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Old 09-16-2021, 08:20 AM
 
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It's time for Ohioans to pay close attention to their utility bills, especially for households on a tight budget.

Wholesale natural gas prices have almost doubled this year, reaching $5.50/million BTU this week, up from a 52-week low of $2.55. Click on full chart in the link below. Just in September, the price has increased from $4 to $5.50! Today, the price sits at $5.30.

https://www.bloomberg.com/quote/NG1:COM

Wholesale natural gas prices may differ in Ohio, and by locality in Ohio due to local natural gas production, regional natural gas price production, cost and quantity of inventories in storage accumulated at lower prices, proximity to pipelines carrying cheaper natural gas, etc. E.g., I searched for Marcellus (western Pennsylvania production region that extends into Ohio) natural gas prices with no immediate luck.

This article suggests that natural gas prices may reach at least $10 this winter, with higher prices needed to ration demand given a shortage of supply, and to encourage increased drilling by producers. Increased drilling won't immediately increase supplies, as time is needed to drill a well and to connect it to a pipeline. So demand rationing through higher prices may be a feature of this year's winter utility markets in Ohio.

<<Stan Brownell, an analyst at Argus Media, and Luke Jackson, an analyst at S&P Global Platts, figure that Henry Hub prices would have to jump to $10 or more to provide an incentive to fulfill domestic natural gas demand.>>

https://finance.yahoo.com/news/natur...210000738.html

As much as Ohio's electricity is produced at natural gas-fired plants, higher natural gas prices hit the consumer not just directly, but also due to higher electricity prices.

Surprisingly, there has been little discussion in Ohio about the impact of higher natural gas prices, with focus on higher gasoline prices. This will change as the weather cools and natural gas prices may jump to prices not seen in several years. Discretionary consumer expenditures may fall as Ohioans divert liquidity to pay utility bills.

Natural gas prices already are at the highest level in the last 5 years, and soon may top the 10-year high, before adjusting for inflation.

https://tradingeconomics.com/commodity/natural-gas

Will natural gas prices this winter reach double digits, approaching 15-year highs?

Keep in mind that these are wholesale prices. Retail prices are much higher, reflecting the cost of delivery to a home, generation plant, etc. For retail customers, natural gas bills in Ohio already contain hefty monthly base fees, as much as $35/month in Greater Cleveland.

Due to high base fees, the price per million BTU delivered to a home (monthly bill divided by gas consumed) actually falls during the winter when natural gas consumption peaks.

https://www.eia.gov/dnav/ng/hist/n3010oh3m.htm

Considering storage and higher wholesale natural gas prices, my guess is that residential consumers will pay $3-9 more per million BTU this winter, with an average increase of perhaps $5-6 over the course of the winter. Thermal underwear, hoodies, and electric blankets may be in great demand in coming months!

Look closely at your natural gas bill in coming weeks, and extrapolate current charges for natural gas to last year's rate of consumption in order to calculate the impact on your household. Ditto, for electricity bills. Barring reductions in consumption, Ohio household natural gas and electricity bills seem likely increase at least several hundreds of dollars this winter, depending upon the price of wholesale natural gas this winter.

Delivered natural gas prices to industrial consumers (e.g., electricity generators) are significantly lower due to economies of scale.

https://www.eia.gov/dnav/ng/hist/n3035oh3m.htm

Another topic not yet discussed is that northern Ohio's nuclear plants surely are now profitable, and supplying vast amounts of emission-free electricity, and significantly lowering demand for natural gas and thereby forestalling even higher natural gas prices.

Last edited by WRnative; 09-16-2021 at 08:55 AM..
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Old 09-28-2021, 01:24 AM
 
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Default NG wholesale price tops $6/mmbtu

https://www.bloomberg.com/quote/NG1:COM

Amazingly, I still have NOT seen any Ohio media news stories about the impact of rising natural gas prices, and also rising electricity prices as Ohio's marginal electricity generation comes from natural gas, on Ohio consumers, industry, retailers, governments, etc. If anybody has seen such a story, please post a link.
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Old 10-02-2021, 08:15 AM
 
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Default Colder than normal winter to aggravate natural gas shortage?

Projections of a colder than normal winter and, to a much lesser extent, a global energy shortage may push natural gas prices higher this winter. Winter temperatures remain the primary factor impacting marginal U.S. natural gas demand and prices, as U.S. natural gas exports are constrained by limited export capacity.

<<“This winter, I think, is going to be a colder one, at least for the interior sections from the Appalachians to the Ohio Valley and Great Lakes,” Pastelok said. Last winter, temperatures across these areas were right around normal, but this year, the winter as a whole is likely to average 1 to 3 degrees Fahrenheit below normal.

The first waves of cold air are anticipated to chill the Northeast in November when Pastelok said there could be “a couple of rounds of cold weather and some snow,” particularly across the interior Northeast. The chance of a plowable snow is also anticipated to start early in the season with the early waves of cold air.>>

https://www.accuweather.com/en/winte...recast/1022887

The global energy shortage serves more as a warning to the U.S. once the economy recovers post-COVID and as electricity demand increases as the U.S. shifts to electric vehicles, hydroelectric production decreases due to climate change associated droughts, and marginal U.S. electricity demand comes from natural gas generation.

A massive energy shortage in China and low natural gas inventories in Europe will max out U.S. exports of liquified natural gas, but these still are limited by U.S. LNG export capacity to a little less than 10 percent of U.S. natural gas production.

https://www.latimes.com/world-nation...y-coal-climate

https://www.eia.gov/outlooks/steo/data/browser/#/?v=15

<<China’s central government officials ordered the country’s top state-owned energy companies -- from coal to electricity and oil -- to secure supplies for this winter at all costs, according to people familiar with the matter....

Natural gas futures in New York jumped, and shares of U.S. gas exporter Cheniere Energy Inc. rose.>>

https://www.bloomberg.com/news/artic...s-at-all-costs

<<Asian liquefied natural gas prices surged to a record-high as global competition for the super-chilled fuel intensified amid low inventories and coal shortages.

The Japan-Korea Marker, North Asia’s benchmark for spot LNG shipments, surged to $34.47 per million British thermal units, the highest on records going back to 2009, according to price reporting agency S&P Global Platts. European gas prices, which Asian rates have closely followed this year, also broke records on Thursday....

Unlike previous record-breaking price spikes, this one is happening while temperatures are still relatively mild, illustrating the extent of the supply crunch. Frigid winter weather could send Asian LNG prices surging threefold from current levels, according to Citigroup Inc.>>

https://www.bloomberg.com/news/artic...upply-tightens

https://www.bloomberg.com/news/artic...upply-tightens

Note that global prices for natural gas currently are over 5 times U.S. wholesale prices, but, again, limited U.S. natural gas export capacity insulates the U.S. market from these high global prices.

U.S. natural gas storage is rising despite significant disruptions in Gulf of Mexico production as a result of damage caused by Hurricane Ida, but storage levels remain lower than in 2020 and the five-year average.

https://ir.eia.gov/ngs/ngs.html

The Energy Information Administration's Sept. 30, 2021 "Natural Gas Weekly Update" documents the low European natural gas inventory levels.

<< Inventories as of Tuesday, September 28, 2021, were more than 0.75 Tcf (22%) below last year and over 0.5 Tcf (16%) below the five-year (2016–2020) average.>>

https://www.eia.gov/naturalgas/weekly/

Mild autumn weather and modest economic demand has allowed the U.S. to build natural gas inventories during this year's "shoulder season." This situation would flip with a colder November and winter.

https://www.naturalgasintel.com/nove...torage-levels/

U.S. liquified natural gas export capacity limits LNG exports, but the U.S. now is exporting more natural gas by pipeline to Mexico than it is importing from Canada.

https://www.eia.gov/todayinenergy/detail.php?id=49156

U.S. electricity production to a limited degree also is shifting to coal given high natural gas prices.

https://www.eia.gov/outlooks/steo/
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Old 10-04-2021, 06:54 PM
 
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As far as the rise in natural gas prices goes, we came down here from Northern New England four years ago and our total energy costs are less than half what they were up there. There was no natural gas up there, at any price, and that was the principal reason our overall energy costs were so high.

Thought for the Day: Be glad you don't live in Germany, where the average cost of a kwh of electricity is three times the average here in the US. Mind you, they've gone green in a way that we haven't yet, so we've got some catching-up to do.
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Old 05-04-2022, 08:03 AM
 
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Default Natural gas price tops $8/millionBTU this morning

Since the beginning of March, wholesale natural gas prices in the U.S. have soared from about $5/millionBTU to over $8/millionBTU June 2022 contract) this morning.


https://tradingeconomics.com/commodity/natural-gas


https://futures.tradingcharts.com/chart/NG_/



While Ohio consumers won't have to worry about the impact of soaring natural gas prices on home heating bills this summer, they will have to foot the bill for soaring electricity prices as much of Ohio's electricity now is generated by burning natural gas prices. Air-conditioning costs will be much greater this summer for most Ohioans.


Prices for electricity this summer may double compared to last year in much of the state.


https://www.daytondailynews.com/loca...KY6EQV4CPX4XQ/


<<Experts were putting into perspective that while prices were “soaring” into the $5 and $6 range, there were some years in the last two decades when we were paying as much as $10 to $16/mcf. >>


https://www.beaconjournal.com/story/...ne/7370381001/


The likelihood is that natural gas prices will remain much higher YOY for the 2022-2023 winter heating season, as a cool spring limited the build-up of underground storage.


<<Working natural gas in underground storage facilities in the Lower 48 states totaled 1,387 billion cubic feet (Bcf) as of the last day of March this year. Inventories were 17 percent lower than the previous five-year average (2017–21) for that time of year, EIA’s Weekly Natural Gas Storage Report showed on Thursday.


A colder January 2022 and record-high U.S. liquefied natural gas (LNG) exports led to more withdrawals despite the fact that domestic production of natural gas increased, the EIA says.>>


https://oilprice.com/Energy/Natural-...-Year-Low.html


A warmer summer with increased electricity demand for air-conditioning also would impair the ability of U.S. natural gas storage to recover before the beginning of the winter heating season.


https://ir.eia.gov/ngs/ngs.html
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Old 05-23-2022, 06:58 AM
 
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Default NG price spike into double digits before next heating season

An analyst offers a very plausible scenario for much higher gas prices by year-end from even today's elevated levels IF natural gas drilling/production doesn't increase materially in the U.S. Producers are unwilling to divert capital to drilling after years of low prices, and they also are constrained by labor shortages, material shortages and higher price levels for drilling services.


In the summer, natural gas inventories traditionally increase in the U.S. as natural gas utilities refill their storage facilities. Limited production and higher than anticipated summer demand for natural gas, especially as a fuel for electricity generation if heat waves boost air-conditioning usage, could limit the availability of NG to refill storage, setting the stage for potential shortages of supply and much higher prices next winter. Hybrid and EV vehicle owners also may increase electricity and NG demand as their numbers now increase each year. One or more hurricanes in Gulf of Mexico also could reduce supply by shuttering off-shore production platforms and perhaps destroying onshore pipelines and other production infrastructure.



<<"There could be some black swan event here in North America that will suddenly cause the U.S. gas market to swing from structural surplus to structural deficit. If that happens, U.S. gas prices could surge. They could triple or possibly even quadruple," Goehring warned.

Investor apathy to this risk is "foolish," the Goehring & Rozencwajg Associates managing partner pointed out.


"Our models suggest the decades-long protection from international price swings, enjoyed by the North American gas market, is about to change," he said. "Slower-than-expected shale growth will push the U.S. market into structural deficit for the first time in 15 years. Almost immediately following the shift, U.S. prices will converge with global gas prices. Given today's $35 per mmbtu international gas prices, prices could surge by almost four-fold."


The big change in 2022 is the export levels. In the last six years, the U.S. went from being a minor player in the global LNG export market to the world's largest LNG exporter, Goehring noted.


"Six export facilities currently operate, and a seventh, Calcasieu Pass, will add an additional 1.7 bcf/d of capacity, bringing total US LNG export capacity to 13 bcf/d, surpassing both Qatar and Australia, formerly the world's two largest LNG exporters," he said. "Surging shale production has far exceeded LNG export demand. The U.S. natural gas market has remained in structural surplus even with surging LNG exports. That is all about to change," Goehring said.


This could happen within the next six months as inventory levels shrink. The U.S. is entering a season of very low inventories. If temperatures are high in the summer, the U.S. could fall even further behind. "This is exactly what happened in Europe in the summer of 2021," Goehring stated. "And if inventories continue to be substandard relative to where they should be, the market is going to panic like it did in Europe.">>


https://www.kitco.com/news/2022-05-2...ozencwajg.html


Natural gas storage levels in the U.S. currently are down over 17 percent y-o-y and over 15 percent from the five-year average.


https://ir.eia.gov/ngs/ngs.html
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Old 05-24-2022, 09:55 AM
 
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Default Cost of residential gas in Ohio

In recent years, the cost of residential natural gas in Ohio has been inflated by large increases in monthly base fees, reportedly to finance the reconstruction of Ohio's aged natural gas distribution system. It has been very possible to pay more in base fees than for the amount of natural gas actually consumed, especially in a modest, well-insulated home with low winter temperature settings, and most especially in summer months (see second link below) when gas consumption is minimal but the base fees remain the same. Yet delivered residential natural gas annually in Ohio has averaged $10/thousand cubic feet due to record low natural gas prices adjusted for inflation.



https://www.eia.gov/dnav/ng/hist/n3010oh3a.htm


Wholesale price increases for natural gas will likely push the annual cost of delivered Ohio residential natural gas to above $20/thousand cubic feet, if wholesale prices move well above $10, let alone $20, as widely anticipated. Note in the above link, Ohio residential gas prices in the immediate years before 2010 were 50 percent higher than in recent years, even though base rates were much lower, reflecting higher wholesale natural gas prices before the shale boom.



https://www.eia.gov/dnav/ng/hist/n3010oh3M.htm


Sadly, and inexcusably IMO, the EIA hasn't maintained this data chart which provided a good indicator of Ohio wholesale prices.


https://www.eia.gov/dnav/ng/hist/na1140_soh_3a.htm


Here's the "Henry Hub" wholesale natural gas price. This chart is interactive, so note in December of 2021 the HH price was still below $4/million BTU (about one thousand cubic feet of natural gas (mcf). Currently, the Henry Hub price is above $8 and expected to move much higher.


https://fred.stlouisfed.org/series/MHHNGSP
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