Gas Prices will Spike? How High?

October 19, 2021

Just like computer chips, fossil gas is slow getting ramped up after the COVID plunge.
The longer term market response is that clean energy becomes more competitive.

The short term market response is that generators in the US, China and Europe are using more coal.

Wall Street Journal:

Americans got a stark warning from the government this week: Expect higher heating bills this winter.

According to the Energy Information Administration, nearly half of U.S. households that warm their homes with mainly natural gas can expect to spend an average of 30% more on their bills compared with last year. The agency added that bills would be 50% higher if the winter is 10% colder than average and 22% higher if the winter is 10% warmer than average.

The forecast rise in costs, according to the report, will result in an average natural-gas home-heating bill of $746 from Oct. 1 to March 31, compared with about $573 during the same period last year.

The forecast is part of the EIA’s winter fuels outlook, which projects that U.S. households will spend more on energy this winter than they have in several years. The agency attributed its forecast to rising energy prices—natural-gas futures have this year reached a seven-year high—and the likelihood of a more frigid winter than what most of the country saw last year.

The looming increase, on top of rising prices for many consumer goods and commodities, is likely to cause stress for Americans at many income levels. Economists warn that the larger utility bills are most likely to affect those households still hobbled by the Covid-19 pandemic.

Wall Street Journal:

Will the U.S. run out of gas this winter?

The answer is almost certainly “no,” but the rest of the world might not be so fortunate. Now that the U.S. has become a major liquefied natural gas exporter, it can play a big role in making sure other countries have enough. Or it can keep some of that gas at home if domestic natural gas prices, already at their highest since the 2014 polar vortex, spike further. 

If it did so, the ensuing tussle could get nasty, denting America’s reputation as a reliable supplier. Almost a decade ago, long before the U.S. became a major LNG exporter, industrial users—including Dow Chemical and steelmaker Nucor—pre-emptively called for export curbs to make sure domestic users had access to cheap and abundant gas. Suppliers countered, saying that the U.S. could pump the commodity rapidly enough to meet both export and domestic demand.

A cold winter could challenge the suppliers’ assumption. With domestic inventory below five-year average levels, U.S. benchmark gas prices have already doubled from a year earlier, recently nearing $6 per million British thermal units.

That is nothing compared with East Asia and Europe, where prices are about five times as high well before the first snowflake. The supply crunch comes at a time when the U.S. is exporting more natural gas—supercooled and liquefied to be carried to destinations abroad—than ever before. If supplies merely get stretched domestically then U.S. customers might need to pay a similarly shocking sticker price. Making matters worse, U.S. natural gas producers are in no rush to drill for more gas after getting burned by previous sprees that left them saddled with debt. Coal, which can step in to replace natural gas for power generation, is also in short supply.

Grumbling is already starting. Two weeks ago, a trade group representing manufacturers sent a letter to Energy Secretary Jennifer Granholm urging “immediate action” to reduce LNG exports, saying manufacturers can no longer compete in the market if natural gas prices surge. That dynamic has already played out in Europe, where soaring energy prices have prompted some steelmakers and fertilizer plants to halt production. An LNG industry group countered with a letter asking Secretary Granholm for continued support on LNG permits and approvals, saying that exports stabilize and incentivize U.S. production.

9 Responses to “Gas Prices will Spike? How High?”

  1. Brent Jensen-Schmidt Says:

    To state the bleeding obvious, if fossil fuels are needed, they will be used. The only solution is to provide alternatives. Any other action is a feel good distraction.

  2. jimbills Says:

    Interesting, but read the fine print:
    https://theconversation.com/whats-behind-news-corps-new-spin-on-climate-change-169733

    Good news, outright denial is abandoned. Bad news, Fox will still do everything it can to undercut action against limiting fossil fuel use, while promoting carbon capture as the solution.

    • greenman3610 Says:

      that’s Australia – any news about change in the American branch?

    • rhymeswithgoalie Says:

      Yergh!

      The campaign missionzero2050 triggers my rant about 2050 targets being meaningless without hard and fast earlier targets at, say, two, five and ten years from now. (Even 2030 without interim milestones is just handwaving.)

      /rant

  3. jimbills Says:

    Despite climate change promises, governments plan to ramp up fossil fuel production
    https://www.npr.org/2021/10/20/1047531537/fossil-fuel-paris-global-warming-climate-un

    ‘The U.S. specifically has shown a 17% planned increase of oil production and 12% with gas by 2030 compared to 2019 levels, according to Wednesday’s report.’

  4. jimbills Says:

    COP26: Document leak reveals nations lobbying to change key climate report
    https://www.bbc.com/news/science-environment-58982445

    ‘Saudi Arabia, the world’s biggest oil exporter, requests the UN scientists delete their conclusion that “the focus of decarbonisation efforts in the energy systems sector needs to be on rapidly shifting to zero-carbon sources and actively phasing out fossil fuels”.

    Argentina, Norway and Opec also take issue with the statement. Norway argues the UN scientists should allow the possibility of CCS as a potential tool for reducing emissions from fossil fuels.’

  5. redskylite Says:

    Gullible mankind has been taken for a fossil-fuelled “cash-cow” ride by business cartels such as OPEC and the like, for far too long now. The price is dictated by the will of a select few, who lobby, bully and control economies and governments of the world.

    When will we finally be free of this burden? Wind, marine, sun may be intermittent, but at least it is an energy source that is not mined, drilled and controlled by money chasing businesses.

    And their sweaty, dirty hands won’t let go until the last drop has been exploited.

    ===========================================

    COP26: Document leak reveals nations lobbying to change key climate report

    The leak reveals Saudi Arabia, Japan and Australia are among countries asking the UN to play down the need to move rapidly away from fossil fuels.

    It also shows some wealthy nations are questioning paying more to poorer states to move to greener technologies.

    https://www.bbc.com/news/science-environment-58982445


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