Funny how this sentence is buried towards the end of an article on the current natural gas situation:
"Gas is up 32 percent this year, heading for the biggest annual gain since 2005."
That just does not fit the current narrative of energy cornucopia - and is dismissed as the result of unusually cold weather.
But reality is starting to show potential trouble on the near term horizon.
The current level of natural gas supply is the lowest it's been in years for this time of year and is dropping at a very fast rate compared with historical averages.
The other main heating fuels - propane and distillates (heating oil) are also running very low.
Stock levels of natural gas, propane and distillates are all so low that they are ALL below the lowest point in their 5 year range - IE this is the lowest stock level we have seen in over 5 years for this time of year.
And the media continues their cornucopia talk. Articles ask if the U.S. be destabilizing energy rich nations when we start to export natural gas in a big way. I think this is absurdly premature.
If the rate of stock draws of Natural Gas continues at it's current pace (last three weeks) it will reach 718 Billion Cubic feet by the middle of March. The lowest stock levels recorded in recent history was 642 Billion Cubic feet at the end of winter 2003. Last years minimum was about 1700 BCF and the year before that the minimum was well over 2000 BCF.
Propane and Distillates are also on a path towards very low stock levels by the end of winter.
I do not think that Natural Gas inventories will drop to 718 Billion Cubic Feet by the middle of March because the price will move up in a big way long before it gets that low. Likewise propane and distillates will see strong increases in price if the current stock level draws continue at even close to the current pace.
The last two winters have been mild. 2011-2012 was one of the warmest in history and 2012-2013 was somewhat above average. So far 2013-2014 is running somewhat below average.
The Energy Cornucopias are warning that if prices rise this will result in the market being flooded with new supply. But stock levels are currently dropping like a stone so if this glut of low cost supply really exists it should hit the market any time. If this glut of low cost supply really exists the stock levels will quickly stabilize - in this case it means they will drop at a substantially lower rate while the price stays somewhat stable. Readers of this blog know that I am quite skeptical of the this "energy cornucopia" and am therefore guessing that we will see a big increases in the price of Natural Gas, Propane and perhaps even diesel over the next couple of months unless we have a big warning trend and fast.
It could get bad enough to be labeled as a minor energy crisis.
I do not think it will be a major energy crisis because solar and wind are waiting in the wings with prices not much higher than fossil fuels right now and could ramp up in a big way pretty fast. There was no such infrastructure for solar and wind in the 1970's.
How would this affect heating? Short run: space heaters running on electricity that stays cheap even as natural gas and propane skyrocket. Longer term: electric baseboard heat - or many other options.
"Gas is up 32 percent this year, heading for the biggest annual gain since 2005."
That just does not fit the current narrative of energy cornucopia - and is dismissed as the result of unusually cold weather.
But reality is starting to show potential trouble on the near term horizon.
The current level of natural gas supply is the lowest it's been in years for this time of year and is dropping at a very fast rate compared with historical averages.
The other main heating fuels - propane and distillates (heating oil) are also running very low.
Stock levels of natural gas, propane and distillates are all so low that they are ALL below the lowest point in their 5 year range - IE this is the lowest stock level we have seen in over 5 years for this time of year.
And the media continues their cornucopia talk. Articles ask if the U.S. be destabilizing energy rich nations when we start to export natural gas in a big way. I think this is absurdly premature.
If the rate of stock draws of Natural Gas continues at it's current pace (last three weeks) it will reach 718 Billion Cubic feet by the middle of March. The lowest stock levels recorded in recent history was 642 Billion Cubic feet at the end of winter 2003. Last years minimum was about 1700 BCF and the year before that the minimum was well over 2000 BCF.
Propane and Distillates are also on a path towards very low stock levels by the end of winter.
I do not think that Natural Gas inventories will drop to 718 Billion Cubic Feet by the middle of March because the price will move up in a big way long before it gets that low. Likewise propane and distillates will see strong increases in price if the current stock level draws continue at even close to the current pace.
The last two winters have been mild. 2011-2012 was one of the warmest in history and 2012-2013 was somewhat above average. So far 2013-2014 is running somewhat below average.
The Energy Cornucopias are warning that if prices rise this will result in the market being flooded with new supply. But stock levels are currently dropping like a stone so if this glut of low cost supply really exists it should hit the market any time. If this glut of low cost supply really exists the stock levels will quickly stabilize - in this case it means they will drop at a substantially lower rate while the price stays somewhat stable. Readers of this blog know that I am quite skeptical of the this "energy cornucopia" and am therefore guessing that we will see a big increases in the price of Natural Gas, Propane and perhaps even diesel over the next couple of months unless we have a big warning trend and fast.
It could get bad enough to be labeled as a minor energy crisis.
I do not think it will be a major energy crisis because solar and wind are waiting in the wings with prices not much higher than fossil fuels right now and could ramp up in a big way pretty fast. There was no such infrastructure for solar and wind in the 1970's.
How would this affect heating? Short run: space heaters running on electricity that stays cheap even as natural gas and propane skyrocket. Longer term: electric baseboard heat - or many other options.
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