has it right as they appear to be moving more in the hydrogen direction than battery electric.
In every way possible the amount of energy per unit of hydrogen is only at least half of the energy needed to manufacture the said hydrogen.
“What is else is an energy storage device that relies on chemical reactions to store and release electricity? Right, a battery.”
A fuel cell is not a battery either.
“Hydrogen’s utility is not in energy production, it’s in storage.”
Whatever that means. If anything. You’re claiming energy storage is somehow unrelated to energy production, which is absurd.
You flunked English and physics, didn’t you?
Ervin: “In every way possible the amount of energy per unit of hydrogen is only at least half of the energy needed to manufacture the said hydrogen.”
Conventional alkaline electrolysis has an efficiency of about 70%. Average working efficiencies for PEM electrolysis are around 80%.
Record-breaking hydrogen electrolyzer claims 95% efficiency New Atlas: March 16, 2022
You obviously flunked basic reading, specifically the words “storage device”.
Of course, you know you’re being a pedantic nimrod.
You also clearly flunked basic thermodynamics. You are not including the efficiency loss in turning the hydrogen back into usable work. In most cases that’s limited to the Carnot cycle efficiency, which if memory serves is around 40% at atmospheric temps and pressures.
Fuel cells may do netter, but haven’t.
It’s funny when in addition to being pedantic, you’re also wrong.
“Of course, you know you’re being a pedantic nimrod.”
Translation: “We fossil fuel trolls are hopelessly outclassed.”
I’m not correcting trolls on unimportant details. I’m correcting your basic information, disinformation, and definitions of words and scientific terms.
drg1234: “You are not including the efficiency loss in turning the hydrogen back into usable work.”
Which is what you’re not doing when including the efficiency loss in turning fossil fuels into usable work.
The Tu Quoque fallacy. Minus twenty.
“Road legal cars are only about 20% to 35% when used to power a car.” – Engine efficiency – Wikipedia
My Bentley is 70% efficient. You lose!
The Tu Quoque fallacy. Minus twenty.
Okay, genius. Let’s see you “correct” my subsequent comment.
Since you’re now just posting spluttering nonsense, I’ll leave you alone.
“Since you’re now just posting spluttering nonsense, I’ll leave you alone.”
Argumentum ad Hominem (Abusive) fallacy.
Hydrogen is hard to store. Seeps right through most materials as a gas, and is 423° below zero as a liquid.
If the use rate is high then a bit of leakage is acceptable.
Permanent storage not needed for a fuel that’s being generated and used on an ongoing basis.
a) We don’t have time for a long transition period b) For electricity generation, building new wind turbines is increasingly competitive even with the marginal cost of running existing fossil fuel plants
a) We do have time to transition correctly b) New infrastructure needs to have the proper considerations given to impact on local communities and the environment. Correcting one problem and creating a worse one has been done all too many times in the past.
My primary focus is more on the health of our environment and not on reducing CO2 regardless of the cost. Destroying the environment with windfarms and strip mines has no less a detrimental effect than drill sites and pipelines.
“Destroying the environment with windfarms”
Windfarms aren’t destroying the environment. That would be your paymasters in the Big Oil Industrial Complex.
‘the cost per unit of energy for “green” energy would bankrupt the lower income people.’
Wrong. Green energy costs LESS than fossil fuels.
We’ve been over this before. You’re flacking for the Big Oil Industrial Complex. It’s dishonest, and it’s unseemly, and you should be ashamed of yourself.
If “renewables” are so awesome, they should go from the current 20% of energy production to 100% in no time…
Probably not. Lack of water is severely impacting hydroelectric. Hoover Dam electrical production is already down 33%.
unamused – Please provide some data. “Green” energy is currently much more expensive than fossil fuels.
You don’t prove your point by attacking, you provide facts. What your saying may be true some time in the future. Unfortunately, it is not the case.
I am not beholden to any industry. I put the environment first. PERIOD.
‘ “Green” energy is currently much more expensive than fossil fuels.’
The fossil fuel industry get $5 Trillion in subsidies every year. How do you rationalize it being cost-effective?
Solar Energy vs. Fossil Fuels – ConsumerAffairs.com May 12, 2022 — Electricity from fossil fuels costs between 5 and 17 cents per kilowatt-hour. Solar energy costs average between 3 cents and 6 cents per kilowatt-hour
Solar and Wind Energy Start to Win on Price vs. Conventional … https://www.nytimes.com › … › Energy & Environment Nov 23, 2014 — The cost of electricity from wind and solar power plants has plummeted, making it cheaper than coal or natural gas
Renewable Energy Prices Hit Record Lows – Forbes Jan 21, 2020 — Over the last decade, wind energy prices have fallen 70% and solar photovoltaics have fallen 89% on average
Renewable Energy Is Now The Cheapest Option – Forbes Jun 15, 2019 — Onshore wind and solar PV power are now, frequently, less expensive than any fossil-fuel option, without financial assistance.
Are you being deliberately dishonest or are you really that ignorant? Choose one or both.
“The fossil fuel industry get $5 Trillion in subsidies every year.”
I’d sure like to see a breakdown of those subsidies. Thank you!
Only 8% is direct payments, the rest are tax breaks and most importantly being able to walk away from damage to the environment and people.
All your employees just got black lung ? Just declare bankruptcy and walk away.
Also keep in mind this is worldwide not just U.S.A.
Green energy production cost varies wildly depending on the source. But even assuming green energy sources are much cheaper, you’re ignoring the fact that storage alone is easily expensive enough to crush the peasants.
The cost to build and maintain storage is still a problem. Battery technology still needs significant improvement on both energy density and cost, PLUS we need time to build out the required infrastructure to support those green sources. I’d love to see carbon-free energy become the standard, but Oil/NG is still king, and it’s going to take decades to change that fact.
Germany was touted as being such a revolutionary leader in green energy adoption. It’s quickly becoming clear just how insufficient that position is. Solar and wind are great for progressive bragging rights, but still useless when called upon for the consistent, reliable baseload generation and flexible mobility methods needed to maintain Germany’s status as Europe’s manufacturing powerhouse.
“Solar and wind are great for progressive bragging rights”
Thanks for letting us know that your position is based on right-wing ideology, and not rational.
“Green energy production cost varies wildly depending on the source.”
True of anything. Another ignoratio elenchi fallacy.
Unamusing Getting all moralistic on what you think you know is bad fanatical religion.
Translation: “I can’t argue with your facts so how about if I just smear you?”
1) After spending $21B on Speedways 7-Eleven cut 900 jobs, despite $100-$130 oil, because traffic is slow and wages are too high for them. 2) USD/JPY went vertically up, the strong dollar should come back home to Japan, but Speedways is a flop. 3) CA is 7-Eleven biggest flop. 7-Eleven have 67,000 stores world wide, 16,000 in US. 4) Natgas is rising because Germany is lifting it’s reserves from 60% to 90%, using what they got, starving consumers, during a heat wave. 5) The Dow completed it’s S-wave to Feb 2020 high. It retrace less than 38%. The Nasdaq only 24%. 6) Natgas backbone is Apr 18/25 2022, $7.37/$6.47. Natgas @$8.37 a lower high, above BB. 7) If Nerd supply is uninterruped and the German reserve are gradually depleted, natgas price might drop next winter to $5.
This is what climate change does.
Shocker!!! Seriously who is surprised by this??
Wait! …….We are discussing natural gas pricing here, not climate change.
If you are interested in climate change, go read up on “The Great Dying”, aka the Permian-Triassic Extinction event. Sure, it happened 251 Million years ago, but it was an exciting time via climate change (and man wasn’t here yet).
WOLF Thank YOU for all that you do to help us Bob
The grain deal will make JP and beer mug winners happy. Lower food inflation, higher SPX.
“The Federal Energy Regulatory Commission (FERC) said on Tuesday that it would inspect the plant in September.”
“SEPTEMBER??!!!” Maybe like France, August is for “holidays” and all closes down.
These incompetent bureaucrat parasites need to be fired immediately. If what is becoming a national energy emergency can’t get them on site within 48 hours with a crash team to get this facility reopened, then they are useless foot draggers. Likely on purpose.
In the private sector, they’d be long gone already with their replacements on site in trailers working a 24/7 schedule until the facility is returned to service.
Now, lets have all the apologists comment with their oh so reasonable points of reason for such delays.
The Pres needs to get on this as we won’t be able to supply the EU with all their natural gas need next year (like he promised) if this plant is not operational.
August might be a Western Europe or European thing. When I was in Italy everything was dead except the big tourist spots. Like whole country went to Capri or Cinque Terra.
Maybe, just maybe, the LNG plant won’t even be ready for inspection until September?
Also, this plant is for exporting LNG, not producing it.
Verizon down big today… a few days after AT&T. I guess the German TMobile is kicking the American cellular companies butts.
TMobile pays it CEO less than AT&T even though AT&T CEOs make huge gambles that loose tens of billions of dollars. Amazing.
They dry grain with Nat Gas too. This demand will also increase with the current situation. I got into $BOIL three weeks ago and exited today. Markets are resilient and traders tend to take profits.
Alot of scientists on this thread.
One scientist and a cast of humiliated fossil fuel trolls. They always come out when fossil fuels are the topic.
CreditGB: “The Federal Energy Regulatory Commission (FERC) said on Tuesday that it would inspect the plant in September.”
And if the fossil fuel industry has its way they’ll inspect the plant in 2028. They have a vested interest in limiting supply to jack up prices, and they have hundreds of very expensive lobbyists.
The International Monetary Fund states that the fossil fuel industry gets at least $5 Trillion in subsidies every year, which somehow doesn’t seem very cost-efficient.
The oil and gas industry paid state, federal and local taxes. They matched 401k contributions. Build all the windmills and rooftop solar cells you want. Open some mines to extract battery metals. These industries are more likely to get fined than subsidized.
There is a lot of wasted subsidiary money on green energy too. People have views, and are not trolls, unless you consider yourself a troll for it must be green energy and nothing else. What is your problem with using both. We have talked about this before and you were not listening regarding the cost/value of various energies, but you don’t believe in the science that the density/cost of energy is the primary factor for affordability. There is no way the world or the US can afford to go all green for many years. It has nothing to do with being a green troll or carbon troll. If you want to do some good, take care of your own garden, plant some trees, perennials and annuals, they will eat the co2 so you can take a deep breath of o2 and relax.
“The oil and gas industry paid state, federal and local taxes.”
Fossil Fuels Received $5.9 Trillion In Subsidies in 2020 Look it up.
“There is a lot of wasted subsidiary money on green energy too.”
If green energy got $5.9 Trillion in subsidies just once – and not year after year – there wouldn’t be much fossil fuel industry left and we would not be having this pleasant conversation.
Fossil fuels can’t compete even WITH subsidies.
Are we in depression : SPXA50R – stocks above dma50 – dived to 0.80 in June 13 2022, the deepest dive, a world record, under Mar 2020 low. Yes, we are depressed, very much so.
Great news for natural gas companies, employees, and their shareholders. Sucks for the rest of us. Not sure if the terminals get any fed/state government subsidies. Hope not.
NG a very volatile commodity in the USA with many factors. Supply constraint by pipelines and drilling activity and available capital. Demand components with no alternative should there be demand disruptions or constraints. LNG capacity, LNG overloading capacity, export pipelines, weather, and rapid decode of resource of capital dries up. Inflation and demand destruction. The commodity may follow some trading indicators but the ultimate price of course lands someplace between the oversupply low from the shale resources and the quest for more resources and waiting on the demand as LNG globally grows to meet supply. I do agree we can easily see $5/mmbtu and less. Futures out year prices are in the $4.00 range when I checked a couple of months ago. As cost of supply rises and margins shrink suppply with drop and prices will escalate higher than inflation.
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Raging inflation finally forces the ECB to abandon its reckless and absurd monetary policies and turn hawkish.
Reverse stock splits keep them from getting delisted. But some didn’t even get that far and filed for bankruptcy, like, WOW that was fast.
The magic of ridiculously inflated home prices meeting holy-moly mortgage rates.
The first year-over-year price declines crop up as the crazy California housing market “normalizes” amid holy-moly mortgage rates.
Few took the warning seriously that margin debt issued last year.
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